is reported that the treasury’s procurement office has
discovered 12000 dead people as shareholders in companies that do
business with the state. In addition, some 14000 state employees
are directors of companies that have been awarded state contracts
in breach of regulations.
seems a never-ending story of corruption that is set to undermine
the credibility of good governance; one of the yardstick used when
assessing the country’s credit status.
Duty – one calendar month to the day after the incorporation
of Access to Information Act manual – 31
December 2021 extended
Voluntary Disclosure Programme
– 1 October 2016 to 31 August 2017
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. Clients should
start accumulating their tax paperwork now in order to facilitate
early submission once the latest returns are released.
the changes to trust tax returns is one that requires the
Statement of Assets and Liabilities to differentiate between
Interest Bearing and Interest Free loans. Whilst this may appear
to be a minor change, the intent appears to be to give SARS
ammunition to impose donations tax on free loans. At the current
official interest rate of 8%, the donations tax payable may be
calculated by the following formula:
value x 8%)-100 000)x20%. The R 100 000 is the amount of the
annual exemption from donations tax.
submission of trust tax returns is no longer acceptable.
office of the Tax Ombud was established to provide an avenue
whereby taxpayers, that are aggrieved by the actions of
SARS in relation to their affairs, to address their
frustrations. It is not the avenue through which points of law can
be attacked. Rather, the intent is for the ombud to investigate
claims of administrative errors on the part of SARS that cannot be
addressed through the dispute resolution process.
in keeping with his terms of reference, the Ombud’s office is
currently investigating claims of alleged withholding of tax
refunds by SARS.
written contracts include clauses that regulate how a contract may
be terminated other than upon the strict fulfillment by the
parties of their obligations set out therein. These clauses
determine an aggrieved party’s remedies where the other party
breached the terms thereof.
aggrieved party may either demand that the other party comply with
the terms of the contract or cancel the contract. Additionally,
where damages are incurred, an action may be brought to recover
a contract will contain provisions in terms of which notices are
required to be given of the intent to terminate and to demand
specific performance within a specified period. It is of vital
importance that the aggrieved party comply with these provisions.
Failure to do so may lead to the other party interpreting the
aggrieved party’s conduct to be a repudiation of the contract,
the aggrieved party to cancel the contract, the breach must be
material, i.e., goes to the root of the contract and relates to a
a contract provides for a specific date of performance, failure to
perform on that date does not give an automatic right to cancel.
Therefore, it is imperative that the cancellation clauses enforce
performance by that date. Bear in mind that a contract that
contains a clause that provides that the terms thereof are
suspended unless defined provisions are complied with within a
specified period automatically terminates at the expiration of
that period without such compliance.
March 2017, the Chief Master issued a directive to all Masters
with regard to the administration of trusts and in particular with
regard the following topic:
deregistration of trusts
is no provision in the Trust Property Control Act for the
de-registration of a trust. However, the Master may confirm that a
trust has been closed upon the provision of the following:
for the termination and a resolution that states whether the trust
is dormant or inactive and whether a bank account was opened and,
if so, that it has been closed
original Letter of Authority
statements reflecting a nil balance or a letter from the bank
confirming that the account has been closed
that the beneficiaries have received their benefits; and
affidavit from the trustees stating that the trust has been
divested of all assets.
in independent trustees
implementing the decision of the court in the case of Land and
Agricultural Bank of South Africa v Parker and Others, the Master
must consider appointing an independent trustee where a trust is
registered for the first time and the trust deed indicates that
the trust is a “family business trust”.
family business trust is one where:
trustees have the power to contract with independent third parties
thereby creating trust creditors; and
trustees are all beneficiaries: and
beneficiaries are all related to one another.
be a person who understands the responsibilities of a trustee.
be a member of a professional body
no family relation or connection to any of the existing or
proposed trustees, founder or beneficiaries
knowledgeable about the law of trusts
not have any interest in the trust property as a beneficiary
knowledge of the business field in which the trust operates
good cause being shown by the Founder, the Master may dispense
with the appointment an independent trustee. However, he may
request security and audited annual financial statements
to Fitch, there has been no further major deterioration in the
economic outlook and fiscal landscape that would warrant a further
ratings downgrade at this stage. However, such a move is dependant
upon the government sticking to its fiscal consolidation plans and
not embracing major policy changes in order to woe the voters.
agency is also concerned with improvement in economic growth
without negatively impacting on revenue collection. It is
anticipated that the other credit agencies will follow suit.
the agency is also concerned about the quality of governance of
state owned enterprises, particularly Escom and SAA as they pose a
significant risk of the need for a government bailout. It is
concerned that the continuing low economic growth rate is
contributing to the budget deficit and public debt levels.
the meantime, the debate surrounding the distribution of wealth in
South Africa continues. In that regard, the Davis Commission is
investigating the possible introduction of a wealth tax. To some
extent that focus may be attributed to statements, by the current
Minister of Finance, emphasizing the inequitable distribution of
wealth. These statements use, as their source, a report by Oxfam
which is based on one by Credit Suisse. However, facts, in those
reports, that place South Africa in a more favourable light were
overlooked by the minister. For example, South Africa has a more
equitable wealth distribution than Denmark, Sweden and Norway.
government could improve the country’s rating substantially by
changing the land ownership policy whereby land in some areas,
including Nkandla, are held under Permission to Occupy (PTO). This
policy inhibits the ability of persons in tribal areas and African
farmers from obtaining finance and thereby improving the value of
the land. This would help reduce the negative wealth distribution
statistics that are also a factor used in the determination of the
country’s credit rating.
factor requiring urgent attention is the current unemployment
rate. Of particular concern is the youth unemployment rate which,
at 52%, exceeds the national average of 27%. In this regard, the
effectiveness of the Youth Employment Incentive scheme should be
examined and consideration given to making it more effective. This
sector of the population is justifiably disenchanted with
government’s efforts to remedy the situation. Unfortunately,
this disenchantment could well result in unrest which, in itself,
will influence the credit rating agencies in the short to medium
“There is nothing
glamorous about death.” – Roger Moore