On Tuesday the 25th of August 2020 the Parliament of the Republic of South Africa issued a press release stating that the National Assembly had, during its hybrid plenary, passed the Disaster Management Tax Relief Bill and the Disaster Management Tax Relief Administration Bill. Both bills were introduced to the National Assembly by the Minister of Finance, Tito Mboweni, on the 24th of June 2020 together with the Special Adjustment Budget.

Before passing the Bills, the National Assembly first had to adopt a resolution to suspend Rule 290(2)(a), which provides that the debate on the Second Reading of the Bill may not commence before at least three Assembly working days have elapsed since the committee’s report was tabled.

Both bills contained proposed amendments aimed at introducing tax relief measures to alleviate the constraints directly caused by the Covid-19 pandemic. The bills provided, inter alia, the following provisions:

• The Employment Tax Incentive Act No. 26 of 2013 being amended so as to provide for tax relief in respect of the COVID-19 pandemic. The increase of the additional employment tax incentive amount of up to R750 per month was proposed for each employee that earns less than R6 500 per month. The bills proposed, in addition to the increase of the additional employment tax incentive amount, to remove the provisions relating to the age requirement and the criteria for how long the individual had to been employed.
• The introduction of section 7 of the Disaster Management Tax Relief Bill which provided for the tax treatment of certain organisations. Section 7 provides that any COVID-19 disaster relief organisation may apply for approval as a public benefit organization, as defined in section 30(1) of the Income Tax Act 58 of 1962 (“Income Tax Act”), to the extent that they carry on COVID-19 disaster relief activities.
• The introduction of section 8 of the Disaster Management Tax Relief Bill which provides for donations to such COVID-19 disaster relief organization. The deduction available to taxpayers who donate to qualifying institutions in terms of section 18A of the Income Tax Act was increased from the normal 10% deduction by an extra 10%, which additional 10% applies to the extent that the donations are made to the Solidarity Fund.
• To provide any employer defined in section 1 of the Skills Development Levies Act No. 9 of 1999 with temporary exemption of liability to pay skills development levies and to provide for matters connected therewith.

Once the Disaster Management Tax Relief Bill and Disaster Management Tax Relief Administration Bill have been passed by Parliament, signed by the President and promulgated in the Government Gazette, the various provisions will start to apply retroactively, starting from 1 April 2020 to 1 August 2020.

Published: 07 September 2020