• Special tax treatment for funds established to assist with COVID-19 relief measures will be similar to the current special tax dispensation applicable to Public Benefit Organisations.

• COVID-19 Disaster Relief Funds will on application and approval by the Commissioner for SARS be deemed to be PBOs and be subject to PBO prescriptions in the Income Tax Act

Approval as a PBO will apply from 1 April 2020 to 31 July 2020. During the four-month period the following tax exemptions will apply:

• Receipts and accruals of COVID-19 Disaster Relief Funds will be exempt from income tax

• Donations made to or by the COVID-19 Disaster Relief Funds will be exempt from donations tax.

Refer to Section 4 in the attached

• Where a loan is made by the COVID-19 Disaster Relief Fund to an SMME and the amount of the loan is not paid directly to the SMME, but payment is made as weekly allowances directly to the employees to ensure that jobs are retained, the loan obligation still remains with the SMME.
• Since it will be difficult for the SMME to withhold PAYE in respect of payments paid directly by the COVID-19 Disaster Relief Fund to the employees, the SMME will not be required to withhold PAYE. Such payments will however be treated as income in the hands of the employees and will be subject to tax.
• The proposed exclusion from PAYE withholding will only apply for the limited four month period.

• At the end of the four month period the COVID-19 Disaster Relief Trusts will cease to apply the provisions set out in the Disaster Management Tax Relief Bill.
• At the end of the four month period the COVID-19 Disaster Relief Trusts that have not dissolved and the assets thereof are not distributed on or before 31 July 2020, will be classified as Small Business Funding Entities (as contemplated in section 30C of the Act).