BEST DEBT RELIEF FOR SMALL BUSINESS | DEBT RELIEF FUND ASSISTANCE TO SMALL BUSINESSES – LABOUR (UIF) – COVID-19
Credit: As taken from The FD Centre
1. AS REGARDS WORKER EXPOSURE IF YOU ARE AN ESSENTIAL SERVICE BUSINESS AND WILL CONTINUE OPERATING
a. Ascertain the category that your workers are in and act accordingly
2. AS REGARDS PAY AND RELATED ISSUES
a. From a pure COVID-19 impact perspective – as things stand normal conditions per the Labour Relations Act still apply
b. Normal sick leave regulations are in force
c. Normal short-time and related regulations are in force
d. There are some NEW UIF regulations regarding reduced working time
- An employee (i.e. contributor) who loses income due to the implementation of a duly arranged company policy which results in reduced working time, is entitled to claim and receive UIF benefits, if that employees’ total income falls below the benefit level that the employee would have ordinarily received if the employee had become unemployed (irrespective of that employee still being employed). It is however subject to that employee having sufficient credits available (i.e. as a result of their UIF contributions whilst being employed).
- The income received by the employee from reduced working time plus the value of UIF benefits calculated, may not exceed the benefits that would have been paid if the employee had become unemployed. Reduced working time benefits must be calculated based on the remuneration of the employee at the time that the reduced working time policy was implemented.
- The new UI-2.1, UI-2.7, UI-6A and UI-19 forms cater for the recording of reduced work time.
- There are also 2 new forms in the case of a worker not being able to attend work if exposed to the virus
- We have the batch of documents that need to be completed for your ease of reference should you require
e. A tax subsidy of up to R500 per month for the next four months for those private sector employees earning below R6,500 under the Employment Tax Incentive is to be implemented. Details are yet to be released.
f. The South African Revenue Service will also work towards accelerating the payment of employment tax incentive reimbursements from twice a year to monthly to get cash into the hands of compliant employers as soon as possible.
g. Tax compliant businesses with a turnover of less than R50 million will be allowed to delay 20% of their pay-as-you-earn 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.
h. The Department of Small Business Development has made over R500 million available immediately to assist small and medium enterprises that are in distress through a simplified application process. The best debt relief for small business comes in the form of relief applicable to all small, micro and medium enterprises (SMMEs), who may apply for relief on existing debts and payments. In order to be eligible, all applicants will be required to show an impact, or potential impact, of the virus on their business. This facility will also assist entities to acquire raw material, pay labour and operational costs. All these interventions will be structured to match the patterns of the SMME’s cash flows, as well as the extent of the impact suffered.
i. This application requires basic information such as your company’s registration and income tax numbers, details of shareholding and employee numbers. It is clear that certain sectors, those aligned to essential services in light of the virus crisis, will be prioritised. See below the current table that specifies what constitutes a medium, small or micro business by sector.
It would appear that the following criteria are applicable for this funding:
- Company must be 100% owned by South African citizens
- Employees must be 70% South African
- Priority will be given to companies owned by Women, Youth and Persons with disabilities
- Be registered and compliant with SARS
- Be UIF compliant
3. OTHER CONSIDERATIONS
a. We also recommend you look at your insurance cover and see if there is cover for loss of profits; and if so what triggers this – if you need help in this area please speak with your MMS consultant.
*PLEASE SEE TABLE
TABLE REFLECTING MEDIUM; SMALL AND MICRO BUSINESSES BY SECTOR – ITS IS EXPECTED THAT THESE WILL QUALIFY IF THEY MEET THE CRITERIA FOR COVID RELIEF FUNDING
|Mining and quarrying||Medium||R210 million|
|Electricity, gas, water||Medium||R180 million|
|Retail, motor trade, repair||Medium||R80 million|
|Catering, accommodation, other||Medium||R40 million|
|Transport, storage, communication||Medium||R140 million|
|Finance and business services||Medium||R85 million|
|Community, social, personal services||Medium||R70 million|