 On 24th June, Finance Minister Tito Mboweni presented the supplementary budget in response to emergency measures taken to combat the COVID-19 pandemic.
According to Ettiene Retief, Chairman of the National Tax and SARS Committee at the South African Institute of Professional Accountants (SAIPA), the presented figures may not fully consider the knock on effects of the disrupted economy. “While I have every confidence in SARS’ ability to collect available revenues, I’m not sure the Minister’s downward adjustments account for the coming reality,” he says. Projections Mboweni said that, in 2020, a global economic contraction of 5.2 percent is expected while the South African economy is expected to shrink by 7.2 percent. Unemployment had already risen to 30.1 percent in the first three months of the year and inflation is projected at 3 percent. He also noted that the country is reliant on exports and this has been impacted by the collapse in global demand and restrictions on economic activity. The projected total consolidated budget spending, including debt service costs, will exceed R2 trillion. Gross tax revenue for 2020/2021 is revised down from R1.43 trillion to R1.12 trillion, for a loss of R300 billion. Tax relief measures and adjustments result in a consolidated budget deficit of R761.7 billion (15.7 percent of GDP) up from the R370.5 billion (6.8 percent of GDP) stated in February. Gross national debt will be R4 trillion (81.8 percent of GDP) instead of R3.56 trillion (65.6 percent of GDP) projected in February. Real impact According to Retief, even the adjusted tax revenue of R1.12 trillion may not be achievable. “Although companies are reopening, for many this will be a gradual process over the next 12 months which will hamper them from recovering the losses they suffered during lockdown,” he says. He notes that other businesses will be forced to close, many employees will be retrenched from surviving ones, and remaining workers may be forced to take pay cuts of up to 30 or 40 percent. “We will have to wait another three months for the latest unemployment figures, so we can assume that current unemployment is much higher,” he says. At the same time, consumer and business buying behaviours will change. Individuals may eat out less or holiday less, due to the risk of contracting the virus, resulting in lost revenue for local businesses. They may also defer purchases, like home improvements, because of lower pay. Likewise, companies will have less funds for business development. Knock-on effect “This has a snowball effect that affects vendors across the supply chain and further slows economic activity,” says Retief. He believes it is almost impossible to model the full extent of the fallout because each sector and industry will have a different recovery rate, which will be staggered across sectors and industries. “All of these factors and the resulting slump will have a far-reaching and unforeseeable effect on tax collections,” says Retief. The government therefore needs to amplify its efforts to restart the economy if it wishes to achieve its target. 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
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 We all face ethical dilemmas during our lives, but for the professional the stakes are particularly high.
By Shahied Daniels, CEO: South African Institute of Professional Accountants (SAIPA) We all make choices every day, from the trivial (“What coat shall I wear?”) to the significant (“Should I take advantage of this loophole in the accounting system?”). Many choices have no right or wrong answer, or there is clearly a right one. But then there’s the ethical dilemma which, strictly speaking, is a dilemma in which either each alternative is “right”, or each will compromise an ethical principle. It is not called “the horns of a dilemma” for nothing—making the right choice can be excruciatingly difficult. Ethical dilemmas are relatively rare in personal life but, in professional life, they crop up more frequently. Professionals must balance the ethics of their profession, serving the interests of the public and serving the interests of the client. One can distinguish several different types of common ethical dilemma. One is when ethics derived from one’s culture or beliefs conflict with legislation—this is likely when laws are unjust, or in multicultural societies where the law is based on one set of cultural or religious precepts. This can lead to a conflict between personal morals, laws or regulations, and professional ethics codes. During the Level 5 lockdown, many individuals and organisations faced an acute ethical dilemma because of the prohibition on supply cooked food to the needy. Similarly, nurses often had to choose between allowing a COVID-19 patient to receive visits from family members and the need to keep the infected individual isolated. Another common type of ethical dilemma relates to industry practices. A Professional Accountant might work in, say, the oil and gas industry and become habituated to the accepted codes of behaviour and regulation in that industry, and then shift industries only to find that some of these are not accepted in the new environment, or are indeed contrary to industry-specific regulations. The same might occur even when moving between companies within the same industry. A topical ethical dilemma could concern the CFO of a government department being asked to bypass payment or tender procedures to facilitate the swift rollout of an urgently needed social relief programme. An important factor that complicates ethical dilemmas is that the added complication that one has to engage with the ethics of other stakeholders. For Professional Accountants in particular, a significant and common dilemma relates to assessing the integrity and materiality of the information supplied to them by clients. Making the choice So, when trying to navigate the correct choice between two conflicting ethical courses, how should one proceed? There are some useful rules of thumb, the first of which is the legal test. Is a law going to be broken? If so, the choice is between a law, which can be enforced, and a moral code, which cannot. If the option you choose is legal, then there are other tests to apply. Does it carry the stench of corruption? Would you be happy to see your choice being communicated on a billboard or the front page of a news site? And, finally, what would another person who values and cares for you think about your choice—your parent or spouse, for example? Those who are bound by professional codes of conduct, such as Professional Accountants (SA) also have the benefit of an official code of ethics to help guide them. It can also be extremely useful to speak to fellow professionals or a fellow member of your professional association. When confronting an ethical dilemma, one could argue that the principle embodied in the Business Judgment Rule could be helpful. The Rule is used to protect directors from liability or censure if a decision they take later proves to have been faulty. Fundamentally, the Rule provides directors with a “safe harbour” if they can show that they took all reasonable steps to inform themselves and properly applied their minds to all the factors before making their decision—in other words, that they acted competently as directors and in good faith for the benefit of the organisation based on the information before them. Professionals confronting a tricky ethical question could well make use of the same principle. In the end, because an ethical dilemma is ultimately about choosing between two “right” choices, the best one can do is make the decision as rationally as possible, taking everything into account and taking all reasonable steps to ensure the most appropriate outcome in the circumstances. In addition, professionals would be well-advised also to keep a record of the decision-making process they followed so that it their choice is later questioned, they can demonstrate the process they followed in arriving at it. 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  On 10 June 2020, the South African Institute of Professional Accountants (SAIPA) successfully concluded its first virtual AGM on the Zoom conference platform. The meeting encountered no technical difficulties and digital interaction between the Board and its Members was seamless.
“I am very happy with the smooth execution and satisfactory outcome of the event, as well as how we were able to more efficiently progress through our agenda using technology,” said Kantha Naicker, SAIPA Chairman of the Board. Voting on various matters, facilitated by the auditor, was conducted by way of the platform’s polling system. Slowed but not halted Although attention was devoted to the SAIPA’s response to the COVID-19 crisis, the emphasis was on our roadmap towards digital and service transformation to ensure that we are aligned to the requirements of the Fourth Industrial Revolution. Particular attention was devoted to the steps that need to be taken to ensure that the profession, the Institute and our members are future-ready and well equipped to serve the interests of our country and the communities in which we operate. During their presentations, both Kantha Naicker, the SAIPA Chairman and Shahied Daniels, the Chief Executive of SAIPA, drew attention to the fact that SAIPA had, despite being encumbered by the consequences of the pandemic, explored the most optimal and innovative ways of continuing to perform its responsibilities. By virtue of its new home-grown digital cloud-based platform and its willingness to embrace technological advances, SAIPA maintained operational continuity and was able to further enhance its service delivery. “Because we own the intellectual property related to this system, so we are able to rapidly enhance its functionality and the services we deliver, not having to be concerned with proprietary restrictions,” said Daniels. Future-driven After the opening presentation by the Chairman, Daniels provided members with a summary of the Institute’s outlook and strategic direction during the year ahead. He emphasized the primary responsibility of minimizing the COVID-19 risks to which the staff and management, the board and our members are exposed. Furthermore, he stressed the need to continuously keep members appraised of the latest developments and of opportunities they could leverage to add value for themselves and by so doing enhance the Professional Accountant (SA) designation. Daniels drew attention to the fact that globally the accounting profession was in a transformational phase, which was primarily due to rapid advances in technology that are compelling the profession to chart a new future. “Professional Accountants (SA) must move their current skillset towards what is needed to provide a business advisory service to clients; a service that is value creating and value adding”, he said. Bearing in mind the developments in the profession, SAIPA will need to adopt a strategy that provides for restructuring the Institute in such a manner that it is future-ready and remains future-fit. SAIPA accepts that the ultimate goal must be to empower our members to become increasingly credible and trusted business advisors that are able to meaningfully contribute to inclusive socio-economic prosperity. Service-based strategy Daniels pointed to SAIPA employing a GREG (Governance, Risk, Ethics, Compliance) framework to guide it on the road ahead. Consequently, the Institute embarked on implementing the results of a major governance review that was focused on compliance, board and operational committee structures, policies and procedures, and problems that were encountered in previous years. “Our challenge for the year ahead is to ensure we consistently implement and enforce appropriate processes, procedures and practices,” he said. Having streamlined its personnel requirements, the Institute is now committed to building a culture of trust and performance excellence, whilst simultaneously instilling a service philosophy that inspires its staff to deliver superior service to members. With respect to CPDs, the aim is to upskill and reskill members by way of an enhanced competency framework. “We are developing visionary thought leadership that will secure our position as the Professional Accounting Organisation of choice,” said Daniels. Consequently, SAIPA had established a Centre of Future Excellence (CoFE), which is led by Professor Rashied Small, the SAIPA Executive for Thought Leadership. The intention is to sharpen the further focus on rebuilding public trust and maximizing the ethical conduct of members. This initiative will inter alia involve the recertification of all members, the signing an ethical pledge by all members, the establishment of a comprehensive practice review system. This will be augmented by a major ethics and professional conduct campaign to reinforce the attention paid to public interest and trust. An ongoing initiative will be to actively engage members by virtue of various initiatives, such as the monthly open agenda forum, which will be hosted by the Chief Executive and afford members the opportunity of sharing their wishes, concerns and queries in a face-to-face interaction, albeit two-dimensional. “Our intention is to promote a culture of transparency and to provide an open line of communication to our members,” Daniels said. AGM close The AGM concluded with the swearing of new Board members, whereupon the Chairman closed what had been an uneventful and very successful meeting, reiterating her unwavering commitment to serving the Institute for the final year of her tenure as Chairman. 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  For Professional Accountants, the way you engage with clients is an ethical issue too.
By Shahied Daniels, CEO, South African Institute of Professional Accountants When one thinks about ethics, one’s mind immediately conjures up some big moral dilemma and how you, as a professional, should act. That’s obviously part of it, but true ethics should be embedded in the way a Professional Accountant (SA) conducts his or her business in the ordinary course of events—in that sense, everything a Professional Accountant (SA) or any other professional does in his or her business life should be done ethically. This is particularly evident in the way a Professional Accountant (SA) engages with clients. Clearly, any business relationship needs to be conducted with the utmost professionalism, but it must also be admitted that there is considerable scope for dispute. This is particularly true when the professional is providing vital services or dealing with sensitive information, as an accountant does. In areas like this, the boundary between professional and ethical conduct is necessarily blurred: the one cannot exist without the other. To ensure that they engage with clients both professionally and ethically, Professional Accountant (SA) need to follow these three guiding principles:
It is important to watch out for scope creep or amendments. It is quite common for clients to expand the work they want done, or to request additional services (such as doing personal tax). Make sure that these amendments or additions are noted either in an addendum to the original letter of engagement or, if appropriate, a new one. A good letter of engagement will make it clear what a Professional Accountant (SA) has undertaken to provide and thus will make it easier for him or her to deliver what was promised, and thus be both professional and ethical.
It is advisable that clients understand this issue and spelling it out in the letter of engagement would be wise. As always, ethics and true professionalism turn out to be two sides of the same coin. 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  Globally, ethics is becoming recognised as the hidden asset on which long-term success is founded.
This is especially true for the professions like accounting. By Shahied Daniels, CEO, South African Institute of Professional Accountants (SAIPA) As South Africans come to terms with state capture and everything it means for our economy and public life, the importance of ethics is receiving recognition. We can all see that even the best laws can be circumvented or broken—and that legal processes are slow and expensive. By contrast to law, ethics relates to an individual’s sense of morality, or right and wrong. An ethical person is guided by law, to be sure, but he or she is fundamentally motivated by trying to do what is right. One could say that law is about rules while ethics is concerned with principles. In the most basic sense, one can trust that an ethical person is not trying to get away with what he or she can but is trying to do the morally correct thing. Clearly, it is important that everybody is ethical in how they deal with all their affairs, personal and business, but it is critical in the professions. Professionals like accountants, doctors and lawyers deal with extremely sensitive matters, and their advice and actions have life-or-death consequences or spell the difference between financial success or failure. Managing ethics When it comes to ethics in general, there are different conceptions of what is right and wrong. This problem is more acute when one exists in a multicultural environment such as South Africa. Another challenge is that deciding specific ethical questions can be surprisingly difficult at times, as most people can confirm from experience. In response, professional organisations like SAIPA develop ethical codes to guide their members’ actions in their professional lives. These codes offer clients the peace of mind that comes from knowing that the professional they engage with have subscribed to the code and will be held accountable to it. SAIPA has subscribed to the Code of Ethics for Professional Accountants developed by the International Ethics Standards Board for Accountants. Those holding SAIPA’s certification as Professional Accountants (PA(SA)) thus have a well-structured framework to assist them in making ethical decisions. It is important to emphasise that ethics is not about following rules, but rather principles. Codes of conduct can help Professional Accountant (SA)s work out how principles should be applied, but they do not specify certain actions. King IV, the latest iteration of South Africa’s governance code, follows the same approach by focusing on outcomes and not rules. Audi alteram partem--the requirement to be fair For a professional body like SAIPA, holding its members accountable to an ethical code is critical in building public confidence in the profession generally, and the Professional Accountant (SA) designation in particular. That means holding members accountable to the code. Here it is important to stress that SAIPA and other professional bodies must be rigorously fair when it comes to holding members accountable. The key principle here is audi alteram partes, the Latin maxim that means “listen to the other side”. This is a foundation of any fair legal system and should never be ignored in the interests of expediency. SAIPA thus has a carefully thought-out process to allow members to respond to complaints, sift the evidence, and decide whether sanction is needed, and what form it should take. As in law, there is also an appeal process when a member feels that an incorrect decision has been taken. Gold standard The gold standard refers to the practice of backing paper currencies with gold, a practice that has fallen somewhat out of favour in today’s financial systems. However, the phrase remains as a vivid metaphor for the concept that true worth is underpinned by something solid. Digital technologies are ushering in the Fourth Industrial Revolution, which in turn is automating many accounting processes. But in this often confusing and fast-moving digital environment, trust has become almost a currency—and trust is founded not only a profession’s record but the knowledge that he or she is bound by an enforceable ethical code. Ethics, and the trust they engender, have always been the foundation of a successful professional career, and that is one thing that is not going to change. 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  On Tuesday 5th May, SARS Commissioner Edward Kieswetter detailed improvements in the tax authority’s operations and its proactive response to COVID-19. However, he painted a gloomy picture of national revenues.
“It’s sadly ironic that SARS has worked towards reversing its poor collection performance of the past only to be faced with an economic outlook comparable to the Great Depression,” says Ettiene Retief, Chairman of the National Tax and SARS Committee at the South African Institute of Professional Accountants (SAIPA). Tax performance According to Kieswetter, tax and customs revenue collection is being negatively affected by several factors, including: the country’s poor economy before COVID-19, weakened further by rating downgrades; COVID-19 tax relief measures; the effects of the phased lifting of the national lockdown on economic activities and capacity; and the overall impact on compliance. He explained that a great concern was reduced economic capacity due to business closures and job losses. According to Stats SA, business liquidations for February 2020 increased 12.3% compared to February 2019, while business insolvencies were 13.9% higher in January 2020 compared to January 2019. Total retrenchments for April 2020 were just over 20,000, a 1622 (or 9%) increase from last April. “These directly affect taxable incomes and therefore revenue collection levels,” emphasises Retief. Lower expectations Three modelled scenarios predict local GDP outcomes of -5.4% to -16% for the current year. Kieswetter said that SARS’ initial estimates are that revenues will be 15% to 20% lower than announced in the February Budget Speech, amounting to an under-recovery of R285 billion. SARS’ preliminary assessment of revenue performance for April showed a R9 billion under-recovery, a year-on-year decline of 8.8%. This was the result of a drop in prior year performance of PAYE by 5.2%, domestic VAT by 4.3%, import tax by 19.7%, specific excise duties by 54.7%, and corporate taxes by 55.4%. VAT refunds were 12.5% lower than estimated due to fewer credit returns this year. COVID-19 tax relief measures could cost SARS much more than the initially predicted R70 billion, said Kieswetter. Continued compliance Kieswetter also highlighted the need for employers and employees to remain compliant during the upcoming 2020 filing season for personal tax, which he described as more important than ever. “SAIPA urges employers to ensure their employee tax submissions are current and that all PAYE has been paid to SARS to support economic recovery,” says Retief. Businesses seeking tax relief, government aid or business rescue should contact a Professional Accountant (SA) to maximize the chances of their applications being successful. 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  Following President Ramaphosa’s announcement of a risk-adjusted reopening of the economy, companies will be able to depend on the full services of their Professional Accountants. As a professional service, accounting firms fall into the Level 4 category of businesses that can resume operations from 1st May 2020.
“This is provided both accountant and client adhere to the strict regulations meant to mitigate the spread of the COVID-19 virus,” It is however still advised that where possible accountants continue to work remotely. says Faith Ngwenya, Technical and Standards Executive at the South African Institute of Professional Accountants (SAIPA) Compliance not optional It is important for accountants and other qualifying organisations to recognise that, come 1st May, it will not be business as usual. They must first lay the groundwork for the resumption of operations by having in place COVID-19 risk assessments and plans, and educating workers on COVID-19 and protection measures. They must implement systems for identifying and protecting vulnerable employees, safely transporting employees, screening employees entering the workplace, preventing viral spread in the workplace, ensuring surfaces and shared equipment are kept clean, providing good ventilation and managing sick workers. Further, only one third of a company’s staff may be present at its place of operation and it is advised that, where possible, employees must work from home. This is over and above the generally demanded practices of maintaining a social distance of two metres from others, wearing a face mask outside home (now officially ordered by the President) and washing one’s hands frequently. Travel Although SAIPA is still waiting for full regulations to be issued by the government, it appears that accountants will not need to apply for an essential services permit. However, with the large deployment of troops, it is conceivable that roadblocks will continue and those who cannot prove their business may be turned back. “We advise that Professional Accountants keep their ID and PAO membership card with them at all times as a precaution,” says Ngwenya. Compliance and relief Because many SMEs are not connected to the Internet and their data is held onsite, their accountant must travel to the company’s premises to perform their duties. This includes the compilation of the financial reports, projections and documentation without which organisations cannot apply for relief funding from the various available government programmes. Companies also have the option to defer SDL payments for 4 months as of 1st May (not including April, as some have wrongly stated), as well as 35% of PAYE payments for the month of April onwards. “However, this relief is only available to those who are tax compliant,” warns Ngwenya. She directs companies to have their accountant settle their tax obligations before making any applications. Restarting the economy Ngwenya reports that SAIPA recently appealed to various Ministers to classify Professional Accountants as an essential service in light of the above. With the easing of restrictions, practitioners can now resume their critical role as economic enablers. “Businesses cannot recover without their Professional Accountant’s input. So SAIPA pleads with both parties to adhere closely to all COVID-19 regulations and restrictions to ensure we do not return to the previous lockdown status,” she concludes. 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  On Tuesday, 14 April, Finance Minister Tito Mboweni warned that the country should prepare for a deep recession but offered hope of a return to economic growth in 2021.
According to Ettiene Retief, Chairman of the National Tax and SARS Committee at the South African Institute of Professional Accountants (SAIPA), the future of most businesses will depend on the critical financial choices they make now. “Accountants and tax consultants are more important than ever, not just for financial and tax reporting, but as business advisors who can help their clients discover and leverage vital emergency funding,” he says. This is especially true for SMEs who often do not have the deep overdraft facilities and contingency financing available to big businesses. Accessing funds “There is a vast amount of information to consider and many requirements to satisfy before companies can apply for aid,” warns Retief. Government intervention schemes require organisations to submit financials and projections, including assumptions and impact analysis, to prove that their current distress is a direct result of COVID-19. This prevents scarce funds from being squandered on businesses that were already failing before the pandemic occurred. It, therefore, benefits companies to ensure their financial statements are up to date and that the impact of the virus on their profitability is accurately represented in interim reports. Accountants, who are typically familiar with the state and needs of their clients, can also assist with a variety of applications, including cost-saving through efficiency and effectiveness, employee UIF applications, tax deferments, etc. Business continuity In addition, organisations must develop a sound business continuity plan that embraces heavy cost-cutting and stretching the value of each Rand spent. They may even resort to bootstrapping techniques, like sharing office space or reciprocal service exchange, which will likely become a standard tactic for some cash stapped SMEs. Accountants will draw up strict operating budgets, and implement monitoring and evaluation strategies to assure adherence. They will also develop sustainability plans which include a thorough review of their clients’ business models. “This will help companies weather the coming months and provide optimal approaches to keep their business afloat,” says Retief. Most businesses have a strong relationship of trust with their accountant, who is also intimate with their business affairs. This, and their strategic capabilities, makes the accountant the ideal candidate to help the business prevail. Business rescue “We must realise that, effectively, every business is now a potential business rescue case, and this is a situation for which Professional Accountants are not only well trained but optimally suited,” says Retief. He advises all organisations to quickly approach their accountants for assistance in making sensible financial and strategic choices that contribute towards their survival and return to profitability. The Institute continues to make representations before the government on the importance of uninhibited accounting services as a means of driving economic recovery and growth, during and post COVID-19. 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  On Monday, 30 March, President Ramaphosa announced measures the government will be taking to minimise the local economic impact of the COVID-19 pandemic. The initiatives are aimed at reducing loss of income for small businesses and protecting jobs.
In direct response to the measures, the South African Institute of Professional Accountants (SAIPA) held a member engagement webinar on 31 March with several subject matter experts from the Institute in attendance to offer guidance. Offering clarity According to Faith Ngwenya, Technical and Standards Executive at the Institute, the purpose was to provide its members with clarity around the new proposals and the relief measures that have been implemented by government. “We realise that fake news and misinformation are spreading rapidly, and we are committed to providing authoritative guidance on the regulations to ensure they are implemented correctly,” she says. Relief Measures The webinar was backed by interactive chat that allowed the participants to submit their pressing questions in parallel with the presentations. The first segment unpacked relief measures offered by the Department of Labour in terms of the proposed Compensation Fund and UIF allowances. This was followed by details on the steps being taken by the Department of Small Business Development to provide support for small businesses. Tax relief around PAYE, Provisional Tax and VAT deferments were also covered. However, the last speaker emphasised that, although certain concessions were being implemented to protect small business cash flow, tax deadlines remained fixed and needed to be met. This was punctuated by a senior SARS official, who spontaneously joined the discussion to offer his input. Essential services Members expressed several concerns through chat. Many asked how to apply for an essential service permit for clients who were sole traders, as they were not registered on the CIPC website where the permits are obtained. Small business owners will typically turn to their Professional Accountants to help them submit applications for relief, essential services permit and other matters during this time. Says Ngwenya. “Since many of these submissions must include cash flow statements, other financial reports and supporting documents, it is critical that our members remain informed on the latest requirements.” Conclusion Ngwenya says the Institute continues to engage with government bodies at all levels to ensure its members deliver critical accounting and tax services correctly in the public interest. She invites Professional Accountants and members of the public to visit the SAIPA website at www.saipa.co.za for daily updates on current regulations. 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  On 27 February, the South African Institute of Professional Accountants (SAIPA) hosted its Annual Budget Breakfast at The Wanderers Club in Illovo, Johannesburg. The event which saw almost 200 attendees as well as a Live Stream audience, came the morning after Finance Minister Tito Mboweni’s National Budget Speech and served as a platform to review his announcements.
A keynote address by Judge Bernard Ngoepe was followed by a presentation on the budget highlights by Ettiene Retief, the Institute’s Chairman of the National Tax Committee. Below are the top take aways. Union influence In his address, Judge Ngoepe said the government had correctly contextualised the country’s economic problems and had made plans to address them. However, he asserted that they would not follow through on wage bill reduction or SOE restructuring to the full extent indicated, given the strong influence of the unions to obstruct policy execution. “Don’t hold your breath,” he said. Unrealistic growth projection Covering the highlights of the budget, Ettiene Retief noted that last year, the government had projected growth of 1.5 percent, but only achieved 0.3 percent, and this year project growth of 0.9 percent. He said this figure is possibly overestimated as the country could not sustain growth of just 0.3 percent, before considering current economic forces, like the effects of the coronavirus on trade with China and the impact on tourism, and the lack of stable electricity supply. Tourism and agriculture According to Retief, government could make significant strides in its goals in boosting both tourism and agriculture by legalising marijuana beyond only medical use. Also, government needs to consider how to support the agricultural sector, which includes means to ensure sustainable water supplies. “Certain foreign states have quite literally balanced their budgets, taking them out of the red into profitable positions purely on the basis of legalising and regulating marijuana usage,” he said. Water security Retief said that an important economic factor that had not been addressed in either the SONA or the Budget Speech was water security. “We do not at the moment have a sustainable water policy; we’re not even smart in how we use our water in terms of agricultural usage,” he said, noting that this was the one resource without which agriculture could not flourish. We have already experienced water resource shortages, and this matter will require significant infrastructural send. The effect of 4IR Retief explained that the Fourth Industrial Revolution will automate many repetitive tasks, and that this could result in economic growth but does not create more jobs, unless we prepare the labour market to the changing demand in respect of skills. The person currently doing the job must be deployed somewhere else, possibly in a different sector or doing a different task. “I don’t think we’ve really understood how our tax base is evolving, how it’s changing, how it’s going to stay sustainable for the next few years,” he said. Reducing corporate tax rates The Organisation for Economic Co-operation and Development has reported that there is an international trend for corporate income tax rate cuts. The average corporate income tax rate across OECD countries is 23.9 per cent, which was 32.5 per cent in 2000. A lower corporate income tax rate could reduce the risk of Base Erosion and Profit Shifting. However, various studies found that a reduced corporate income tax rate does not yield greater tax revenues or significant increases in investment, said Retief in response to government’s proposal to reduce corporate tax rates. While the corporate tax rate should not be high, we should avoid participating in the “race to the bottom”, and “we should not try to get business here because we’re reducing corporate tax rates.” The speakers and participants in a discussion panel that concluded the event all painted a picture of a budget that does not face the reality of an economy in need of desperate remedial action. 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 |
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