The South African Institute of Professional Accountants (SAIPA) has welcomed the focus on austerity in the 2016 budget tabled today in Parliament by the Minister of Finance, Pravin Gordhan. However, adds Ettiene Retief, chairperson of the National Tax and SARS Stakeholders Committees at SAIPA, the budget is weakened by a lack of clear targets and timelines.

No clear targets and timelines
“Certain parts of government are bloated and lacks specifics, and the Minister is surely right to make it the target for his strict measures. His repeated point that we cannot spend money we don’t have, and that we cannot borrow what we can’t repay, are welcome reality checks,” Retief says. “But I confess to feeling that the medicine could have been a little stronger, and the absence of concrete savings targets and timelines is a real missed opportunity.”

This lack of detail may be of particular concern to international investors and ratings agencies, he speculates. Similarly, while it was good to hear that SAA and SA Express might be consolidated, a firmer expression of intent with regards government funding would have been preferable. 

Retief noted that the Minister chose not to raise the extra revenues needed through a VAT increase as many commentators expected. On balance, he felt that this was probably a sound political decision given the restless labour environment and the wave of student and service delivery protests currently under way. However, a VAT increase may still be in our near future.

The budget outlined several important growth initiatives, including continued spending on infrastructure, but was again short on detail as regards targets and deadlines. With the growth projection revised downwards to a barely visible 0.9 percent, a more concrete set of targets could have made a more convincing growth story for foreign investors and the battle-weary local business community.

Some wise moves 
Retief says that the reallocation of R475 million to the Department of Small Business Development was one of the major positives of the budget, along with a recommitment to making it easier to do business generally. The Minister’s proposal to identify unspent government funds and reallocate them was also a wise move. 

On the tax front, the Minister achieved a good balance by providing marginal tax relief for the lower-income earners while avoiding a direct increase for the rich. In fact, the rich will effectively pay more because there is no relief for inflation, and the increase in capital gains tax and the aggressive attack on the use of trusts for estate planning will naturally affect them the most. 

In the same vein, the proposed extension of the existing Voluntary Disclosure Programme to include foreign assets, for a 6 month period starting October of this year, will give wealthy taxpayers with undisclosed foreign assets the opportunity to come clean, but will not offend compliant taxpayers as this is not an amnesty. This follows the HSBC Swiss leaked information, and the various information sharing agreements concluded with foreign jurisdiction.

“We have a disproportionate tax base, meaning only a small portion of taxpayers contribute the majority of the personal income tax revenue, and the Minister has to be careful not to alienate those taxpayers,” Retief concludes. “If I had to sum up the budget, I would say he has managed not to offend any major constituency, and that is a hard balancing act at a sensitive time for the country. Whether his strict measures and plans for reigniting economic growth and the proposed austerity measures will be enough for the international financial community, only time will tell.”
​
ENDS

MEDIA CONTACT: Cathlen Fourie, 012 644 2833, cathlen@thatpoint.co.za, www.atthatpoint.co.za  
 
For more information on SAIPA please visit:
Website: www.saipa.co.za
Twitter: @SAIPAcomms
LinkedIn: South African institute of Professional Accountants Company
Facebook: South African Institute of Professional Accountants

The South African Institute of Professional Accountants (SAIPA) calls on the Minister of Finance to focus the budget on mid- and long-term economic growth, even while dealing with short-term issues.
 
“Minister Gordhan has promised that the budget will inspire confidence even though the country has some tough decisions to make. This will only happen if the Minister maintains focus on the medium and long term in order to set the scene for economic growth,” says Ettiene Retief, chairperson of the National Tax and SARS Stakeholders Committees at SAIPA. “The pain we will certainly have to take will only be bearable if the taxpaying public is confident that its money is being wisely spent, and that the foundations for long-term prosperity are being laid.”
 
For example, two of several pressing issues that the budget will need to address are the need to prop up the finances of the higher education system in the wake of the #FeesMustFall campaign, and the drought. However, the measures proposed must do more than alleviate the short-term crisis, they must contribute to the long-term vision and be sustainable.
 
Three key actions should be integrated into the budget in order to inspire or restore confidence in the economy:
 
Measure that the money allocated is actually spent
As an example, Retief points to the underspending on infrastructure which, he believes, is partly to blame for the bad situation in which the construction industry finds itself now. “It geared up to cope with demand that did not materialise and now that the economy is ailing, it is suffering,” says Retief.
 
Ensure that money is spent effectively
This means ensuring that money is spent in line with the long-term national strategy, as set out by the National Development Plan. “Simply acquiring assets or completing projects is futile unless they advance the national agenda as a whole,” he argues. “We need a mechanism to ensure that all government entities are pulling in the same direction. Even short-term projects, such as drought relief, should be conceptualised in this way. We cannot afford simply to apply Band-Aids.”
 
Hold officials accountable
It is common cause, and validated by the Auditor-General, that enormous sums of money are squandered through fruitless and wasteful expenditure, aside from corruption. “This has been going on for decades now, and it has to end,” says Retief. “Taxpayers need to see that action is taken to bring underperforming officials into line, and to hold them accountable for the spending of public money.” When taxpayers do not see the return for the taxes paid, and feels disgruntled with how the tax revenues are spent, those taxpayers will consider ways to avoid paying taxes. It’s about tax morality! 
 
The Finance Ministry cannot do all this on its own. Retief concludes, “We are looking for ways in which other organs of government can be involved to help the Ministry achieve these goals—it is a big ask, but it can and must be done.”

ENDS

MEDIA CONTACT: Cathlen Fourie, 012 644 2833, cathlen@thatpoint.co.za, www.atthatpoint.co.za  
 
For more information on SAIPA please visit:
Website: www.saipa.co.za
Twitter: @SAIPAcomms
LinkedIn: South African institute of Professional Accountants Company
Facebook: South African Institute of Professional Accountants

​Tax Ombud 
Judge Bernard Makgabo Ngoepe 
B.JuR, LLB, LLD (h/c) LLD (h/c) LLD (h/c) 

Judge Ngoepe has a stellar record for his participation in and contributions to human rights and the rule of law in South Africa and abroad. As Judge President of the High Court of South Africa, North and South Gauteng High Courts, the Judge heard and decided seminal cases, including business and tax matters, and was responsible for assigning judges to the Tax Courts. He has also acted for a term as a Constitutional Court judge. In 2006, he was appointed as part-time Judge of the African Union’s African Court of Human and Peoples’ Rights. He is presently Vice-President of the Court. 

The Judge has a solid academic background which includes the following: B.Juris (UNIN); LLB (UNISA); LLD (h/c UNIN); LLD (h/c UNISA); LLD (h/c UNIVEN). Before assuming his role on the Bench, Judge Ngoepe practised as an attorney until 1983 when he was admitted as an advocate of the Supreme Court of South Africa. In 1994, his career reached another zenith when he was appointed Senior Counsel (SC).

Judge Ngoepe has been a member of many landmark democracy-building fora such as the Amnesty Committee of the Truth and Reconciliation Commission, the Court of Military Appeals (Chairperson), the Magistrates Commission (Chairperson), the Judicial Service Commission, the Appeals Panel of the Press Council of South Africa (Chairperson since February 2013), the Appeals Board of the South African Council for Medical Schemes (Chairperson since 2012) and as Chancellor of the University of South Africa since 2000. 

Judge Ngoepe has been awarded the following accolades: Honorary Captain of the South African Navy, Honorary Professor, University of Limpopo, and three honorary Doctor of Laws degrees. He has also received many leadership and human rights awards.

started his studies in financial accounting and auditing, with under graduate and bachelor studies in accounting, corporate procedure, and forensic auditing; with post graduate studies in the interpretation and drafting of contracts, trust law, taxation, and international tax. 
With more than a decade and a half of experience as a practicing financial accountant and tax practitioner (started working in commerce in 1994), Ettiene was a partner of, and the financial director for Financial Tax & Remuneration Services from 2000 till 2009. Ettiene also serves on the Technical & Standards Committee of the South African Institute of Professional Accountants.

During 2009, Ettiene started his own practice, which allows him the flexibility to provide personal corporate and tax law advice and assistance to his clients.

Ettiene was the chief editor and co-author of the Practical Tax Handbook for SMMEs (2003 - 2010); technical editor for SAIPA’s Professional Accountant magazine (since 2010); a regular speaker at update and training seminars, and regular contributor to various publications and media. 

Chairman of the National Tax and Stakeholders (SARS and National Treasury) Committees and member of the Technical and Standards Committee of the South African Institute of Professional Accountants, actively involved in the SARS Joint Stakeholder Committees, and specific sub-task force teams.

Was an elected member for two years to the FASSET (SETA for Finance, Accounting, Management Consulting and other financial services) Management Board, Chairman of the Finance Committee, also serving on the Remuneration, and Executive Committees.

Member of the working group for the development and drafting of the financial reporting standards for Non-Public Entities (also referred to as Micro-GAAP) as issued by SAICA and ECSAFA.
​
Ettiene holds membership with the Institute of Directors and South African Institute of Professional Accountants. Registered with SARS as a tax practitioner, and registered as a FSB (Financial Services Board) compliance officer.

Professor Jannie Rossouw is Head of the School of Economic and Business Sciences at the University of the Witwatersrand.
​
Professor Rossouw, an NRF C2-rated researcher, pursued his tertiary studies at the University of Pretoria where he obtained an MBA and an MCom in Economics. He was awarded a PhD by the University of KwaZulu-Natal in 2008. He started his professional career as a lecturer in the Economics Department at UNISA, before joining the private sector. Professor Rossouw served as Head: Currency Management at the SA Reserve Bank. Professor Rossouw is a prolific writer and has authored and co-authored numerous articles in a wide variety of media, focusing mainly on the accuracy and credibility of inflation figures and on South Africa’s looming fiscal cliff. He is Vice-President of the Economic Society of South Africa, Chairperson of the Audit Committee of the Afrikaans Language Museum and Monument in Paarl and is a member of the Audit and Risk Committee of the South African Academy for Arts and Culture

​Depika is a qualified Chartered Accountant she holds a Bachelor of Accounting, Hdip in Accounting and Mcom Taxation. In a year 2000 after completing her articles she joined Natal Technikon as lecturer in Auditing and Tax division. In June 2002 she Joined University of Witwatersrand school of Accounting as lecturer in Taxation Division until December 2005. In February 2006 she joined UKZN School of Accountancy as Senior Lecturer in the Auditing Division. She re-joined University of Witwatersrand as Senior Lecturer in Taxation Division from September 2008. In December 2014 she was appointed Head of Tax Division at University of Witwatersrand, School of Accountancy. In 2015 she was further appointed as the Head of Operations for the School of Accountancy at Wits university  
Apart from being actively involved with lecturing ,she is also involved with a lots of committees which includes ; 
•    Social Committee 
•    Member of SAICA ITC marking team since 2008. 
•    Also appointed as assistant umpire and now an umpire.
•    Was a member of  IRBA marking team from 2008 to 2010
•    Member of SAIPA Exam Panel
•    Member of SAIPA Syllabus Panel 
•    Member of numerous selection panels within the Faculty
•    Was a member of Faculty  and Council Re-admissions Committee 
•    Evaluator for Accounting and Commerce related programmes for CHE
•    Judge on external tax competitions for E&Y and Deloitte
•    Facilitator for Project Achiever for SAIPA and Presenter for seminars for SAIPA

​With an unemployment rate of 25.5 percent, rising to 50 percent among young people, joblessness is rightly seen as a national issue—and a political hot potato. The South African Institute of Professional Accountants (SAIPA) urges the Minister of Finance to use the budget to stimulate the small to medium-sized enterprise (SME) sector as it has the potential to generate the jobs we need at the speed we need.
 
Government must resist the temptation to attempt to solve the problem by itself employing more people, adds Ettiene Retief, chairperson of the National Tax and SARS Stakeholders Committees at SAIPA.
 
“The hard truth is that the public-sector wage bill is already too large. The latest increases have reduced the amount government can spend on services and infrastructure by R100 billion over the next three years, as Minister Nene pointed out in the mid-term budget—all of this without notable improvements in service delivery,” says Ettiene Retief. “Aside from being unaffordable, increasing the state’s wage bill is not really effective in creating large numbers of jobs—only entrepreneurs in a growing economy can do that.”
 
Retief points out that government has long recognised the role that SMEs can and must play in job creation—the National Development Plan’s target of 11 million new jobs by 2030 is dependent on this sector to a great extent. Using the budget to stimulate this sector not only makes good economic sense, it is in line with government policy. 
 
Ways to achieve this goal include strategic infrastructure spending that favours the awarding of contracts to SMEs, as well as tax and other incentives to SMEs. Excessive red tape and onerous compliance should be further eased for SMEs, areas in which government has already made some headway. Our tax and labour legislations and the initiatives by the Department of Trade and Industry still fails to recognise services with regards SMEs.
 
“In addition, we would suggest that the Minister give serious thought to providing special allowances for SMEs that provide professional services. Such businesses are quick to set up, require little capital and are much less risky than other types of business, with great potential for skills development and transfer—an important consideration given the high proportion of SMEs that fail in the first three years,” he says. “We are really urging the Minister to apply his considerable creativity to spend taxpayers’ money more smartly, in line with the government’s own plan to grow the economy.”

ENDS

MEDIA CONTACT: Cathlen Fourie, 012 644 2833, cathlen@thatpoint.co.za, www.atthatpoint.co.za  

For more information on SAIPA please visit:
Website: www.saipa.co.za 
Twitter: @SAIPAcomms
LinkedIn: South African institute of Professional Accountants Company
Facebook: South African Institute of Professional Accountants

Ahead of the 2016 budget speech on 24 February, the South African Institute of Professional Accountants (SAIPA) is requesting the Minister of Finance to confirm that the proposed reform measures relating to retirement funding go into effect on 1 March 2016 as legislated, and not delayed further. “Uncertainty has a massive negative effect on business generally, and individual taxpayers themselves have been planning for the scheduled implementation of the new laws,” says Ettiene Retief, chairperson of the National Tax and SARS Stakeholders Committees at SAIPA.
 
Enough time to prepare
“The reforms to our retirement funding legislation were laid out in the Taxation Laws Amendment Act and the Financial Services Laws General Amendment Act in 2013 for implementation during 2015, which was postponed to 1 March 2016,” he says. “It’s well-known that certain parties is not in agreement with the reforms but, at this late stage, the right choice is to go ahead with the implementation.”
 
Retief argues that there are sound policy goals behind the reform, and that government has consulted extensively. The prior delay already caused some trouble as employers, payroll systems, and financial institutions had prepared for the implementation, and days prior to implementation a postponement was announced.
 
Sound policy goals
The reforms aim to harmonise the regulations relating to provident, pension and retirement annuity funds. The new law will allow members of provident funds to make a tax deduction on their own contributions. Higher tax deduction limits will encourage retirement saving while, at the same time, a limit on the total deduction allowance will make it harder for high-income earners to benefit excessively from tax deductions. Effectively, the reform levels the playing field.
 
An important change is the extension of the requirement to purchase an annuity to members of provident funds. This means that, like members of pension and retirement funds, members of provident funds will now have to preserve their retirement savings by transferring a portion of their retirement pay-outs into an annuity. This change is intended to fulfil the important public-policy goal of protecting people against poverty in old age.
 
Retief notes that the requirement to transfer provident-fund pay-outs into annuities will not negatively affect peoples’ existing provident fund contributions as transitional rules have been put in place. This reduces impact on existing members of provident funds, and should address many of the issues we had in the past with switching between different funds.
 
Contributions made towards retirement savings should be preserved as such, and not easily accessible to fund short term needs. This is a common problem, as people use the funds available on termination of employment to fund short term needs, and do not generally reinvest these funds into another retirement fund.
 
“If, at a later date, reasons for amending the new regulations become apparent, this could be done via an amendment to the act,” Retief says. “For now, it’s important to give everybody certainty.”

ENDS

MEDIA CONTACT: Cathlen Fourie, 012 644 2833, cathlen@thatpoint.co.za, www.atthatpoint.co.za  

For more information on SAIPA please visit:
Website: www.saipa.co.za 
Twitter: @SAIPAcomms
LinkedIn: South African institute of Professional Accountants Company
Facebook: South African Institute of Professional Accountants

As the tax year comes to a close, the 2016/2017 budget becomes sharply into focus for all SMEs. Effective budget planning and execution provides a much needed framework which allows for more informed decisions and, as a result, improved growth.
 
“It is hard to put a value onto a well-prepared and well-designed budget,” says Rashied Small, Education, Training and Membership Executive at the South African Institute of Professional Accountants (SAIPA). “It provides insight into business processes, how these align with business goals and the best direction to take within the financial constraints of the company.”
 
Small provides three ways for SMEs to make sure their 2016/2017 budget is heading in the right direction.
 
Plan and evaluate
The planning of a budget must be taken seriously; it needs to have focused time set aside in order to prepare it effectively. Use the time to evaluate the performance metrics of the previous budget periods along with the current business environment. This will go a long way towards assessing the budget against the business goals and ensuring that they remain aligned, or using it as an opportunity to adjust elements where necessary.
 
“Beware of focussing exclusively on the outcomes of the budget,” warns Small. “Spend time on its preparation so it can give improved insight into the business, its operations and management effectiveness.”
 
Monitor and measure
Any budget is a living document. It needs to adapt and shift and provide valuable insight as time goes on and situations change. The SME should include milestones into the budget along with a reliable monitoring and evaluation process. These tools can then be used to validate the assumptions and provide indications and directions for adjustments and amendments whenever they are needed.
 
“The value of budgeting lies in continuous and regular monitoring, and this should not only be an end result or a punitive function,” adds Small.  “The quote; ‘budgets should not be cast in stone,’ is often one which is ignored by owners and managers, but few realise that not achieving the budget isn’t a failure.  Monitoring and evaluation serve the purpose of information gathering so that corrective action can be taken when there are changes in the environment.”
 
Allocate responsibility
If there are staff who are directly responsible for certain activities, then it is a good idea to allocate them budgetary responsibility. This will encourage a system which is more participatory than top heavy and inspires buy-in from employees as it acknowledges their expertise and involvement.
 
“Allocating budgetary responsibility will result in greater accountability while stimulating innovation and cost-saving methodologies which are critical to the success of the modern business,” concludes Small. 

ENDS

MEDIA CONTACT: Cathlen Fourie, 012 644 2833, cathlen@thatpoint.co.za, www.atthatpoint.co.za  

For more information on SAIPA please visit:
Website: www.saipa.co.za 
Twitter: @SAIPAcomms
LinkedIn: South African institute of Professional Accountants Company
Facebook: South African Institute of Professional Accountants