I. Background
The first tax measures announced by the Minister on 29 March 2020 and included in the 2020 Draft Disaster Management Tax Relief Bill and 2020 Draft Disaster Management Tax Relief Administration Bill published for public comment on 1 April 2020 made provision for the expansion of the ETI programme for a limited period of four months, beginning 1 April 2020 and
ending on 31 July 2020 as follows:
Increasing the maximum amount of ETI allowable during this four month period for employees eligible under the current ETI Act from R1 000 to R1 500 in the first qualifying twelve months and from R500 to R1 000 in the second twelve qualifying months.
Allowing a monthly ETI claim in the amount of R500 during this four month period for employees from the ages of:
-18 to 29 who are no longer eligible for the ETI as the employer has claimed ETI in respect of those employees for 24 months; and
-30 to 65 who are not eligible for the ETI due to their age.
Allowing the above mentioned monthly ETI claim to apply to employees previously not classified as “qualifying employees” to apply for a limited period of four months irrespective of their date of employment (employees employed before 1 October 2013 will also qualify for the relief).
Accelerating the payment of employment tax incentive reimbursements from twice a year to monthly as a means of getting cash into the hands of tax compliant employers as soon as possible.
This expansion will, however, only apply to employers that were registered with SARS as at 1 March 2020. Further to the above, the current compliance requirements for employers under sections 8 and 10(4) of the ETI Act will continue to apply.
II. Reasons for change
The COVID-19 outbreak coupled with the extended nation-wide lockdown continues to have a significant impact on cashflows of businesses. Government remains committed to assisting to minimize unemployment and the risk of the economy grinding to a halt during this difficult period.
Government proposes to further expand the ETI measures that were announced earlier to assist employers retain employees during this critical period, thus reducing the risk of low income earners losing their employment as a result of the lockdown.
III. Proposal
As a result, it is proposed that the amount of R500 per month for each employee that earns less than R6 500 per month be increased to R750 per month for a limited period of four months starting from 1 April 2020 and ending 31 July 2020. In view of the fact the proposed increase from R500 to R750 (in respect of the amount to be claimed) is made after the April payroll run, it is proposed that the additional R250 not claimed as part of the April payroll run can be claimed during the May payroll run.