11 May 2021
11
May 2021

Announcement:

We are pleased to announce that Levi Segal who qualified as a Chartered Accountant in February 2020 has now qualified as a Registered Auditor and has been appointed as a Director of the Firm. We wish him all the success with his new position.


Undisclosed Foreign Assets:

Automatic exchange of information between various revenue authorities worldwide is now a reality.

As a result, the South African Revenue Service is able to obtain financial information on any South African tax resident from various countries. This allows SARS to verify whether taxpayers have accurately reported their taxable income. 

Based on these information-gathering abilities, SARS has recently started to notify taxpayers that it intends to review their tax affairs specifically in relation to taxpayers offshore holdings.

The Voluntary Disclosure Program:

Certain taxpayers who have not complied with their legal obligations may make a voluntary disclosure to SARS to regularise these foreign assets and income in terms of the Voluntary Disclosure Program (“VDP”) as provided for in the Tax Administration Act 2011.

Under a successful VDP application, all administrative non-compliance and understatement penalties that would otherwise have been imposed will be waived. Criminal prosecution for a tax offence could also be avoided.

However, the taxpayer would still be liable to pay the original tax and the interest thereon.

In order to qualify for such relief, the VDP application must:

• Be voluntary
• Involve a default that has not occurred within five years of the disclosure of a similar default by the applicant
• Be full and complete in all material respects
• Involve the potential imposition of an understatement penalty in respect of the default
• Not result in a refund due by SARS.

We have had a lot of experience with the voluntary disclosure program and can assist were necessary.

Anti-avoidance rules bolstered for trusts:

The anti-avoidance rules aimed at curbing tax-free transfers of wealth to trusts have been strengthened to prevent persisting loopholes.

The amendment is directed at structures where individuals subscribe for preference shares with no, or a low rate of return in a company owned by a trust connected to the individual.

Employer-provided bursaries:

The Income Tax Act makes provision for the exemption of bona fide bursaries or scholarships granted by employers to employees or their relatives.

Historically, employees used this exemption as a mechanism to structure their remuneration package to reduce their tax liability.

The exemption will no longer apply where the employee’s remuneration package is subject to an element of salary sacrifice; that is where any portion of their remuneration is reduced or forfeited as a result of the grant of such a bursary or scholarship.

Criminal sanctions for minor tax offences:

Previously, a taxpayer would only be guilty of a criminal offence for non-compliance under the Tax Administration Act if they “willfully” failed to comply with their tax obligations.

With the new amendments, non-compliance will constitute a criminal offence where it is as a result of the taxpayer’s negligence.

“In other words, intent is no longer required; where you are non-compliant as a result of ignorance of your obligations, you may be found guilty of a criminal offence. These offences are subject to a fine or imprisonment of up to two years.

COVID-19 Loan guarantee scheme

After numerous consultations and inputs from various stakeholders, National Treasury and the South African Reserve Bank (SARB), in partnership with the main commercial banks, have agreed to expand the current Covid-19 Loan Guarantee Scheme. 

This resulted in the launch of a second term loan to cater for clients with slightly different needs (referred to as Phase II). 

As in the case of Phase I of the scheme, Phase II will again be facilitated through the National Treasury and the South African Reserve Bank (SARB), working together with commercial banks.

Since the initiation of Phase I of this scheme, it became evident that it will provide much-needed support to the economy as a whole, and importantly, contribute to the preservation of jobs.

Phase II of this scheme is now open for applications. To assist you in your decision whether you can apply for Phase II, please note below guidelines:

Qualifying Criteria

Businesses with any turnover (measured at group level), including sole proprietors, professional practices, SMMEs, SMEs and commercial companies can now apply. 

This is the one significant change from Phase I in that the turnover threshold is now removed.

However, individuals, state-owned entities, listed companies and companies with capital market funders or funding instruments will not be eligible. 

Apart from this, every business applying for this scheme must be in good standing with their bank.

It is also required that the business be registered with the South African Revenue Services.

Purpose of the loan scheme 

The loan is aimed at supporting businesses in financial distress. The loan is intended to cover up to six months’ specific (previously three months) operational expenditures of the business and will be drawn down monthly. 

These costs include existing expenses and other operating costs that may be required to generate income, such as salaries, rent, utilities, security, supply chain expenses and dividends paid as owner salaries. 

Capital equipment (Capex) is, however, not included. 

Phase II funding may not be used to pay, prepay or repay any other bank facilities or any other financial institution, including trade creditors.

Where to apply

The parameters of the loan scheme are that a business can only apply for one Covid-19 loan from their primary bank. 

In line with the qualifying criteria the bank is not obliged to extend the Covid-19 loans and it will be done utilising normal credit application and risk evaluation process.

VAT on Google advertising

Vat is charged in electronic services including online advertising software subscription, streaming services, online courses and publications.

Thus all advertising on Facebook, Google and Twitter include Vat with effect from 1 April 2019. You can get Tax invoices from Google, Facebook etc on their website.


Business Quotes:

• “Don’t blow off another`s candle for it wont make yours shine brighter” Jaachynma N.E.Agu, The Prince and the Pauper
• “You have to work on the business first before it works for you” Idowu Koyenikan, Wealth for All :Living a Life of Success at the Edge of your Ability.
• “Money is always eager and ready to work for anyone who is ready to employ it” Idowu Koyenikan, Wealth for All :Living a Life of Success at the Edge of your Ability.
• “ If there is one trait that your brand must speak of, it is trust: Idowu Koyenikan, Wealth for All :Living a Life of Success at the Edge of your Ability
• “Don’t set your goals by what other people deem important.” Jaachynma N.E.Agu, The Prince and the Pauper
• “This defines enterpreneur and enterpreneurship- the enterpreneur always searches for change, responds to it and exploits it as an opportunity”. Peter F. Drucker, Innovation and Enterpreneurship; Practice and Principles.
• “Opportunities will come and go, but if you do nothing about them, so will you” Richie Norton, The Power of Starting Something Stupid: How to Crush Fear, make Dreams Happen, and Live without Regret
• “Success in life is not for those who run fast, but for those who keep running and always on the move” Bangambiki Habyarimana, Pearls Of Eternity
• “The true enterpreneur is a doer, not a dreamer.” Nolan Bushnell
• “Do not be embarrassed by your failures, learn from them and start again”. Richard Branson

SERVICES WE PROVIDE

  • Statutory Audits
  • Reviews of financial statements
  • Compilation of financial statements
  • Outsourced Financial Management
  • Completing personal and corporate income tax returns
  • Assisting with tax queries.
  • Accounting services
  • Company secretarial services including Company formations.
  • Due Diligence Investigations
  • Financial Emigration
  • Voluntary Disclosure Programs
  • Outsourced Payrolls.

IAPA JOHANNESBURG WEBSITE


For any queries on any issues, please contact David Grawitzky on 
Phone: 011-887-8593 or 082-821-3449  | Email: david@iapa.co.za | Visit our website link: www.iapa.co.za

Important Note 
The information contained in this Newsletter is of a certain nature, and may in certain circumstances be subject to misinterpretation. Consequently, we recommend that our advice be sought when acting upon the information contained herein.
While every care has been taken in the compilation of this Newsletter, no responsibility of any nature whatsoever shall be accepted for any inaccuracies, errors or omissions.

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