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Parliament Passes Disaster Management Tax Relief Bills

September 22, 2020

Parliament

Parliament has passed the Disaster Management Tax Relief Bill and the Disaster Management Tax Relief Administration Bill and sent them to president Ramaphosa for assent.

The national assembly passed the bills and sent them to the national council of provinces for concurrence at the end of August 2020.

The bills were tabled in June 2020 as part of the 2020 Supplementary Budget.

The Disaster Management Tax Relief Bill seeks to:


• amend the Employment Tax Incentive Act, 2013, so as to amend certain provisions to provide for tax relief in respect of the COVID-19 pandemic;
• make new provision for the tax treatment of certain organisations for disaster relief in respect of the COVID-19 pandemic and of donations to such organisations;
• provide for a temporary exemption from liability to pay skills development levies under the Skills Development Levies Act, 1999; and
• provide for matters connected therewith.

The Disaster Management Tax Relief Administration Bill aims to:


• provide for tax measures in order to assist with alleviating cash flow burdens on tax compliant micro and small to medium sized businesses arising as a result of the COVID-19 pandemic and measures taken under the Disaster Management Act, 2002;
• provide for the employees’ tax treatment of donations to the Solidarity Fund;
• provide for a change in the value-added tax category of vendors to effect monthly returns and refunds; and
• provide for matters connected therewith.

The standing committee on finance amended the Disaster Management Tax Relief Bill by extending by two months, the relief provided for in Clauses 7,8 and 9 of the bill.

As regards the Disaster Management Tax Relief Administration Bill, the committee amended clause 2 on COVID tax relief measures so that repayments would now only begin in October 2020 and run through until March 2021.

Speaking to the national assembly during the debate on the bills, the finance minister, Tito Mboweni, declared that the tax measures in the bills were always part of a much broader package announced by president Ramaphosa to combat the impact of COVID-19 and the bills only reflect one portion of that package.

Meanwhile, in Government Gazette 43726, parliament published notice of intention to table the Draft Pension Funds Amendment Bill in parliament.

The private member’s bill, drawn up by Dr Dion George, a Democratic Alliance member of parliament, seeks to allow pension fund members to obtain a loan for other purposes in addition to home loans.

According to the explanatory summary, the draft bill, therefore, seeks to amend the Pension Funds Act in order to “allow for pension fund members to obtain a loan, secured by a guarantee from a registered pension fund, to alleviate financial pressure during the COVID-19 emergency or any other emergency similar to COVID-19”.

“The draft Bill provides for a registered pension fund to offer a guarantee to a pension fund member of a maximum of 75% of their share in the value of the fund. By enabling a member to access a pension-backed loan, that member will be able to leverage their pension fund investment prior to their retirement date, without eroding their provision for eventual retirement. Lending institutions will be enabled to offer loans to pension fund members at competitive interest rates and over extended or deferred payment periods given that the loan is fully guaranteed.”

Comment on the proposed content of the draft bill is invited within 30 days of the date of publication.

In Notice 506, the South African Reserve Bank announced that the registration of Netcare Life Limited has been cancelled with effect from 1 September 2020.

The withdrawal of licence was effected in terms of Section 29(1) of the Insurance Act.

Section 29 outlines the conditions for a withdrawal of licence of an insurer.