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August 2016

INTRODUCTION

Lack of confidence in the management competency of state owned enterprises has lead to the withdrawal of funding by major overseas lenders. What message is this sending to offshore investors?

DEADLINES

Annual Duty – one calendar month to the day after the incorporation date

Promotion of Access to Information Act manual – 31 December 2021 extended yet again!

Special Voluntary Disclosure Programme – 1 October 2016 to 31 March 2017

2016 Tax returns

Submissions by non-provisional taxpayers at a SARS office – 25 November 2016

Efiling by non-provisional taxpayers – 25 November 2016

Provisional taxpayers by Efiling – 31 January 2017

Tax returns

Tax clients should note that unless we receive all the relevant data and documentation at least fourteen days before the applicable submission deadline we cannot be held responsible for any punitive action taken against them by SARS.

Excel Tips

Excel has a feature that automatically assumes what you mean to type based on previously typed text. For example, say you have already typed the words “printing and stationery” and now you wish you to type “printing ink”, Excel will automatically correct your input to read “printing and stationery”. You can undo the auto-correct by pressing Ctrl+Z during the typing process. E.g., as soon as you type “printing”, “printing and stationery” appears. Move the cursor to the end  of the first word and press Ctrl+Z. “and stationery” will disappear and you can type a space and the word “ink”.

TAXATION

In recent years, the government policy regarding retirement funds has focused on ensuring that these funds are preserved for their intended purpose, i.e., to provide funds to finance the members' retirement years and thus avoid the retiree’s dependence on the state.

The Draft Taxation Laws Amendment Bill contains provisions that are designed to continue this process and are designed to prevent certain individuals from withdrawing their retirement annuity funds prematurely. Previously, South Africans who have worked abroad for a number of year were considered to be non-resident without the necessity of formally emigrating. This enabled them to withdraw their retirement funds.

The intention of the Bill is to permit such withdrawal only where the member formally emigrates and only after such emigration is approved by the South African Reserve Bank. This amendment will come into effect retrospectively from March 2016.

Special Voluntary Disclosure Programme

Whilst a draft guide is already available regarding the procedures required to apply for this relief, the extent of the relief and the procedures are none to clear. Clients who feel or are aware that they have contravened either the various tax laws or exchange control regulations with regard to offshore assets are urged to monitor the SARS website for further announcements.

Refunds

Those readers that are relying on their tax refunds to finance special needs had better be a little patient. SARS has had a high incidence of refunds being fraudulently misappropriated. To combat this, SARS has instigated a procedure that effectively stops large refunds. This is happening despite supporting documents being submitted and a letter signifying the end of investigations having been issued. Unfortunately, no notification of the stoppage is sent to the affected taxpayer or his/her practitioner. It is up to the taxpayer/tax practitioner to monitor the situation by regular calls to the call centre. If a client has been affected, the only solution is a personal appearance by the taxpayer at a  SARS office together with a stamped original recent bank statements , proof of address and a valid original identity document. The following original documents must also be presented:

·         IRP5 and IT3(a) certificates

·         Medical aid certificates

·         Retirement annuity certificates

·         Log books

The increased fraud is the apparent result of the purging by the commissioner of investigators, who previously made a major contribution to combating fraud, in an effort to remove possible allies of a former commissioner.

BUSINESS

Financial Intelligence Centre Act (FICA)

Recent amendments and possible future amendments to the FICA are set to make doing business more onerous. This is because monitoring laws internationally have undergone major changes in order to combat organised crime and, in particular, the financing of terrorism.

Huge penalties are in force to discourage persons from failing to report suspect transactions and activities. For that reason, it is essential that a risk analysis process is in place to ensure early detection of possible high risk persons or businesses. At present, this is compulsory for accountable institutions. Among others, attorneys, estates agents and bankers are among those required to have a risk analysis system in place. Motor dealers and dealers in Kruger Rand and jewelers who deal in articles that contain that coin are classified as “reportable institutions”. They, too, are subjected to the reporting provisions. Consideration is being given to widening the net still further.

One of the key aspects of this process is the conducting of a due diligence exercise on all new and perspective clients Accountable institutions are required to maintain due diligence records. Similarly, a periodic review of this process in respect of all clients is necessary. This is particularly true where known infringements of other laws by a client or factors leading to an uneasy feeling about that client occur. Extra care is to be applied to persons listed as “a prominent influential person”. Amongst, these are the State President and persons of similar stature together with their family members and known connected persons. Additionally, businesses should be careful to beware of persons who seek to be anonymous or to maintain a high degree of secrecy in relation to the source of their funds.

The Act imposes many obligations on accountable and reportable institutions. These obligations include the need to retain certain records applicable to the establishment of a business relationship for at least five years. Therefore, it essential that affected persons become thoroughly familiar with the legislation and regulations,

The reporting process is designed to provide anonymity for the reporter. However, given that systems may be prone to failure, it will be wise to be very careful of the veracity of the report and the confidentiality of the submission.

UIF

There are two acts that control this. The one requires a monthly payment of contributions collected from employees and paying this together with an employer’s contribution to SARS against an EMP201.

The other, and, from the employees’ perspective, equally important, is the act that controls the granting of benefits to employees. There has recently been policing of the submission of returns that are required in terms of this Act. The only return to be submitted monthly is the UI19.

This forms is a list of employees, their identity number, date of employment and discharge and present earnings. Previously, the form needed to be submitted upon a change to any of this data taking place, However, this is now required on a monthly basis. Employers are invited to contact us should they require assistance in this regard.

The Prevention and Combating of Corrupt Activities Act

In terms of this Act, a corrupt activity (CA) must be reported to the police official in the Directorate for Priority Crime. A CA is defined as the offence of theft, fraud, extortion, forging a document and using it for fraudulent purposes, involving an amount in excess of R 100 000. Among others the persons charged with reporting a CA are:

·          A manager, secretary or director of a company

·          A member of a Close Corporation

·          Executive manager of any bank or other financial institution

·          Any other person responsible for the overall management and control of any entity

·          Any partner in a partnership.

ECONOMY

Not all doom and gloom for SA economy. According to SA Statistics, the economy grew by 3.35 in the second quarter of 2016. This represented an expansion of .5% over the predicted  estimate and a marked improvement over the first quarter when the economy contracted by 1.2%. The manufacturing sector, at 8.15%, showed the best growth of all sectors and made a significant contribution to the overall figures.

Commenting on the revised growth figures, the Reserve Bank governor stated that he anticipated slow growth. In the meantime, two credit rating agencies warned that further cuts in the country's rating were likely to be influenced by policy uncertainty and political instability. Students need to be aware of the implications of this and that their militant actions are eroding the educational capability of some of the country's finest tertiary institutions. The country’s ability to generate the income necessary to provide, at any price, the education they demand is also prejudiced as is the funding of every other welfare activity that they expect the government is to provide.

TAILPIECE

“The problem with socialism is that you eventually run out of other people's money.  - Margaret Thatcher