In the blog today we have a clarification on TERS payouts and additional payments by employers. Additionally, we will provide information on possible changes to annuity funds for individuals who are currently drawing down from a living annuity, an expansion to the 35% PAYE deferment as well as other relevant news.
TERS Payouts and Additional Payments by Employers
Update 8 May: If looking for guidance on the calculations relating to the TERS payout and effect of additional employer contributions, please kindly disregard the SAICA guidance below and refer to our latest blog post here.
Update 7 May: The Department for Employment and Labour has not yet started accepting TERS applications for the month of May. They have requested that applicants continue to revisit the website until applications for May become live.
We have received a few queries from employers asking if they may make additional payments to employees after receiving their TERS benefit payouts. Based on our understanding of the scheme as well as other reputable sources, it seems that, not only is this not allowed, but could in fact amount to fraud.
When submitting the TERS application, employers are expected to complete the Leave income during shutdown field with the amount anticipated to be paid to each employee by the company, over and above the TERS payout. The reason for this is that it is taken into consideration in calculating the payout per employee – employers who are able to pay their employees a portion of usual income should do so and will then likely get lower payouts than those employers with zero cash flow.
Failing to accurately declare these amounts and / or subsequently paying additional amounts to employees, could result in employers / employees receiving an “overpayment” from TERS, which in turn amounts to fraud. This opens employers up to potential penalties and legal action.
The South African Institute for Chartered Accountants (SAICA) has recently released a very helpful publication which provides additional information and clarity on the above. The information it contains aligns with information received from the UIF and other stakeholders and we strongly recommend that if you are participating in TERS that you read it to ensure that you are applying the scheme correctly.
35% PAYE Deferment Update
The number of businesses which can defer the payment of 35% of their PAYE liability without any penalties or interest has increased. The annual turnover threshold has been increased from R50 million to R100 million, increasing the number of businesses that can benefit from this short term cash flow relief.
Businesses with a turnover in excess of R100 million can also apply for this relief, which applications will be dealt with on a case by case basis. The business must prove that it was materially negatively affected by the lockdown, which appears a very ambiguous statement. We are hoping for additional clarity in the coming days.
More information on this can be found on our second lockdown recap blog here.
Delay in Tourism Relief Fund Payouts
The Department for Tourism has delayed the release of funding it has allocated to companies based in the tourism sector, due to a legal challenge. It is awaiting the verdict to be handed down upon whether it is deemed racially discriminatory, that applicants to the fund must be BEE compliant to qualify.
The final verdict shall be released in the next few days, after which it will become apparent whether the allocation of funds can remain, or whether they need to be re-examined.
In the SARS draft explanatory note for the approaching amended bill, a new proposal has been made with regards to helping individuals receiving monies from living annuity funds. This is not directly relevant to payroll, but may assist you during the lockdown period.
There have been changes proposed to the amount of an individual’s annuity fund which can be withdrawn, resulting in added flexibility. Rather than having to wait for the anniversary date of the annuity, it is proposed that for the 4 months between May and August the amounts withdrawn can be altered. This can benefit individuals in two ways:
- The heightened band (17.5-20%), increases the amount of money that can be withdrawn, meaning that individuals who need immediate cash flow can gain access to it, by increasing their periodic withdrawal.
- The lower band (0.5-2.5%), allows individuals to delay the sale of investments in shares which have underperformed, till a more opportune time.
We hope that this information proves useful to you. If you have any queries on how the above relates to payroll and the SimplePay system, please feel free to get in touch with our customer support team at [email protected]epay.co.za.
Keep well. Stay home. Stay safe.