Newsletter 26 May 2020 - LEAD Financial Strategists

Reflection

Lockdown day 61:

Firstly, I want to apologize to you, our client that we did not email you a newsletter last week. We as a family were moving home (yes you are reading correctly), moving home in this crazy season. Moving home is rated as one of the top three stressful events in a person’s life, like we needed that in this season?

What is the new normal, is there a new normal? A lot has changed in the weeks since President Cyril Ramaphosa announced a nationwide lockdown. The old way of doing things has in many cases been permanently disrupted, while new business cases and opportunities have appeared.

This season did provide time, time to reflect and in the words of one of my friends: “it is time to uproot and destroy that which is not good, which does not provide fruit in our businesses and personal lives, it is time to plant and implement new ideas”.

In a bid to help you make sense of this changing world, we keep you informed about the latest developments that might have an effect on your business.

VAT Relief – The import of essential goods under Covid-19

At the end of March, SARS announced that imported goods that it defined as “Essential Goods” will be VAT-exempt. This exception is specific to the Covid-19 pandemic.

SARS, however, noted that the VAT-exemption status will only apply on goods which are collected or received by companies themselves at the country’s ports (direct imports), and not on imported goods that first go through warehouses or other third parties before it’s delivered to companies (indirect imports).

The local supply of essential goods or critical supplies will attract VAT at standard rate of 15%.

UIF TERS

The UIF sent out letters to claimants around the payment of April 2020 TERS payments. These letters state and clarify the following:
a) UIF TERS benefit payments and what an employer has paid to an employee, may not exceed the basic salary that an employee would have earned in a typical month if they had worked normal hours.
b) The UIF is currently evaluating all the transactions that have been paid out as part of the April TERS benefits to ensure that these transactions were correct and accurate. In the letter, the UIF said employers should inform them of the accuracy of April TERS payments by selecting one of the three options provided in the letter, and sending the response to an email address provided.

The three options are:
1. The monies received from the TERS fund was correct, with no overpayments to employees.
2. The monies received from the TERS fund was in excess of what should have been received, however, the overpayment (or partial overpayment) has already been refunded or will be refunded.
3. The monies received from the TERS fund was in excess of what should have been received, and no refund has been paid to the UIF. The overpayment will be recalculated by the UIF and a debt raised against the employee that will reduce the May 2020 benefit payment.

The UIF warned that if employers do not submit a response to the letter within good timing, May 2020 claims may be affected.

Employers who indicated on their April 2020 submission that employees will not be paid during the lockdown period would not have received such a letter. This is because there cannot be any difference between what the UIF calculated and what was actually paid to employees.

Employers are reminded that the TERS benefit payments cannot be used as a cash flow injection for a business’ operational expenses as it is in direct contravention of the agreement between you, as the employer, and the UIF. The UIF has previously stated that they will take legal action against any employer who contravenes this agreement.

OHS Covid-10 Pandemic
Our people safety is priority number one.

We have implemented all necessary protocols to comply with the Occupational Health and Saftey (OHS) and are able to serve you with limited staff at our office. The majority of our team will continue to work remotely.

As many businessses return to work under lockdown level 3, it is important for businesses to ensure that they comply with the necessary OHS and legal requirements before returning to the workplace.

Final thought

Our people are probably our biggest casualty during this time, and they are the ones who are going to get us through this. They will remain our biggest asset.

Take care of yourself, your team, your clients and your community. Seek the opportunities that will undoubtedly arise and monitor your finances closely. You have our full support.

Together, we’ll do this!