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February 2016

INTRODUCTION

A belated welcome to 2016 but don’t get to comfortable. Economically, it’s going to be a slip and slide instead of a climb every mountain type of year.

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!

2015 Income Tax returns for Companies (IT!14) – 26 February 2016

Excel Tips

Suppose that you have a formula that you want to copy across a row but do not want to include the border of the cell from which the copy is to be made. Right click the fill handle and drag it across the row. When you let go of the mouse, the following menu will appear:

-          Copy Cells

-          Fill formatting only

-          Fill without formatting

-          Flash fill

Select Fill without formatting and only the formula will be copied.

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.

TAXATION

Travel Allowance Deduction

Although no mention was made of this in the budget, the rates to be used to calculate this deduction have been changed to read as follows:

Value of vehicle (including VAT)

Fixed cost

Fuel cost

Maintenance cost

R

R per annum

c per km

c per km

0 – 80 000

26 675

82.4

30.8

80 001 – 160 000

47 644

92,0

38,6

160 001 – 240 000

68 684

100,00

42,5

240 001 – 320 000

87 223

107,5

46,4

320 001 – 400 000

105 822

115,0

54,5

400 001 – 480 000

125 303

132,0

64,0

480 001 – 560 000

144 784

136,5

79,5

Exceeding 560 000

144 784

136,5

79,5

 Some other budget proposals

·         The annuitisation requirement for provident funds and tax-free transfers from pension funds to provident funds is to be postponed for two years

·         A further amnesty in respect of offshore funds and earnings to be effective from 1 October 2016 to 31 March 2017 and to be effected by amendments to the existing Voluntary Disclosure Programme – see below

·         Assets transferred to a trust by way of loan account are to be added to the donor’s estate for duty purposes and interest free loans (presumably only to trusts) to be treated as donations. One wonders what the impact of this will be on the donor’s hitherto before right to make an annual payment of  R 100k  donation tax free  to be offset against such loan provided such payment is not made by a mere book entry?

·         Various amendments regarding the taxation of contributions to retirement funds including the treatment of an employer’s contribution as a fringe benefit in the hands of the employee

·         Increases to the fringe benefit tax exemption levels in respect of employer granted bursaries

·         Local employees of foreign employers, who are based in South Africa and do not deduct PAYE from the employees salary, will be required to pay provisional tax

·         Currently, a provisional taxpayer is not subjected to a penalty if his/her estimate for the second provisional tax return is submitted before the due date of the next provisional tax return. It is proposed that the final date be changed to the date of the issue of the assessment for the relevant year

·         Expenditure incurred to earn taxable REIT dividends is to be allowed as a deduction

·         Currently, the period provided for the lodgment of an objection is 30 days from the date of the relative assessment. A longer period and consequent amendments to the dispute resolution rules are being considered

Special Voluntary Disclosure Programme in respect of offshore assets and income – key points

·         Applicable to companies and individuals but not to trusts

·         Donors, deceased estates and beneficiaries of foreign discretionary trusts may participate if they elect to have the trust’s offshore assets and income deemed as their own

·         Awareness of a pending audit or investigations in respect of foreign assets and income prohibits participation

·         Amounts obtained by SARS through an international exchange of information procedure will be excluded

·         Only 50% of the amount used to fund the offshore acquisition will be included in taxable income

·         Investment returns prior to 1 March 2010 will be exempt but those thereafter will be included in taxable income.

·         Any tax debt arising from such disclosure will be subject to interest with effect from 1 March 2010

·         Successful applications will not give rise to any understatement penalties and SAR will not pursue criminal prosecutions

·         Exchange Control contraventions prior to 29 February 2016 will be covered by the amnesty

·         Any persons who are subject to a current investigation by the reserve bank will be excluded

·         A levy of 5% of the current market value at 29 February 2016 of repatriated assets and 10% of current market value at 29 February 2016 of assets that are kept offshore may be imposed

·         The levy must be paid from foreign sourced funds and an additional 2% will be imposed where those funds are insufficient to meet the 5 or 10% levy

·         Foreign capital allowances may not be utilized to reduce the leviable amounts nor may the levy be reduced by any fees or commissions

BUSINESS

Protection of Personal Information (POPI)

When, eventually, this Act comes into force business will be allowed a period of one year to become compliant. Given the procrastination levels of many small businesses it may well be appropriate to remind them of their responsibilities. To that end, portions of an article that appeared in our March 2014 issue are repeated below. It must be emphasised that a thorough knowledge of the act is essential and readers are advised to familiarize themselves with the Act that is available at www.gov.za/documents/download.php?f=204368

Personal information is defined as information relating to a living or juristic person and includes information relating to, inter alia:

a)            race, gender, sex, pregnancy, marital status, nationality, ethnic or social origin, color, sexual            orientation,  age, physical and mental health, well being, disability, religion, language;

b)            education, medical, financial, criminal or employment history;

c)             various addresses and contact information;

d)            biometric data;

e)             personal opinions, views and preferences;

f)             personal and confidential correspondence.

Any person or organization that has such information in their possession has a duty to ensure that it is safeguarded and not revealed to persons other than the person to whom that information relates other than in a manner authorised by the Act. Further, once the information is no longer required for the purpose it was obtained, it shall be destroyed.

Severe penalties are provided for any infringement.

ECONOMY

FNB reports that there is an increased demand for crude oil and this could well lead to rising fuel prices with the related knock-on effect that this could have on the South African economy. However, this could be moderated to some extent by the increase in exports that is associated with the weakening of the rand. But the strengthening of exports is dependant upon demand from our major trading partners and, given, China’s slowing economy, one should not get too excited about export growth. The slow down in demand for basic metals could result in the closure of marginal producers and related unemployment problems and associated labour militancy during the coming wage negotiation season. Weakening consumption is likely to result in a lowering of import volumes and to some extent this should compensate for the likelihood of dropping export levels.

 

TAILPIECE 

Being honest may not get you many friends but it’ll always get you the right one.” – John Lennon