COVID-19 Lockdown: Deferral of employees tax (PAYE) payable
- Effective date (period for which this relief is available) – 1 April 2020 to 31 July 2020.
- Compliance – tax returns may not be in arrears and there must be no outstanding debt with SARS (unless there is some arrangement with SARS or the debt is less than R100.
Under the COVID-19 relief provisions:
- Qualifying small to medium size businesses may defer payment of 20% of the PAYE liability arising during the period 1 April 2020 to 31 July 2020 without SARS imposing administrative penalties and interest on the late (short) payment.
- The aggregate PAYE liability deferred will have to be paid to SARS in equal instalments over the six-month period from 1 August 2020 (i.e. the first payment is due on 7 September 2020 and the last by 5 February 2021).
A qualifying small to medium size business in this case is one in which the annual turnover does not exceed R50 million per annum for the 2020/2021 year.
Example: deferral of PAYE liability for four months (using assumed PAYE figures)
|Payroll Month||EMP201 – |
|Less 20% |
Deferral (deferred total)
|80% payable||Submit EMP201 |
and make payment by
|April 2020||R 150 000||R 30 000||R 120 000||7 May 2020|
|May 2020||R 145 000||R 29 000||R 116 000||5 June 2020|
|June 2020||R 155 000||R 31 000||R 124 000||7 July 2020|
|July 2020||R 150 000||R 30 000||R 120 000||7 August 2020|
|Cash flow benefit||R 120 000|
Repayment of deferred total of R120 000 (6 monthly instalments)
|Payroll Month||Amount payable||Submit and make payment by|
|August 2020||R 20 000||7 September 2020|
|September 2020||R 20 000||5 October 2020|
|October 2020||R 20 000||6 November 2020|
|November 2020||R 20 000||7 December 2020|
|December 2020||R 20 000||7 January 2021|
|January 2020||R 20 000||5 February 2021|
|Total deferred PAYE repaid||R 120 000|
Please note: interest and penalties will apply if the employer has understated the PAYE liability for any of the four months.
In terms of Paragraph 2 of the Fourth Schedule to the Income Tax Act, 1962 (the Act) a resident employer or representative employer (in cases where the employer is non-resident) must deduct employees’ tax (PAYE) from remuneration paid to its employees.
In addition, the employer or representative employer must submit a return and pay over the PAYE withheld to the South African Revenue Service (SARS) within seven days after the end of the month for which the PAYE was deducted.
Administrative penalties may be imposed in terms of paragraph 6 of the Fourth Schedule to the Income Tax Act for late payment of PAYE.
Source of the legislation:
- Disaster Management Tax Relief Bill, and
- Disaster Management Tax Relief Administration Bill