All the financial help available to South Africans during the corona crisis
There is now a range of measures – from government, banks, and insurers – available to South African businesses and individuals amid a crippling corona-induced economic crisis.
From loans to tax breaks, most interventions are aimed at getting small businesses in particular through the next couple of months. More measures are expected to help individuals, the self-employed and the informal sector.
On Thursday, when he announced a two-week extension to the national lockdown, president Cyril Ramaphosa also promised that a new package of urgent economic measures is coming – as well as more support to protect poor and vulnerable households.
For now, here’s where you can find help, and money, to get through the coronavirus disaster.
For all businesses
Companies can claim back up to R1,500 a month per employee who earns less than R6,500 (for those younger than 30), and R500 for those 30 and older. These amounts will be paid back every month by SARS as part of the Employment Tax Incentive (ETI) programme. Read more.
As part of the special Temporary Employee/Employer Relief Scheme (TERS), administered by the Unemployment Insurance Fund (UIF), money will be paid out to workers in distressed companies. The amounts paid will be a percentage of an employee’s salary, according to a legislated sliding scale from 38% (for the highest earners) to 60% (for the lowest earners). The maximum benefit is R6,730 a month. Companies struggling to pay salaries due to the coronavirus crisis need to report this per email to Covid19ters@labour.gov.za.
The first of the new coronavirus benefits will be paid in the next few days.
Struggling with rent?
While new regulations pave the way for large property landlords and retailers to work together to come up with rent relief schemes, there is not yet any official announcement on rental holidays. But The Foschini Group has already announced that it won’t be paying rent during the lockdown. For now, individual tenants are advised to contact their landlords to agree on new terms.
For small and medium-sized businesses
There are two main government schemes aimed at small businesses. The Debt Relief Finance Scheme will assist distressed small companies with funding. Then there is the Business Growth/Resilience Facility aimed at small companies which can take advantage of supply opportunities resulting from the coronavirus pandemic or a shortage of goods in the local market. For both of these, companies first need to register at https://smmesa.gov.za/. Further details to apply for both schemes will be released on Thursday. (Money will be paid out within seven business days after an application has been approved, the department of small business development promised.)
Instead of paying 50% of their expected tax bill six months into the tax year, and then settling the full amount at the end of the tax year, companies are now allowed to pay only 15% after six months, and another 50% by the end of the tax year. Then, by 30 September 2021 (or six months after the end of its financial year), the company needs to pay the outstanding balance. (This option is only for companies with an annual turnover of less than R50 million.) Read more.
Businesses with an annual turnover of less that R50 million can also keep back 20% of the pay-as-you-earn (PAYE) payments they were supposed to hand over to the SA Revenue Service (SARS) for the next four months. But they will have to pay back this amount in equal instalments, with the first payment expected on 7 September 2020. Read more.
Help for different sectors:
Financially distressed small-scale farmers who have an annual turnover of between R20,000 and R1 million can apply for R1.2 billion in government funding. Applications will lose on Wednesday 22 April.
The Department of Tourism will pay once-off grants of R50,000 to approved small and medium enterprises. Applications will be evaluated by a panel of experts – and black empowered companies will get preference.
The Industrial Development Corporation (IDC) has allocated billions in emergency funding to help manufacturers with working capital, as well as for companies in agriculture, tourism, energy, and vehicle components manufacturing.
The National Film and Video Foundation (NFVF) has invited the industry to submit funding applications for script development, animation, and post-production projects. The call for these applications was supposed to have opened in August, but this has been hastened “to keep the industry busy during this downtime”. The NFVF will also provide a once-off cash injection of R500,000 to the ten companies currently commissioned by the organisation.
The South African Music Performance Rights Association (SAMPRA) has brought forward the distribution of royalties scheduled for August 2020 to April 2020.
SA Taxi, which finances more than 32,000 minibus taxis, has announced a repayment holiday of a month (from April 1) for its clients.
The insurance company has allocated money (part of R102 million in total) to some of its service providers, such as panel beaters and plumbers. Companies need to have a turnover of less than R50 million per year, and the rand value of work allocated by OUTsurance must drop by more than 50% during the period April to June 2020. Other requirements also apply.
Government’s new support scheme for spaza shops will give them funding to buy stock and assure bulk-buying discounts at approved wholesalers. But the spaza shops need to be registered with the SARS, the Unemployment Insurance Fund, and the Companies and Intellectual Property Commission (CIPC). Read more.
For the self-employed
Instead of paying 50% of their expected tax bill after six months into the tax year, and settling the full amount at the end of the tax year, provisional taxpayers only have to pay 15% after six months, and another 50% by the end of the tax year. Then, by 30 September 2021, they need to pay the balance. While it hasn’t finalised which individuals would be eligible, Treasury says that it will probably be those who have a turnover of less than R5 million and don’t earn more than 10% of their turnover from interest, dividends, foreign dividends, rentals from letting fixed property and pay received from an employer.
An important ally in this time could be the credit insurance on your debt. By law, everyone in South Africa must have credit insurance on loans, home loans and credit cards. This means your outstanding debts will be settled if you die or are permanently disabled.
Since 2017, the law changed: since then your instalments will also be covered for up to 12 months if you become unemployed or unable to earn an income, not necessarily due to illness. Even if you aren’t fired, but put on unpaid leave, you should be covered. The banks have confirmed that if you lose your salary due to the lockdown, your instalments may be covered during this time.
Find out from your bank if you qualify.
South Africa’s big banks have also announced individual measures to assist clients, with some offering three-month payment holidays on home loans, vehicle finance, personal loans, and credit cards.
Momentum short-insurance clients: Clients can get cash back (to a total amount of R26 million) early from their no-claims and safety bonuses.
MiWay clients: Clients will automatically get an average 10% reduction in their car insurance premiums during the month of April.
OUTsurance clients: For clients who miss a premium and are within six months of their OUTbonus payment, the bonus will be available for use in lieu of the premiums. Clients can also contact the insure to temporarily reduce their cover, without impacting the terms of their cover. For an example, a customer who has a comprehensively insured vehicle, which is not financed, may want to temporarily reduce cover to third party fire and theft. Although natural perils (flood, fire, hail etc) is not generally covered under third party fire and theft during this period OUTsurance will include this cover. Excess payments for those clients who do have a claim between April and June 2020 will also be reduced.
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