SARS PUBLISHES DRAFT TAX AMENDMENT BILLS
Together with the 2017 Draft Rates, Monetary Amounts and Amendment of Revenues Laws Bill published on 22 February 2017, these three draft Bills give effect to the tax proposals announced in the Budget Review. The two draft Bills released include most of the more complex and administrative tax proposals but exclude the proposals dealt with in the 2017 Draft Rates Bill, such as: changes to the personal income tax brackets, rates and excise duties and the introduction of the Health Promotion Levy (the proposed sugary beverage tax).Some of the key tax proposals contained in the 2017 Draft bills are:
- A higher fringe benefit exemption for bursaries to learners with disabilities
- Removing the foreign employment income tax exemption in respect of South African residents
- Addressing the circumvention of anti-avoidance rules dealing with share buy backs, dividend stripping and contributed tax capital
- Extending the application of controlled foreign company rules to interposed foreign trusts and foreign foundations
- Assisting micro businesses transitioning into the small business corporation system
- Employees’ tax and reimbursement of travel expenses
- Application of the cap on deductible retirement fund contributions
- Taxation of interest payable in respect of normal tax by SARS
- Phased implementation of Tax Administration Act, 2011, interest rules by tax type
SME GUIDE TO BEATING THE RECESSION
South Africa is in a tight corner economically. Not only are we in an official recession, but we get bombarded daily with stories of political mischief, state capture and massive fraud. As business owners we are shell shocked, carrying on about our normal course of business with trepidation. The best action to take is know exactly where you stand at all times. Here are some key ways to assist beating the recession:
Understand your balance sheet
This may sound obvious, but many owners focus on their business’ trading accounts alone. It’s a potentially fatal mistake because healthy profits can mask an impending cash flow crisis. Trading accounts don’t usually contain the information required to make an adequate cash flow projection. For that, you’re going to need a structured balance sheet that includes all the influencing factors including current liabilities, current assets, inventory and so on. This is the basis for your cash flow projection which represents an “educated guess” at the likely incomings and outgoings over the period you have selected to map out.
Review and update cash flow budgets regularly
It’s your best insurance against potential cash shortages. If your business has a predictable cash flow, then cash flow budgeting on a quarterly basis is often enough. The rule of thumb is that the greater the cash flow uncertainty a business faces, the more often a new cash flow budget should be prepared.
Get payments in quickly
Master the art of debtor management. Let debtors know how much time remains before due dates. Stay in close touch with major debtors as payment deadlines approach. Offer small discounts for early payment as an incentive.
Pay your creditors strategically
Take advantage of credit terms and prioritise payments according to the consequences involved in going overdue. Wages, taxes and direct debits are at the top of the list for on-time payment; key suppliers may be prepared to wait a while to keep your business. Don’t pay early just to get a discounted price unless getting the discount is better than being without the cash.
Get finance products working to your benefit
Overdrafts, medium term loans, lease facilities and cash flow funding products can all be excellent tools to help match a business’ cash supply with planned outlays. Even the business credit card can be a good way to ease the squeeze as long as you are sure the debt can be paid before interest kicks in.
Review your fixed overhead
Go through your fixed overheads line by line and determine those costs you can do without.
While many of these tips are obvious, all too often we slip into a comfort zone and take our “eye off the ball.” Why not give us a call to setup a strategy to help improve your cash management.
THE IMPORTANCE OF ETHICS IN ORGANISATIONS
There has been much in the press as relates to the governance at State Owned Entities. So dire has governance been that in some instances the state may look to recover losses incurred from members of such boards. Unethical behaviour is rampant, what can we do to help address the issue.
In order to better understand the issue, we need to understand what ethics are. Ethics are the principles and values an individual uses to govern his activities and decisions. In an organisation, a code of ethics is a set of principles that guide the organisation in its programs, policies and decisions for the business. The ethical philosophy an organisation uses to conduct business can affect the reputation, productivity and bottom line of the business.
Leaders and employees adhering to a code of ethics create an ethical organisational culture. The leaders of a business may create an ethical culture by exhibiting the type of behaviour they’d like to see in employees. The organisation can reinforce ethical behaviour by rewarding employees who exhibit the values and integrity that coincides with the company code of ethics and disciplining those who make the wrong choices.
A positive and healthy corporate culture improves the morale among workers in the organisation, which may increase productivity and employee retention; this, in turn, has financial benefits for the organisation. Higher levels of productivity improve the efficiency in the company, while increasing employee retention reduces the cost of replacing employees.
Just as we see public interest groups around the country working hard to encourage members of public (and parliament!) to resist and speak out against unethical behaviour, so too can we as business leaders encourage ethical behaviour in our own organisations.
Special Voluntary Disclosure Program
The deadline for the Special Voluntary Disclosure Program (SVDP) is on 31 August 2017. SVDP is a window period for individuals and companies to regularise undisclosed or unauthorized foreign assets and associated income. It came into effect on 01 October 2016.
In terms of the new global Common Reporting Standard for the automatic exchange of information between tax authorities, SARS will start receiving offshore third party financial data from other tax authorities on a regular basis from September 2017; hence the SVDP window period ends on 31 August 2017.
If you have not yet taken advantage of this voluntary disclosure program please do hesitate to contact our offices for assistance in this regard.
31 August 2017 marks the deadline for the submission of the 1st Provisional Tax Return (IRP6) for all provisional taxpayers with February 2018 year-ends and the submission of the 2nd IRP6 return for those with August 2017 year-ends.
To ensure compliance with legislation please contact our offices for professional assistance in this regard.
Repo Rate Reduced – Official rate of interest to change
The repo rate was reduced by the reserve bank governor in July 2017 to 6.75% which should see an effective reduction in the official rate of interest to 7.75 % with effect from 1 August 2017. This will affect all taxable fringe benefits that arise from the difference between the official rate and the rate charged by any employer on loans in excess of R3000.