![]() 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
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![]() 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 The South African Institute of Professional Accountants (SAIPA) has expressed concerns that the Government has once again agreed to postpone the compulsory annuitisation of provident fund savings on retirement, which are to come into effect on 1 March 2016.
“In our view, there has been plenty of opportunity for engagement on this legislation, and further delay in compulsory annuitisation has a long-term impact,” says Ettiene Retief, chairperson of the National Tax and SARS Stakeholders Committees at SAIPA. “Retirement savings should be preserved for retirement years, and not used to fund short-term needs. The original intent of making contributions to a retirement fund is to save for retirement, full-stop.” The recent amendments introduced by the Taxation Laws Amendment Act (2015) aims to reform and streamline the retirement funding industry. Proposed reforms include standardising the tax treatment of contributions made by employers and employees to retirement annuity, provident and pension funds. Also, closing the gap abused by high-income individuals to gain tax benefits. The second major reform involves harmonising fund rules across all three types of fund and how the funds are taxed in order to make it easier for investors to switch between funds without suffering adverse consequences, and to ensure that everyone has access to the same benefits. The third major reform proposes to bring provident funds in line with pension and retirement annuity funds by stipulating that at least two-thirds of retirement savings be converted into an annuity on retirement to provide a constant income stream after retirement. This is the reform that Cosatu objects to. Let’s not forget that retirement annuity and pension fund savings already has the compulsory annuitisation requirement. Retief says that Government should be wary of allowing itself to be forced into allowing funds intended to fund retirement to be used to pay off short-term debts, thus leaving South Africans facing the bleak prospect of an underfunded retirement, or again placing the burden on Governments shoulders, funded by taxpayers. “The fact is that already the vast majority of South Africans do not have enough money to fund their retirement. Forcing them to preserve at least two-thirds of their provident fund savings is a sound policy decision because it protects the long-term interests of working people, and it also reduces the potential burden on the state, which has to assume the responsibility for helping those who face a destitute old age,” says Retief. “It does not make sense to sacrifice the future in order to solve immediate problems. Retirement funding is not a vehicle for general saving and should not be seen as such.” 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 Judge Bernard Makgabo NgoepeTax 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. Ettiene Retiefstarted 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 RossouwProfessor 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 Singh CA (SA) |
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