Benefitting SMMES – Businesses which are negatively affected, directly or indirectly, due to the Coronavirus pandemic;
Tax SARS has published a video on their website explaining some of the tax relief available. For more information, you can follow this link: https://www.youtube.com/watch?v=_D1sPVxBmXU&feature=youtu.be
UIF to process COVID-19 TERS benefit to assist employers and workers during Coronavirus (COVID 19) lockdown
Employment tax incentive relief (https://www.accountancysa.org.za/wp-content/uploads/2020/04/COVID-19-tax-measures-and-time-extensions-WW.pdf)
Employers will be able to claim additional employment tax incentive relief (ETI) for remuneration payable from 1 April 2020 to 31 July 2020 as follows:
- an additional ZAR500 per qualifying employee – i.e. an increase from ZAR1000 to ZAR1500 in the first qualifying 12 months, and from ZAR500 to ZAR1000 in the second qualifying 12 months;
- ZAR500 for each qualifying employee (18 to 29 years) where the employer had previously claimed ETI for the full 24 months;
- ZAR500 for each employee between 30 to 65 years who does not qualify for the ETI due to age.
ETI reimbursements will be processed monthly after submission of the EMP 201 returns, as opposed to twice a year.
The above relief will only be available to tax-compliant employers who are registered with SARS on 1 March 2020.
Deferral of employees’ tax (https://www.accountancysa.org.za/wp-content/uploads/2020/04/COVID-19-tax-measures-and-time-extensions-WW.pdf)
Qualifying taxpayers that are tax compliant registered employers or representative employers will be able to defer payment of 20% of their employees’ tax (PAYE) liabilities due and payable for the period 1 April 2020 to 31 July 2020, without penalties and interest.
The 20% deferral will be payable in equal installments over six months from 1 August 2020, i.e. the first installment must be paid by 7 September 2020 and last by 5 February 2021.
SAFT – will extend direct financial support to SMME employees who are at risk of losing their jobs or will suffer a loss of income because of COVID-19. https://saft.africa/#how-saft-works
Recession Impacts on Business
Credit Impairment and Bankruptcy
Accounts receivable may come in slower or not at all. In turn, this will force the business to repay its own creditors slower since there will be increased pressure on cash flows.
Employee Lay-Offs and Benefit Reductions
The business may need to reduce employees and in turn this could have increased work load requirements on remaining staff. This could lead to lowered morale and affect productivity.
Cuts to Quality of Goods and Services
Cutting costs to improve the bottom-line may reduce quality in goods manufactured. This may reduce attractiveness of products to potential consumers.
Reduced Consumer Access
Decline in advertising expenditures will impact the business influence over its consumer confidence. This in turn will lead to a decline in consumer spending.
Recession Impacts on Small Businesses
Small, private businesses with annual sales substantially less than the Fortune 1000 actually perform fairly similarly to large businesses during a recession. Without major cash reserves and large capital assets as collateral, however, and with more difficulty securing additional financing in trying economic times, smaller businesses may have a harder time surviving a recession.