The South African Institute of Professional Accountants (SAIPA) recently announced the provincial winners of its 2019 National Accounting Olympiad (NAO). Several schools took winning spots in both the Grade 11 and Grade 12 categories.
“From feedback, we know the competition is a valuable indicator against which pupils and their schools can measure their progress,” says Faith Ngwenya, Technical and Standards Executive at SAIPA.

The best performing schools, with first or second place winners in both grades, were C & N Sekondêre Meisieskool Oranje in Free State, Khanyisa Education Centre in Limpopo, Middelburg Hoërskool in Mpumalanga, and Rondebosch Boys High School in Western Cape.

According to Ilse Olivier, accountancy teacher at C & N Sekondere Meisieskool Oranje, the NAO provides scholars with a unique challenge that helps prepare them for exams. “It teaches pupils to think outside the box when dealing with unfamiliar questions and gives them confidence that they really can do well academically,” she says. Her school has faithfully participated in the competition for the last 10 years.

Lloyd Nel, Head of Accounting/EMS at Rondebosch Boys High agrees. “It’s a good opportunity for the boys to test themselves, see where they are, and open their eyes to what other questions could be asked,” he says. Nel also believes the competition encourages students to take accounting by building awareness of the subject.

For Stephen Ampong, accountancy teacher from Khanyisa Education Centre, it’s a chance to highlight his school’s outstanding record of a 100% matric pass rate over the last 25 years. Says Ampong, “We want to prove that being a rural school does not mean you cannot be a winner.” He holds extra classes on Saturdays specifically to help his students prepare for the NAO.

Lastly, Hannelize Adendorff, accountancy teacher at Middelburg Hoërskool, commends SAIPA for a well-organised contest: “We will definitely be entering the 2020 competition.”

Ngwenya says the Institute is delighted with the level of achievement among provincial entrants. “We believe that, apart from contributing to a sufficient supply of accountants for the future, the contest provides an outcomes-based platform that helps children think for themselves and assert their academic identity,” she says. She asks teachers to check the SAIPA website regularly for NAO 2020 registration dates.

ENDS

MEDIA CONTACT: Stephné du Toit, 084 587 9933, stephne@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

Photo Caption: Grade 12 Winners
(B/L) Shaun Alex, Matimu Mabunda, Taariq Mowzer
(F/L) Eden Walters, Iman Jhetam, Tebogo Malope

On Thursday, 10th October, the South African Institute of Professional Accountants (SAIPA) hosted a special awards ceremony to honour the Top 3 national winner positions of its National Accounting Olympiad (NAO). The event took place at the Birchwood Hotel & OR Tambo Conference Centre in Boksburg, Gauteng.
 
Held every year since 2002 at schools across the country, the NAO allows Grade 11 and 12 pupils studying accounting to compete for one of three top places per grade. According to Faith Ngwenya, Standards and Technical Executive at SAIPA, participation in the increasingly popular contest exceeded expectations. “Over 5,700 pupils wrote the test this year,” she said. “We’re very happy with the turnout and we’re anticipating even more entrants next time.”
 
The winners
In the Grade 12 category, Matimu Mabunda from Khanyisa Education Centre and Taariq Mowzer of Fairbairn College shared joint first place. Likewise, Justin Knopfmacher and Jesse Drieband of King David High School, along with Gilad Kangisser of Yeshiva College tied for second place. There was an astounding 6-way tie for third place between Iman Jhetam of Lenasia Muslim School, Shaun Alex of Umtata High School, Eden Walters of Middelburg Hoerskool, Alexa Msakiwe of Springfield Convent School, Chris Dean of Rondebosch Boys High School, and Tebogo Malope of Reitumetse Secondary School. 
 
In the Grade 11 category, Nicole De Jager of St. Mary's Diocesan School for Girls took first place, and Veren Naidoo from Rondebosch Boys High School placed second. Once again, third place saw a 6-way tie between Nadine Steyn of Maragon Mooikloof, Zintle Mshoadiba and Manelisi Ncube of Phoenix College of Johannesburg, Vaishnavi Maharajh of Durban Girls High School, Vinil Keshav of King Edward VII School, and Ruan Roodt of Hoërskool Brandwag.
 
“The playing field was definitely shaken up this year,” comments Ngwenya. “First, the number of joint winners shows how tight the competition really was. Also, where KZN cleaned up last year, this time it was Gauteng that rose to the challenge with the most winners. And, just looking at the diversity of schools in top positions, it's clear that everyone brought their A-game in 2019. Well done!”
 
A worthy initiative
According to special guest, Percy Masango, Chief Education Specialist for Commercial Subjects at the national Department of Basic Education, the NAO meets a critical need. “Commercial subjects have been declining over the years. Initiatives like this really generate interest in learners to study the subject. We’d like to thank SAIPA for organising the competition and hope to see it grow,” he said.
 
Stefaan Grobler, Accounting Teacher to Grade 11 first-place winner, Nicole De Jager, said those who win are an inspiration to pupils in lower grades: “There is a role model system among students so juniors look up to successful seniors, especially the example they set and their work ethic.”
 
First place Grade 12 joint-winner, Matimu Mabunda, said the NAO had confirmed his desire to pursue a degree in accounting and a career as an accountant. “I will definitely join SAIPA to become a Professional Accountant (SA),” he added.
 
Inspiring future accountants
According to Ngwenya, the NAO plays a critical part in SAIPA’s strategy to promote accounting as a career of choice among school pupils. “Without enough pupils deciding to become accountants today, the capacity of the Profession would suffer in the future,” she said. She congratulated the winners and encouraged all schools to register their accounting champions in 2020. 
​
Photo Caption: Grade 11 Winners
(B/L) Veren Naidoo, Ruan Roodt, Manelisi Ncube, Vinil Keshav
(F/L) Nicole De Jager, Vaishnavi Maharajh, Zintle Mshoadiba, Nadine Steyn
Photo Credit: (c) Jade Photography 
 
END

MEDIA CONTACT: Stephné du Toit, 084 587 9933, stephne@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

Whilst financial emigration may be a viable option for a small minority of individuals, for the majority, it’s likely to be a costly exercise which won’t in the long-term provide significant tax relief.

Authored by: Ettiene Retief, Chairman of the National Tax and SARS Committee at the South African Institute of Professional Accountants (SAIPA).

Recent news reports have provided conflicting – and even wholly inaccurate – information around the implications for expats to the scheduled March 2020 change to the Income Tax Act. Alarmingly, a number of tax practitioners and financial advisors have been recommending that people financially emigrate in order to avoid the expat tax the revised Act has implemented. And while financial emigration is a viable option for a small minority of individuals, for the majority it’s likely to be a costly exercise which won’t in the long-term provide significant tax relief.

What exactly is financial emigration? Financial emigration is the process whereby taxpayers change their status with the South African Reserve Bank (SARB) from resident to non-resident. It’s a process conducted purely for exchange control purposes, but which does not affect your citizenship status in any way.

Emigration, on the other hand, is a very different process as it involves physically relocating from one country to another country either in the short or long term. Once emigration has become a permanent status, the process of financially emigrating – during which time the individual’s assets move from their old country of residence to their new country of residence – takes place.

The mistake many people are currently making is that they are expecting financial emigration to resolve their issues around paying tax in South Africa on income earned abroad, a so-called ‘expat tax’. The reality, however, is that financial emigration for most individuals won’t provide material tax savings.

Historical context
It’s not uncommon in this modern era to find individuals who have primary residence in one country but who work and earn income in at least one other country. The question is, where do they pay tax?

There has been a global acceptance that it’s not fair to expect individuals to pay tax in both their country of residence and in the country in which they earned the income. As a result – and in order to relieve the burden of paying double tax – it became acceptable practice that the country in which the income was earned has the right to charge tax, in which case the income then became exempt from tax in the individual’s country of residence, or the country of residence provided a credit for the tax paid in another country.

Section 10(1) (o) (ii) of the Income Tax Act is the section which provides this particular tax exemption to South African expats on their foreign income. The proviso, however, is that they need to be outside the country for a total of more than 183 days, of which at least 60 days are consecutive days in any 12-month period. Individuals who met these conditions were effectively exempt from paying tax on their income in South Africa.

However, while the exemption clause was intended to protect individuals from being doubly taxed, it was never intended to relieve taxpayers of double non-taxation. The reality, however, is that some individuals are using this clause to avoid paying tax in any jurisdiction. The United Arab Emirates, for example, has no direct tax requirements in place. South African expats working there could, therefore, in theory, avoid paying any tax at all, whilst still retaining their South African residency.

In response to this trend, the South African Revenue Service (SARS) announced that it intended removing this exemption but as a result of public pressure, has agreed to delay its removal until March 2020.

Understanding the changes to the Income Tax Act
Once the amendments to the Income Tax Act come into effect in March 2020, South African tax residents working abroad will only be exempt from paying tax on the first R1 million they earn abroad. Thereafter they will be required to pay tax on any foreign earnings.

The revised Act does, however, make provision for expats working abroad who are registered for tax in those countries. In these instances, the Act allows those individuals to apply for credits in South Africa which are offset against the tax they owe locally, with the tax rate starting at the lowest rate.

The reality, therefore, is that South Africans working abroad will in most instances not be significantly negatively impacted by the changed regulations and will still not be doubly taxed. The only individuals that will be detrimentally impacted are those earning very large amounts offshore and even in these instances, they will still only be paying the same amount of tax they would have been paying in South Africa in any event.

What’s important to understand is that to all intents and purposes the law has not changed but has instead just corrected a loophole.

It would be counter-intuitive to allow South African residents who spend the majority of their time in the country and have the majority of their assets here, to avoid paying tax locally. South Africa’s tax regime is based on a residence-based system and is evaluated according to how much time you spend in the country, where your assets are based, where your family resides most of the time, and where the country in which your primary residence is situated.

South African residents who work abroad permanently and spend the majority of their time living abroad would already be considered non-residents from a tax perspective. Remember that it is possible to change your tax residency without having to financially emigrate.

When is financial emigration a good idea?
While financial emigration is not a means of avoiding the expat tax, there are limited circumstances when it is a viable option. A viable reason for emigrating financially is in order to access your retirement funding earlier or to shift an inheritance offshore. However, what an individual should not forget is that it is possible to make use of the R10 million foreign investment allowance without having to financially emigrate.

Now that foreign income above R1 million is no longer exempt from tax, the authorities are concerned not just with income earned abroad, but also the value of fringe benefits, including accommodation, which the individual has received. The addition of fringe benefits can quickly launch an individual over the R1 million threshold. This is something of a contentious issue, particularly if the taxpayer is working in a developing country and is subjected to very basic, but often fairly costly, accommodation, which you are then taxed on.

A SARS tax compliance certificate is required should an individual decide to emigrate. There are three types of compliance certificates that an individual can apply for.

These are as follows:

• Certificate of Good Standing: This compliance status is issued when a taxpayer wants to confirm that their tax affairs are in order with SARS.
• Foreign Investment Allowance: This compliance status is issued when a taxpayer will be investing funds outside of South Africa. Foreign Investment Allowance applications are only available to individuals older than 18 years of age.

• Emigration: This compliance status is required when a taxpayer will be permanently leaving South Africa to reside in another country and can only be selected if the eFiler is registered for Income Tax and is an individual. Emigrating from South Africa formalises an individual’s exit from South Africa for exchange control purposes. It does not mean that the individual will have to relinquish his/her South African citizenship. The individual may retain his/her South African passport.

There are downsides to financial emigration
What recent news reports encouraging individuals to emigrate financially in order to avoid the expat tax have failed to reveal is that financial emigration is an expensive exercise. There is a huge tax implication involved in changing an individual’s tax residency.

By financially emigrating an individual is deemed to have disposed of all their assets in South Africa, which means that capital gains tax starts applying. Should the individual decide at some future point to financially emigrate back to South Africa, the individual would not get that money back.

To avoid South African taxation rules, an individual would need to first change their tax residency – financial emigration is the very last step and even then, it’s not an essential part of an amended tax residency given that it is only an exchange control provision. Emigration and financial emigration only comfortably overlap when a taxpayer is legitimately emigrating. The latter doesn’t work if the individual intends to continue residing in South Africa.

Conclusion
Before deciding to financially emigrate the individual taxpayer must make sure all the facts are at hand. Understand the cost and long-term implications and carefully consider these before deciding on this route. The individual taxpayer must be certain that it is a permanent move. Does the individual have a long-term visa, a residency permit or is being sponsored to put down roots in a different country? To financially emigrate as a South African resident in order to avoid a small amount of tax is probably not a wise decision.

Even if the taxpayer is legitimately emigrating, they shouldn’t financially emigrate until they are totally convinced that this is a long-term decision. Individuals should also be particularly wary of service providers offering to help with financial emigration who don’t mention the significant cost associated with this. Those individuals that are considering pursuing the financial emigration route should take the time to understand the real cost implications and do their homework thoroughly.

ENDS

MEDIA CONTACT: Stephné du Toit, 084 587 9933, stephne@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

A recent report from Israeli blockchain portfolio platform, Blox, reveals that a new breed of digital-savvy accountant is emerging. These blockchain boffins are arriving not a moment too soon, as tax authorities around the world begin clamping down on cryptocurrency disclosures.

Faith Ngwenya, Technical and Standards Executive at the South African Institute of Professional Accountants (SAIPA) welcomes a similar trend locally. “As the use of cryptocurrency grows and the regulations governing it are refined, users may need to prove they have met their past tax obligations,” she says. “Without accurate accounting records and correct tax submissions, they could find themselves in hot water with SARS.”

Not a currency!
It’s important to recognise that cryptocurrency is treated differently in various part of the world. In some countries, like the US, it is legal but is not considered a currency. In others, like Morocco, all virtual currencies are prohibited under law. And some, like Canada, prescribe regulated use while banning it from banking transactions. In South Africa, it’s not legal tender (only the Reserve Bank can issue currency) but an intangible asset and is taxed in relation to how it is traded. 

Tax treatment
According to SARS, taxpayers dealing in cryptocurrency will be taxed differently depending on the type of activities they perform. These include issuing a cryptocurrency, mining transactions, speculating, and doing business using the currency as a medium of payment. In general, where it is bartered in exchange for goods or services in the course of business, it is taxed under “gross income” and deductions can be claimed against the effort to earn it. When it is speculated on, CGT rules come into play. If an employer pays staff in cryptocurrency, it will be taxed as normal income. The exact treatment will depend on the specific use as determined by SARS.

A virtual ledger?
Also, the so-called “distributed ledger” associated with a basic blockchain system bears little resemblance to the typical general ledger used by accountants. The latter posts balancing debit and credit transactions into appropriate accounts that are themselves grouped into financial reporting categories. A blockchain entry may hold little more information than “User A sent X units of cryptocurrency to User B on a given date”. In the accounting sense, it’s not even a virtual journal, but rather a record of original entry. “Like any source documents, these transactions need to be extracted and recorded in a formal financial ledger to correctly determine one’s tax obligation,” says Ngwenya.

Growing demand
As more users become aware of the risk of not keeping their cryptocurrency affairs in order, the demand for crypto-smart accountants is on the rise. Many Professional Accountants have already responded by getting to grips with not just the mechanics and processes behind blockchain but also the growing body of regulations evolving around it.
“While there is a steady growth in the number of practitioners who can provide financial and reporting services around blockchain, the level of their expertise varies,” says Ngwenya. “It is always best for those seeking assistance to determine how knowledgeable their Professional Accountant is about these matters.”

END

MEDIA CONTACT: Stephné du Toit, 084 587 9933, stephne@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