Home

Contacts

Vision

Services

Snippets

Budget

Disclaimer

 

 

  

January 2017

INTRODUCTION

A belated welcome to 2017. We hope that this year will be a marked improvement on 2016. It is till to early to judge what impact, if any, the new American administration will have on our economy.

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 August 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

If you are using a spreadsheet that requires the insertion of the date and time for each row, you could use the NOW function which gives the current date and time or the TODAY function that returns the current date. The problem with this is that every time a value changes on the sheet, these functions update. If you want to enter these as constants, press CTRL+; for the date and CRTL+Shift+; for the time.

TAXATION

Allowable Donations

If your motivating factor in making a donation is to obtain a tax deduction, you should ensure that the beneficiary of your generosity is a Public Benefit Organisation (PBO). PBOs are charitable entities that are registered with SARS and not all such entities are. Before making your donation, ask for evidence confirming such registration and, after making the payment, ensure that the receipt bears a PBO number that is specifically described as such. SARS will not allow you a deduction if you cannot produce such a receipt.

Non-Executive Directors

A Non-Executive Director (NED), according to the King III report, is one who:

·         Must provide objective judgment independent of the management of a company;

·         Must not be involved in the management of a company; and

·         Is independent of the management on issues such as, amongst others, strategy, performance, resources, diversity, etc.

SARS Binding General Ruling 40, which deals with the tax consequences of income earned by a NED, interprets to mean that a NED is a director who is not involved in the daily management or operations of a company but simply attends, provide objective judgment and votes at board meetings.

The ruling accepts that a NED is not a common law employee and that no control of supervision is exercised over the manner in which he or she performs his or her duties or the hours that the NED works.

Therefore, income earned in respect of those duties cannot be regarded as remuneration and subjected to PAYE in terms of the Fourth Schedule. Further, whereas an employee’s right to claim expenses against his or her remuneration, a NED is not subjected to this restriction.

The question arises whether or not these earning should attract VAT. As a NED cannot be regarded as an employee, Binding General Ruling 41 deems the NED to be an independent contractor. As such, if directors fees paid to the NED in any12 month period exceed R 1 million, the NED will be required to register for VAT. He or she may also apply for voluntary registration.

A VAT registered NED will be required to comply with all the provisions of the VAT Act that apply to other vendors including the issuing tax invoices for the services. If the company to which those services are rendered is also a VAT vendor, the VAT raised by the NED will be claimable as input tax by the company.

VAT Refund delays

In recent survey of tax practitioners, 40% of those who participated indicated that more than half of their clients reported delays of in excess of 60 days in the refund of VAT claims. Some perceive these delays as being deliberate attempts to delay legitimate refunds.

However, according to SARS statistics, the average turnaround time in the 2016/17 year for VAT refunds was 32.85 working days compared to 33.11  working days in the preceding year. SARS further claims that 60% of refunds were processed in 14 days. Where a legitimate refunds is not paid within 21 business days interest accrues on the outstanding amount.

These statistics exclude cases where the claim was subjected to audit or a verification process. In these cases, interest will only start to accrue 21 working days after the conclusion of the audit or a verification process. As regulations do not specify a conclusion timeframe for these processes, it is essential that the vendor requests regular updates and promptly meet all requests for supporting information.

BUSINESS

Sectional Titles

An amendment to the sectional title legislation states that auditing of body corporate can only be carried out by members of the auditing professions. Particularly in the case of the smaller developments, this will have a significant impact on administration costs and hence levies charged to unit holders.

Previously, smaller units were allowed to engage an accounting officer to perform this function and, as a result, incurred lower costs.

Effected readers are encouraged to raise this issue with their local MP and insist upon a reversal of this amendment.

Choosing a business name

Many business names do not help to promote growth of the operation. Here are some tips put forward by the National Small Business Chamber.

1.        Make a list of words that describe what your business does and what values it ascribes to, e.g. prompt service, care for customers’ needs, the go to a sight such as www.businessnamegenerator.com to obtain a list of names that fit your requirements. Bear in mind that CIPC may well reject your prime choice.

2.        Keep it short and easy to spell and not offensive in any language or culture.

3.        Before settling on a prime choice, test it on family and friends. Consider setting up Facebook pages for each name and see which gets the most likes.

4.        Choose a name that does not limit the future growth potential of the business. For example, John’s Plumbing will be regarded as a plumbing concern only and diversification into other fields will be hampered by that perception.

Starting your own business

The decision to start your own business should not be taken lightly. A lot of planning and forethought should precede the decision. Probably, the most important step is to decide the type of business you wish to start. In making that decision, the first consideration should be whether you have an adequate knowledge of the skills required to be successful.

Thereafter and before making a firm commitment, you should consider the demand in  your proposed area of operations for the product or services that you intend to offer and the extent of competitors’ penetration. You should also consider whether you can offer customers a better product and service than that offered by competitors.

Once these factors favour your decision to start the business and before making any financial commitments, you can then proceed to draft your business plan and budget. This process should make you give further serious thought to every aspect of the operation and should be conducted objectively with a completely open minded view of the possible success or failure of the business.

 

ECONOMY

Although the impact that the Trump Administration has on the world economy is still to be felt to a pronounced degree, the rand has weakened by 34c against the dollar since 20 January 2017, Inauguration Day. At the same time, it has strengthened by 47c against the pound.

When our currency strengthens, sectors that are reliant upon imports are presented with opportunities to expand and to improve their trading results. Conversely, sectors that rely upon exports are going to be adversely effected and competition from countries with stronger currencies. However, businesses that attract overseas visitors will enjoy increased demand.

Therefore, some industries will lose and others will gain. The impact on the overall economy will depend upon how big a share of the domestic economy the impacted sectors have. This statement is true regardless of who is in power in the countries that are in our list of major trading partners.

Thus, whether the Republic, Democrats, Conservatives or Labour rule, the success of our economy depends upon our local entrepreneurs and business management and in their ability to capitalize on the opportunities presented by prevailing market conditions.

TAILPIECE 

“When you can't make them see the light, make them feel the heat.” – Ronald Reagan