July 2011

INTRODUCTION

The world gave a collective sigh of relief, this week, as American politicians reluctantly reached an agreement to overcome the country’s debt burden. This decision and current fuel prices when added to the losses incurred as a result of strikes it is likely to have a profound affect on our pockets in the months to come.

TECHNOLOGY

If you want to print a specific range in Excel simply, highlight the range and choose File| Print. In the dialogue box under Print What, click on Selection. You can customise the Toolbar to avoid some of these steps. Click on Tools, then Customize. Select File and scroll down the right-hand pane until you find the Set Print Area icon. Drag the icon to the Toolbar. Now to select a print range, highlight the range, click on the Set Print Area icon. Thereafter, click the printer button on the Toolbar to print the required selection.

TAXATION

The next few months are likely to be hectic for practitioners and taxpayers alike.

Provisional taxes

The first provisional tax returns for the 2012 tax year are due on or before 31 August 2011. First time provisional taxpayers will need to provide us with reasonably accurate estimates of their income for that tax year. Existing provisional taxpayers are permitted to use the basic amount that is reflected on the returns that are issued by SARS. If they do so, they avoid the possibility of any penalties arising. However, if their income is likely to be substantially lower than the basic amount, they should consider the cash flow implications of providing an estimate. Those provisional taxpayers, whose income for the 2011 tax year, is likely to exceed the aggregate of the two provisional tax returns that have already been submitted for the year, have an opportunity to avoid incurring interest on the shortfall. To do this, they need to make a “top-up” payment by no later than 30 September.

First bi-annual PAYE reconciliation

Employers have from 1 September to 31 October to submit the reconciliation of PAYE payments for the six month ended 31 August.  It is possible that a revised version of e@syFile will be posted before those dates. Therefore, whilst it is advisable to start ensuring that your payroll records are complete and up to date, any data capture using that programme should be delayed until the submission period has commenced.

Company cars

You are reminded that, for the 2012 year, the fringe benefit for company cars is calculated by multiplying the deemed value of the vehicle by 3.5% or where the vehicle is subject to a maintenance plan by 3.25%. Employers will be required to include 80% of that amount in the employee’s taxable income and subject him/her to PAYE thereon. Provided that they have maintained a log book complying with SARS’ requirements, employees, when lodging their annual tax return, will be able to claim a deduction based on the extent of their business travel in a similar manner to those employees who obtain a travel allowance. Where the employee is able to prove that his/her business travel is equal or greater than 80% of the distance traveled, the employer is permitted to reduce the amount of the PAYE deducted. However, this is at the employer’s discretion. Employers are reminded that they need to account for VAT on the value of the company car fringe benefit. This is calculated based on a formula provided by SARS. You are welcome to contact us for guidance in these matters.

Voluntary disclosure

The deadline for these submissions is 31 October 2011. Further details are available at www.sars.gov.za/home.asp?pid=63327.

Transfer of Prime Residence from a Corporate Entity or Trust

Taxpayers, whose prime residence is held in an entity, have until 31 December 2012 to transfer these residences into their names. Subject to certain conditions, such transfer will be free of transfer duty and CGT implications. The process may take some time as it involves Deeds Office procedures. Therefore, we urge clients to start the process as soon as possible as attorneys and the Deeds Office is likely to be flooded with last minute applications. There will still be legal costs pertaining to the transfer and to canceling and raising bonds, if applicable.

DEADLINES

Voluntary Disclosure Programme – 1 November 2010 to 31 October 2011

Annual Duty – end of the month following incorporation date

EMP 501 2012 1st period 1 September 2011 – 31 October 2011

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

Income Tax Returns – 2011 Individuals:

Manual submissions – 30 September, 2011

Efilers:

Non-provisional taxpayers – 25 November, 2011

Provisional taxpayers – 31 January 2012

CLOSE CORPORATIONS AND COMPANIES

Whilst no new Close Corporations may be registered, some companies are still holding stocks of shelf corporations or clean dormant companies. However, these stocks will not last forever. So, if you foresee the need to use a Close Corporation as a vehicle for a business venture, you should acquire one now.

With the introduction of the new Companies Act, accounting standards are set to change. Where previously the financial statements were prepared on an historical cost basis, with effect from 1 May 2012, annual financial statements will be required to accurately reflect the actual worth of the entity.

In many cases, this involves examining all the assets of the entity to determine the present worth of each item. If still in use, those assets that were written down to zero in the past, will have to be accurately revalued.

As the financial statements that are prepared in 2012 will need to reflect comparative figure for the 2011 year, the re-constitution of the entity’s financial statements will have to revalue the entity’s worth at 1 March 2011.

ECONOMY

Once more the South African economy and thus the consumer is at the mercy of trade unions and politicians. In the first instance, strikes are adding to production costs in the various industries and thus upon the disposable income of the very people who the trade unionists allege that they seek to benefit.  In addition, most of them are asking for increments in excess of inflation but settling for far less. In other words, their deliberations have achieved little other than to increase the cost of production due to lost time and to detract from our image as an investment destination. The impact of the strikes in the energy sector will only be felt later in the year when the transport and electricity generation costs escalate. The latter may result in a further revision of Escom tariffs in the coming years. Overall the high wage increase demands are seriously damaging the country’s global competitiveness. Unless, additional efficiencies are found that will compensate for increased labour costs, demand for our products in the global market will decrease and the ultimate losers will be the labour force. Then there are certain politicians whose mutterings of nationalisation have scant regard for the need for our country to attract further investment in order to provide a better lifestyle for the majority of our population; the very people the politicians purport to represent. These leaders would do well to study the impact that nationalisation under Kaunda had on Zambia and how subsequent leaders of that country have had an uphill battle to place the country back on a sound economic path, that of a capitalist society.

One of the impacts of the American debt burden is that the U.S. is likely to cut back on its grants to countries that have been dependant on these grants. These countries will have to look elsewhere for their handouts and it is unlikely that any of the western countries will oblige. Therefore, it is probable that we will see a greater Far Eastern involvement on this continent.

 TAILPIECE

“Isn't it interesting how proudly some enjoy their freedom of speech, but object to it for people who disagree with them?” (US media host Joe Benson)