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May 2016

INTRODUCTION

It is unbelievable that the ANC has only received one complaint about the Guptas’ involvement in state matters. The statement by the Secretary-General to that effect makes one query to what depth that family’s influence goes. Whilst there has been no down-grading of the country’s credit rating, for now, this and reports of al Qaeda training camps in SA does not auger well for future rating reviews.

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

Manual and postal submissions – 23 September 2016

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

Efiling by non-provisional taxpayers – 25 November 2016

Efiling by Provisional taxpayers – 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

If you have a spreadsheet that is intended to calculate the number of hours worked you may experience difficulties in obtaining an accurate answer. For example, say, B1 is the start time, C1 is the end time and D1 is hours worked. Entering the start time of 8 am and an end time of 4.30 pm, logically, should give hours worked as 8.5. However, the formula C1-B1 in D1 will give the answer as 8:30 am. This is because Excel stores time as fractions of a day. To get the answer in hours, the formula should be =(C1-B1)*24.

TAXATION

Scams

SARS has issued a warning of scams that appear to be targeting small business concerns. It has become apparent that approaches are being made whereby criminals are requesting payment of outstanding taxes and penalties. Given that SARS are actually using third party collection agencies and are doing so in contravention of the Tax Administration Act, the warning to beware of telephonic or email requests for payment is doubly pertinent. Clients are reminded that resolution of such matters can only be by attendance at a SARS branch office. In addition, payments may only be made into SARS bank accounts. Under no circumstances must cash payments be made to anyone representing himself to be a SARS collection agent or official. Any such individual and any suspicious activities should immediately be reported to the SARS Anti-corruption and Fraud Hotline on the 0800 00 2870 toll-free number.

Request for further information

It must be borne in mind that, in terms of the Tax Administration Act, SARS has not only the right to request any information that supports a return that is submitted in terms of any tax act it also has the right to define the form that such information takes. This is particularly pertinent in respect of log books. In that regard, the taxpayer is told precisely what information must be contained in the document. The SARS website goes as far as to provide a specimen of a log book. Any logbook that is submitted should comply with that content. Failure to do so could result in prolonging the resolution of the enquiry.

Filing Season 2016

The 2016 tax returns will be available on Efiling on 1 July 2016. In a SARS notice that appears on www.sars.gov.za the following is listed as the documentation that is required to enable the completion of the return:

·          IRP5/IT3(a) certificate(s) from your employer or pension fund.

·          IT3(b) certificate for investment returns. By now most finance houses should have issued these.

·          Financial statements in respect of business income. Separate disclosure of rental income and related expenditure is required. Kindly refer to our April 2016 issue.

·          Medical Aid contribution certificates and receipts

·          Certificates in respect of local interest income earned. This appears to be a repeat of the IT3(b) item above. What is omitted is an IT3(c) in respect of any capital gain. This usually applies to the sale of shares either via your stockbroker or unit trust fund.

·          Retirement annuity fund certificates relating to premiums paid.

·          Logbooks and other documents in support of business travel expenses

·          Completed confirmation of diagnosis of disability form (ITR-DD), if applicable

·          Any other relevant income and deduction information

·          Bank account details

Italics above have been added by us.

Once we have completed your return but prior to lodging it with SARS, we will send a copy thereof to you. The purpose of that is to enable you to verify all information thereon. Of prime importance is the verification of the personal information. Further, the information on any tax certificate should be checked very carefully as any inaccuracies will have to be rectified by your employer before the return is submitted.

BUSINESS

Competition Amendment Act

In terms of a Presidential Proclamation, the sections of this act that relate to criminal sanctions came into effect on 1 May 2016. These sections make it a criminal offence to collude with competitors to fix prices, to divide markets between them and to collude in the awarding of tenders.

Anyone taking part in such an illegal act may face heavy jail sentences. These measures extend to persons having knowledge of these activities and who fail to prevent them.

The objective of these measures is to prevent activities that inhibit economic growth. Cartel type activities are considered to:

·          Reduce production activities and thereby result in job losses

·          Increase prices to consumers and thus impact upon the inflation rate

·          Limit the choice of goods or services available to the consumer

·          Reduce improved efficiencies and innovation

Social Media

Of late, the use or misuse of social media has resulted in a number of prominent court cases. The consequences of such abuse can impact not only on the perpetrator but also on the perpetrator’s employer.

A recent court case resulted in a ruling that a written contract can be amended by a data message. Thus the use of What’s App for business communications may result in an unintended variation of a contract.

In addition, defamatory statements by an employee on Facebook or similar media could lead to the employer being held jointly liable for damages.

For that reason, it is vital that businesses have a clearly written policy regarding the use of its electronic assets and all employees should be made aware of the penalties for disobeying its provisions.

ECONOMY

The announcement that the country's sovereign credit rating is not to be down-graded is certainly good news. This allows the country a period of approximately six months to improve its economic performance and to reduce any negative impact on the gradings.

Such negativity can be reduced by avoiding such racially based utterings as those of Julius Malema and the ANC announcement that the investigation into the Gupta state capture is to be curtailed and there is unlikely to be any funds allocated to further investigation into the matter by Thuli Madonsela. There appears to be a deliberate intent to sweep any condemnation of corruption on the part of senior politicians under the carpet.

Whilst economic performance is a major criterion when considering the credit rating, the country's political stability is an important factor that influences its desirability as an investment destination which, in turn, impacts upon economic performance.

Given the current level of state finances, it is difficult to understand just how the EFF is going to deliver on the promises of its election manifesto and lack of delivery is likely to further civil unrest and a consequent negative contribution to factors that impact upon the country's credit rating.

The general population must be made aware that incidents such as the recent riots and destruction at various educational institutions has a profound effect upon their own well-being as it deprives the government of the financial ability to embark on  and enhance its social upliftment  program. It is highly regrettable that students, among them the cream of the country's future intelligencia, do not have the foresight to see the consequences of their involvement in this destruction.

Add to the above mix, the intent by the SABC to introduce a form of censorship then one is left with an uneasy feeling of a Mugabe styled dictatorship in the making and that cannot auger well for any credit rating review.

TAILPIECE 

“Age is an issue of mind over matter. If you don’t mind, it doesn’t matter.” Mark Twain