February 2011

 INTRODUCTION

Generally, service standards in this country are at a lower level than in the rest of the developed world. Below, we discuss the impact that this has on a business and what steps may be taken to improve the situation.

TECHNOLOGY

To copy the value of a cell situated above the active cell, use CTRL + “. If you wish to copy the formulae from the cell above, Use CTRL + ‘.

When creating a MS Word document, its appearance is enhanced when each paragraph is aligned using the justified button. That’s the button at the far right of the alignment buttons on the tool bar. Adjusting the alignment for each paragraph can be laborious. It would be far better, particularly in a long document, to ensure that all paragraphs are aligned simultaneously. To achieve this click on the File menu and select the Page Setup screen or CTRL+F+U. On the Page Setup screen, select Layout and in the Vertical Alignment box, select Justified.

TAXATION

Budget

A summary of the tax provisions of the budget may be found on our web site, www.accounting4.co.za. Not mentioned in that summary is the fact that from 1 March 2012 an employer’s contribution to retirement funds on behalf of an employee will be regarded as a taxable fringe benefit. From the same date, individuals will be permitted a deduction of up to 22.5% of their taxable income in respect of contributions to pension, provident and retirement annuity funds. A minimum of R 12000 and a maximum of R 200000 will apply to this deduction. Hopefully, employers will be permitted to apply this deduction via their payroll systems otherwise employees could find their monthly net pay drastically reduced Fringe benefits – company cars wef 1 March 2011

Employers who supply company cars as part of employees’ conditions of service will need to amend their payroll package to cater for amended regulations that come into force on 1 March 2011. Details of the rules governing the calculation of the fringe benefit value appeared in our January 2011 issue.

VAT and eFiling

It should be noted that, where a VAT201 is submitted via eFiling but the payment of the liability is not made through that medium, the option to pay the amount due by the last business day of the month is not available.

Claiming Input VAT on the purchase of second-hand goods

When claiming Input VAT on the purchase of second-hand goods, where the purchase price of the item exceeds R 1000, the vendor must ensure that a VAT264 is completed in respect of each such purchase. In addition, in the case of an individual, a photocopy of the seller’s identity document must be attached to the form. If the seller is a legal entity, a photocopy of the entity’s letterhead must be attached to the form. The form contains a number of errors. The most notable is a statement that states that the notional input tax claim is limited to the amount paid for the supply or the open market value of the item. This should read that the claim is limited to 14/114 of the amount paid for the supply or the open market thereof. Do not be tempted to rely on this error and claim the full amount of the purchase price. If such an erroneous claim is submitted and detected, you will not be able to avoid penalties and interest by relying on the SARS error.

Subsistence allowances

With effect from 1 March 2011, the amounts payable in respect of travel within the Republic are as follows:

The allowances in respect of costs incurred outside of the Republic are determined on a country-to-country basis. A table reflecting these allowances can be found on the SARS web site by typing the word “subsistence” in the search field.

DEADLINES

Voluntary Disclosure Programme – 1 November 2010 to 31 October 2011

Annual Duty – end of the month following incorporation date

Consumer Protection Act – 1 April 2011

New Companies Act – no new CC registrations – 1 April 2011

Disposal of a residence from a company or trust – 31 December 2012

ECONOMY

Past commentary in this section has to a large extent been restricted to trying to predict what the short-term impact on the economy of recent developments. In this issue, we attempt to predict the likely outcome of some of the changes in policy that were highlighted in this year’s budget.

The focus has been on job creation through incentives and tax relief measures for business at all levels. At the same time, education and skills development has been allocated funds in an effort to uplift the youth. However, what has not been done is to address the issue of making our labour force competitive in terms of quality and cost with that of other emerging markets such as India and China.

The work force and, in particular, the trade unions appear blissfully unaware of the fact that our manufacturing sector needs to produce quality products at competitive prices. Without this awareness, production cannot increase to levels that will warrant expanding the labour force to embrace the existing 42 per cent of young people that are currently unemployed. Therefore, government needs to forcibly impress upon organised labour the need for greater productivity in order to ensure that not only the existing unemployed but also future entrants into the labour market make a positive contribution to the economy. Failing this,  unemployment levels are likely to rise.

FINANCIAL PLANNING (Capital Gains – continued from our January issue)

The Paragraph 57 allowance is granted to a natural person where that person makes a gain upon the disposal of an active business asset provided that the assets of that business do not exceed R 5 million in value.

There are various conditions that must be applied before this allowance is granted:

·         The amount is cumulative over the person’s life

·         The person must hold at least 10% of the shares or member’s interest in the entity

·         The person must have held those shares for a continuous period of at least five years prior to disposal

·         The person must have been substantially active in the business

·         The person must be no younger than 55 years old or must be selling as a consequence of ill-health (disability) or death

·         Payment for the disposal must be received within twenty-four months of the disposal.

·         It does not apply if the person owned more than one business the assets of which cumulatively exceeded R 5 million.

BUSINESS

How many times have you been in a store waiting to be served whilst the shop assistants conduct private conversations and stare at you as though you are something the cat dragged in? This is not an uncommon experience and is one that is likely to drive your clients into the waiting arms of your opposition.

But, what came first, the increasingly poor service or the customer’s complacency in doing something about it? All too often, we hear people complaining of poor service. Far less frequently do we hear that someone actually did something about it. If the business owner does not know he has a problem, how can he fix it? Given the reluctance to complain on the part of the customer, the business owner needs to be proactive in identifying how to improve service levels and thus minimise loss of business.

A good place to start, with this pro-activity, is by preparing a mission statement that identifies the service standards that the business expects to maintain. Every member of the business needs to be aware of these standards and to be committed to upholding them. Systems need to be put in place to measure the level of compliance.

Before the mission statement can be prepared, the owner needs to identify his/her customer’s needs and how best these needs can be met in a timely and cost effective manner.

TAILPIECE

"I hear and I forget. I see and I remember. I do and I understand." (Confucius)