Covid-19 Government Plays its part

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It seems that the franchisor sector will be hard hit during the 21 day lockdown with most sectors falling outside the designated essential services. However, help is at hand and FASA has been liaising with the Department of Small Business Development, SEDA and sefa on getting information regarding the COVID-19 SMME Emergency funding package document dated 23 March 2020 as well as the UIF Easy-Aid Guide for Employers . Information is given regarding emergency funding that small business can apply for and the National Disaster Benefit for employees where employers can apply for financial benefits from the UIF.  Click here

According to Akhona Qengqe, FASA’s Chairperson, “whilst the shutdown measures seem drastic, they are also very necessary to contain the spread of the virus and to flatten the curve of new infections. It is unfortunate that most of the franchise businesses in South Africa fall within the SMME category and as a result they stand to feel the most impact from the standstill in economic activity. This category is also responsible for job creation in a country that grapples with high unemployment.”

Some of the bold and positive moves by the government through its various departments and agencies include the Department of Small Business Development as well as SEFA with the establishment of the SMME fund. “Whilst we understand that this fund and others similar to it have to have certain criteria for businesses to be able to access them, it is our hope that the criteria is not too stringent as to exclude the very businesses that should benefit.”

“The speed with which business and individuals have responded to the call to partner up with government in the Solidarity fund has also been an encouraging move and we trust that the governance structures will truly ensure this fund accomplishes what it has set out. There is no running away from the economic impact this will have on the most vulnerable of our society and big business alike, however we can all do our bit to minimize this impact,” concludes Qengqe.
The President announced a number of interventions available and under development to provide relief. They include:

National Disaster Benefit Fund

R 30 Billion has been allocated to a special National Disaster Benefit Fund, which will pay Unemployment Insurance Fund benefits for up to three months to qualifying workers whose income has been impacted by the corona virus pandemic. This fund will address the corona virus related to job losses, support job retention, illness payouts and reduced time claims.

Informal Sector Support

A safety net is being developed to support persons in the informal sector.

SASSA

The South African Social Security Agency (SASSA) grants for pensioners and people with disabilities to be paid early.

Temporary Employee Relief Scheme

A special dispensation for companies that are in distress, through this employees will receive wage payment through the Temporary Employee Relief Scheme, which will enable companies to pay employees directly during this period and avoid retrenchment.

Banking Sector

The Department of Trade and Industry has passed new regulations in the banking sector. The exemptions will allow banks to work together which will help small businesses, consumers and firms in distress.

Tax Subsidy

A new tax subsidy of up to R500 per month for the next four months for employees earning below R6 500 per month has been introduced.

Employment Tax Incentive

SARS to accelerate employment tax incentive reimbursement from twice per year to monthly.

PAYE & Provisional Corporate Income Tax

Tax compliant businesses with a turnover of less than R50 million will be allowed to delay 20% of their PAYE 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.

Compensation Fund

Employees who fall ill through exposure at their workplace will be paid through the Compensation Fund.

SMME SA

The Department of Small Business Development made R500 million available to distressed SMEs. Registration is now open for small and medium-sized businesses that require help during the corona virus crisis.

IDC

The Industrial Development Corporation, together with the Department of Trade, Industry and Competition has committed R3 Billion to a range of funding products in support of business to address vulnerable firms and for companies critical to fight the virus and its economic impact.

Tourism Relief Funding

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

Solidarity Response Fund

This was set up to help deal with the fallout of the corona virus and measure to slow its spread. Individuals and businesses can contribute to this fund. Johann Rupert and Nicky Oppenheimer have donated R1 billion each into this newly established Solidarity Fund.

Possible Temporary Reductions

Possible temporary reductions of employer and employee contributions to the Unemployment Insurance Fund and possible temporary reduction of employer contributions to the Skills Development Fund are being considered.

For assistance in accessing any of these schemes, contact Maria Vannucci (maria@marican.co.za) at Marican Incorporated, professional accountants and tax practitioners.

Exemption for the Retail Property Sector 2020

Government published a gazette to enable tenants who are competitors to meet and to reach agreements with shopping mall owners in addressing matters such as payment holidays or rental discounts as well as limitations on evictions.

FASA Franchise Association South Africa
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