With South Africa under a 21-day national lockdown as a result of COVID-19, or the coronavirus, many small businesses and entrepreneurs will be under extreme financial pressure.

Osidon, the world’s first online digital accountant, remains fully operational during the lockdown period, which started on 27 March 2020 and will continue until 16 April 2020. The importance of accounting firms in South Africa during this lockdown cannot be overstated.

In additional to our routine accounting, tax, payroll and compliance services, Osidon is also assisting entrepreneurs and small businesses claim financial support from government and other sources to assist them in this crisis. The additional support comes at no additional cost to Osidon clients.

We have prepared an overview of the measures put in place by the South African government to mitigate the impact of the virus on the country’s economy.

1.Private support funds

– Solidarity Fund

SA has set up a Solidarity Fund, which South African businesses, organisations and individuals, and members of the international community to combat the spread of the virus. Government is providing seed capital of R150 million and the private sector has already pledged to support this fund with financial contributions in the coming period.

– The Rupert Fund – Business Partners

The Rupert family also donated R1 billion and will use specialist small business lender, Business Partners, which Johann Rupert founded in 1981, as the primary means of assisting small businesses. Applications are not yet open.

– The Oppenheimer Fund – The South African Future Trust

The Oppenheimer family established a new trust, the SA Future Trust (SAFT), to disburse the family’s R1 billion donation with the purpose of extending a financial lifeline to employees of small, medium-sized and micro enterprises.

The money made available by the Oppenheimer family will be paid out directly to employees of small, medium and micro-sized businesses as interest-free loans. Employees themselves will not be liable to pay the money back, but companies will be. The typical loan amount per employee is expected to be around R750/week, for a period of 15 weeks. Currently, the money is available to clients of Absa, First National Bank, Nedbank, and Standard Bank, and limited to businesses which were “financially sustainable” before the coronavirus crisis. Businesses will be able to apply directly with their banks from Friday, April 3.

As more details become available, on how small business can benefit from these funds, it will be communicated to Osidon clients.

 2.Tax breaks for all businesses

– Pay as you earn (PAYE)

Tax compliant businesses with a turnover of R50 million or less will be allowed to delay 20% of their employees’ tax 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. According to government estimates, this intervention is expected to assist 75 000 small and medium enterprises.

– Employee Tax Incentive (ETI)

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.

The South African government estimates this measure will assist over 4 million workers.

– UIF Temporary Employee Relief Scheme

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.

This will enable companies to pay employees directly during this period and avoid retrenchment.

• Delay in the payment of provisional tax

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.

• Unemployment Insurance Fund and Skills Development Levies

A temporary reduction of employer and employee contributions to the Unemployment Insurance Fund and employer contributions to the Skill Development Fund are being considered.

– Compensation Fund

Any employee who falls ill following exposure to Covid-19 at work will be entitled to claim from the Compensation Fund.

3.Government funding

There are two main government schemes aimed at small businesses. The Debt Relief Finance Scheme will assist distressed small companies with funding. There is also 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.

4.Assistance for different sectors

– Industrial Development Corporation and the Department of Trade and Industry

The Industrial Development Corporation has put together a package with the Department of Trade, Industry and Competition that provides more than R3 billion in industrial funding to aid vulnerable firms and to fast-track financing for companies that are critical to Government’s efforts to fight the virus and its economic impact

– The Department of Tourism

The Department of Tourism has also made an additional R200 million available to assist SMEs in the tourism and hospitality sector who are under particular stress.

• Film industry

The National Film and Video Foundation (NFVF) has invited the industry to submit funding applications for script development, animation, and post-production projects. The NFVF will also provide a once-off cash injection of R500 000 to the ten companies currently commissioned by the organisation.

• SA Taxi

SA Taxi, which finances more than 32 000 minibus taxis, has announced a repayment holiday of a month (from April 1) for its clients.

5.Banks

South Africa’s big banks have announced individual measures to assist clients, with some offering three-month payment holidays on home loans, vehicle finance, personal loans, and credit cards.

In addition, the banking system will remain open, the JSE will continue to function, the national payment system will continue to operate and the Reserve Bank and the commercial banks will ensure that bank notes and coins remain available.

– The South African Reserve Bank

The South African Reserve Bank’s interest rate cut of 100 basis points will provide relief to consumers and businesses.

6.Rent relief

While new regulations pave the way for large property landlords and retailers to work together to come up with rent relief schemes, there have been no official announcement as yet. For now, individual tenants are advised to contact their landlords to agree on new terms.

NOTE: It’s in your company’s best interests to have an experienced accountant handle these measures on your business’s behalf to ensure it is claimed and completed correctly and legally.