Nolukhanyo Makuni, director at CN Outsourced Finance, explains the payment terms of PAYE deferral.
On 21 April, President Cyril Ramaphosa announced additional measures to assist employers to provide financial stability to their employees. One of these measures includes a 35 percent deferral on the monthly PAYE liability owed to SARS for the months of April, May, June and July 2020.
One of the qualifying criteria for the tax relief was for employers to have a gross income of R100 million or less during the year of assessment ending on or after 1 April 2020, but before 1 April 2021.
SARS will not impose any penalty or interest on the deferred PAYE liability amount. This means that employers are still liable to pay the remaining 65 percent as per normal.
Nolukhanyo Makuni, director of financial management and business advisory services company, CN Outsourced Finance, explained the payment terms and arrangements, noting that employers making use of this relief must pay back the total deferred PAYE liability amount in six equal instalments from August 2020 to January 2021, with the August instalment due on or before 7 September. If an employer defaults on the payment of the instalment, penalty and interest will be imposed for the month defaulted.
“The Covid-19 tax relief was an option made available to employers who required assistance to provide financial stability to their employees during the Covid-19 lockdown period. Should employers decide not to make use of this option, they would complete their EMP201 as per normal and make the full payment to SARS by the due date. If you make a late payment, SARS will impose a penalty and interest on the full amount due,” she said.
She further explained that employers who decided to make use of the Covid-19 relief would also submit their EMP201 as per normal, but would then request a PAYE statement of account, which would indicate the amount that was payable. “It must be noted that this relief only applies to PAYE and not to UIF or SDL.”
After 7 August, SARS will determine the six equal payments for the total amount that deferred and include it in the monthly statement of account, which employers can request from 15 August.