Finovate COVID-19 Response
Dear clients and friends,
The national lockdown marks a major event in South African history. It is hoped that the measures suggested by President Ramaphosa will limit the spread of COVID-19 so South Africa can fully restart its economic engine, as is now being attempted in East Asia.
Despite their necessity, these measures will undoubtedly place considerable pressure on businesses and activities, and are already creating uncertainty and anxiety. Twenty-one days of economic inactivity will have a severe impact on the economy.
The President announced a number of interventions with the aim to assist the business community during this time.
We appreciate that you have questions that require clarity.
Please be mindful that details and practical implications pertaining to many of the interventions listed below have not been finalised by the various Government Departments and there are also false reports in the media / social media to be cognisant of.
We are committed to staying abreast of developments in these interventions as the relevant Government Departments provide them to support you as a business owner where possible and within our means.
Below is a brief summary of the current interventions available and under development to provide relief.
- National Disaster Benefit Fund: R30 Billion has been allocated to a special National Disaster Benefit Fund, which will pay Unemployment Insurance Fund benefits for up to three months to qualifying workers whose income has been impacted by the COVID-19 pandemic. This fund seeks to address the COVID-19 related job losses, support job retention, illness payouts and reduced time claims. Please see attached guide for further information here: Easy Aid Guide For Employers – UIF (Coronavirus). Also see link to website that may contain useful information: https://businessunite.kartra.com/page/uif_assistance
Please note that we have received information that the Department of Labour will not be processing any claims from 24 March 2020 until early April 2020.
- Temporary Employee Relief Scheme: A special dispensation for companies that are in distress, through this employees will receive wage payment through the Temporary Employee Relief Scheme, which will enable companies to pay employees directly during this period and avoid retrenchment. Please see attached guide for more details: Temporary Employer or Employee Relief Scheme – Easy Aid
- Banking sector: The Department of Trade and Industry has passed new regulations in the banking sector. The regulations will allow banks to work together, which will help small businesses, consumers and firms in distress. Certain exemptions will enable banks to facilitate payment holidays and debt relief for businesses/citizens who are subject to financial stress. The various banks will make announcements on this in due course.
- SMME SA: The Department of Small Business Development made R500 million available to distressed SMEs. To be eligible for assistance, businesses must demonstrate the direct link of the impact or potential impact that COVID-19 will have on their business operations. Some of the requirements may be as follows: Annual turnover / Shareholding / Number of Employees / Employee Demographic / Sub-sectors. The website to visit for more information is as follows: http://www.smmesa.gov.za/
- Tax subsidy: A new tax subsidy of up to R500 per month for the next four months for employees earning below R6 500 per month. Currently, it seems that this will be allowed over the next four months facilitated under the Employment Tax Incentive (ETI) Scheme.
- Employment tax incentive (ETI): SARS to accelerate ETI reimbursement from twice per year to monthly.
- PAYE & Provisional corporate income tax: Tax compliant businesses with a turnover of less than R50 million will be allowed to delay 20% of their PAYE liabilities over the next four months and a portion of their provisional corporate income tax payments without penalties or interest over the next six months.
- Tourism Relief Funding: The Department of Tourism has made an additional R200 million available to assist SMEs in the tourism and hospitality sector who are under particular stress due to the new travel restrictions. Please visit the following website for more details: https://www.tourism.gov.za/AboutNDT/Ministry/News/Pages/COVID-19_interventions_for_the_tourism_sector.aspx
- Solidarity Response Fund: This was set up to help deal with the fallout of the coronavirus and measures to slow its spread. Individuals and businesses can contribute to this fund. Johann Rupert and Nicky Oppenheimer have donated R1 Billion each into this newly established Solidarity Fund.
- IDC: The Industrial Development Corporation, together with the Department of Trade, Industry and Competition has committed R3 Billion to a range of funding products in support of business to address vulnerable firms and for companies critical to fighting the virus and its economic impact.
- Informal sector support: A safety net is being developed to support persons in the informal sector.
- SASSA: The South African Social Security Agency (SASSA) grants for pensioners and people with disabilities to be paid early.
- Compensation Fund: Employees who fall ill through exposure at their workplace will be paid through the Compensation Fund.
- Possible temporary reductions: Possible temporary reductions of employer and employee contributions to the Unemployment Insurance Fund and possible temporary reduction of employer contributions to the Skill Development Fund.
The relevant Government Departments will release more specific details and practical procedures related to the above-mentioned interventions within the next few days and weeks.
For your convenience, please find two PDF documents available to download below:
Our Commitment To You:
Our priority as Finovate remains to serve and support our clients to the best of our abilities during this period of lockdown.
We also have a duty to protect our team whilst operating as effectively as possible.
Although we are living in unprecedented times, we want to assure you that we are well-equipped to manage the current disruption. We are able to continue serving and supporting you during the lockdown period. You will still be able to reach us via email, telephonically or digital meeting platforms during this time. We do however request your patience as we also adjust to this manner of remote-working over the days and weeks to come.
South Africans are resilient by nature. As a nation we have weathered many storms and have adapted (and even thrived) in spite thereof. We have no doubt that ‘this too shall pass’.
April 1, 2020
The Wealth Room
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