 Authored by: Marisa Jacobs, Director at Xpatweb, Tax Consulting SA
The Department of Home Affairs published the first directive for 2019 explaining the rules of Section 11(2) Visitor Visas with endorsement to conduct work. The sparing nature in which directives are issued further highlights the importance of this directive and the focus of the Department on business travelers and short-term assignees vs long term secondees. Only Issued Once in a Calendar Year The directive clarifies that Section 11(2) visas are not to be used continuously and are specifically to allow for short term project resources in South Africa. The issuing of this directive indicates a common misuse of the visa category by employers where they are making use of the relaxed nature of visa requirements of this category to bring resources into South Africa and then continuously extending or applying for new visas when they should in fact be pursuing a long term work visa. The directive now sets out clearly that the visa may only be applied for once in a calendar year and further only extended once in the Republic for a period not exceeding 3 months. The maximum period thus 6 months. Work Legally in the Short Term There is further a broad misrepresentation by business travellers, especially those travelling from visa exempt countries, who enter South Africa on a holiday/business visa while in fact conducting work in South Africa. When an employee comes to render employment services in South Africa, make sure they get a valid short-term work visa. Do not take a chance and tell the immigration official this is only a business trip, when the purpose is work. It is easy to be compliant and not worth the risk. The process takes 5 – 10 working days and the short-term visa is issued for 3 months and may be extended in South Africa for a further 3 months. Consequences of Working on a Business Visa Where an expatriate is found on your premises conducting work without the necessary authorisation on their visa to conduct such work, the Immigration Act clearly sets out the implications for both the expatriate and the employer. This includes arrest and deportation for the foreign national and a fine and/or arrest for the employer depending on the offence. The issuing of the above directive points to a more vigilant Department with their eye on individuals and businesses who do not comply with the conditions of their visas. This is a good time to ensure all employees are compliant and your organisation is in the green. ENDS MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za For more information on Tax Consulting please visit: Website: http://www.taxconsulting.co.za/ LinkedIn: Tax Consulting South Africa Facebook:Tax Consulting South Africa
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 The ability for employees and business owners to pre-tax structure their relatives’ school and tertiary education fees remains one of the few available but seldom used tax planning opportunities.
In short, they can sacrifice a portion of their taxable income in exchange for their company’s bursary paying their education costs tax-free, thereby obtaining a tax benefit. How much they save depends on the fee amount, their tax bracket and the number of learners they support. For qualifying employees, their savings range between R3,600 and R23,400 per person per annum. With the allowed limits for employer bursaries having been recently increased, organisations are beginning to see this as a meaningful benefit to attract and retain talent. However, according to Darren Britz, Senior Tax Attorney, and Donne Trump, Bursary Advisor, at Remuneration Consultants (Tax Consulting SA), the arrangement must adhere to the letter of the law or employers could find themselves in hot water with SARS. What is an employee bursary benefit? In terms of the Income Tax Act 58 of 1962 as amended, a bona fide bursary or scholarship granted to an employee’s relatives shall be exempt from tax within certain limits and provided certain conditions are met. The employee must not earn more than R600,000 for the year of assessment, and the portion of the bursary amount exceeding R20,000 for Grade R to 12 or NQF 1 to 4, or exceeding R60,000 for an NQF 5 to 10 qualification, will be subject to taxation. When correctly augmented with the provisions for a salary sacrifice, the clause allows employees to legally reduce their taxable income in exchange for the equal but tax-free bursary benefit. “Employers with tight budgets can increase their employee value proposition (EVP) tenfold, at virtually no cost, just by offering this reward,” says Trump. However, It is important to note that an employer’s payment of the school fees is a fringe benefit, as contemplated in the 7th Schedule of the Act. Therefore, additional requirements need to be met to obtain the exemption, while critical legal and administrative procedures must be followed throughout the life of the incentive for the bursary and resulting tax reduction to be valid. The rise of questionable schemes Any organisation wishing to offer such a benefit must perform the requisite due diligence and thoroughly research the requirements before taking on a partner to set up and administer the bursary. They should also ensure the programme is backed by a legal opinion that expresses its validity. “Companies shouldn’t focus on incentives marketed solely to appeal to employees,” warns Britz. “Rather, they need a system that’s also deeply rooted in law to protect themselves so they can offer a bulletproof case if called to account by SARS.” In contrast, the firm has noted several offerings appearing in the market whose legal grounding would not stand up to close scrutiny by the tax authority. It is concerned that this could rob companies of a much needed means to attract, mobilise and retain vital skills. If enough of those schemes fail, with employers left holding an unwanted tax bill, SARS and businesses alike could tar all such offerings with the same brush. “Yet, this incentive will undoubtedly provide the competitive advantage companies are desperately seeking,” says Miss Trump. “It costs the employer nothing, allows employees to contribute to a need that’s important to them while lowering their tax obligation and, overall, promotes education in South Africa.” She further urges that employers who are interested in this staff incentive should engage a reputable bursary administrator with a strong tax and legal foundation, backed by tax attorneys and chartered accountants, to assure the successful creation and implementation thereof. ENDS MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za ABOUT Tax Consulting SA: Tax Consulting SA offers a streamlined service in the calculation and filing of individual income tax returns, provisional income tax returns or any other more complex individual tax relate matters. Our highly qualified team of Tax practitioners are registered with SARS under controlling body of the South African Institute of Tax Practitioners (SAIT). As tax specialists, we remove the burden from clients to keep their tax affairs in good order, achieving optimal tax savings while ensuring full compliance. For more information on Tax Consulting please visit: Website: http://www.taxconsulting.co.za/ LinkedIn: Tax Consulting South Africa Facebook:Tax Consulting South Africa  Authored by: Janine van der Merwe, Reward specialist at Remuneration Consultants, Tax Consulting SA
Hard skills are easy to quantify in the workplace and at home: either you know how to program software, or you don't. Either you understand how to design a stellar spreadsheet, or you don't. With the rise of automation in the 21st century and the 4th Industrial Revolution, however, many jobs that require simple hard skills like data processing or data collection are going to disappear or evolve. That's why it's essential to harness the power of soft skills like leadership, empathy, and creativity. Here are 10 soft skills you will need to survive. 1. Interpersonal skills: empathy When it comes to day-to-day or workplace situations, it's critical to be able to empathize with others to break down boundaries between team members, prevent conflict, and create a more positive work environment where people can flourish. While sympathy involves feeling bad for another person and extending pity, empathy goes deeper. It requires putting yourself "in another's shoes" and feeling their pain, frustration, excitement, or joy. It's a more profound response, connected to impulses in your cerebral cortex, that allows you to identify with another person's situation. 2. Sense of humor In a fascinating Ted Talk, "The Magical Power of Storytelling," David JR Phillips discusses how telling humorous stories at work can help trigger the production of endorphins. This effect occurs not just in yourself, but also in whoever's listening. People whose brains get flooded with endorphins are more relaxed and creative. Having a sense of humor and being able to engage with other team members in a light and easy way is an essential soft skill. It not only helps ease the mood and get endorphins flowing for greater creativity, but it also keeps things in perspective in work and your day-to-day world. 3. Integrity and honesty Integrity will never go out of style. In its purest form, it's about maintaining a set of personal values at all points during your personal and professional life. Though compromising in some matters is essential to collaborative work, there's never a reason to compromise on values like honesty and respect. When it comes to fostering integrity in your interactions, it's helpful to keep those values top-of-mind so that you don't lapse in moments of hardship. 4. Leadership Quote: "The challenge of leadership is to be strong, but not rude; be kind, but not weak; be bold, but not bully; be thoughtful, but not lazy; be humble, but not timid; be proud, but not arrogant; have humor, but without folly." --Jim Rohn. Jim Rohn's wise words break down the critical aspects of leadership, highlighting the importance of balancing values to guide a team or an organization to success. Even outside of managerial roles, it helps to think like a leader; value other people's contributions and exude confidence but be willing to learn from others. 5. Language Though everyone has a conflicting view on globalization, most can agree that the trend is here to stay. Most Millennials already consider themselves "global citizens". A bilingual employee is an asset to the team. Understanding the structure of other languages can also help strengthen communication skills in your native language, and feeds into other soft skills like flexibility, collaboration, and empathy. Emerging language technology has made it incredibly easy to learn a new language. 6. Communication Language fluency is not enough. The ability to communicate effectively is another necessary soft skill. Communication, as a concept, is way more complicated than you might think. A Principles of Management article breaks down 13 distinct types of communication, including nonverbal, written, storytelling, and touch. 7. Collaboration If you were to ask the Millennial generation about the power of collaboration, they would overwhelmingly agree that it is an essential soft skill in the workplace and beyond. As automation begins to take over more solitary, rote tasks like data entry and data processing, you're going to have to embrace the ability to work in teams on higher-level functions that require more collaborative work. 8. Creativity and problem solving Problem solving, and creativity must be discussed as one cohesive soft skill because most issues do necessitate creative solutions that haven't been thought of before. Think of the ever-evolving world of content marketing, for example. Year by year, innovative companies make new strides and set the standard for development. If you want to work on creativity, try the following: • Brainstorming sessions allow you to develop concepts in a judgment-free zone. • Challenge your creative, right-brain activation through drawing or other artistic practices. 9. Time management When it comes to maintaining your position in an increasingly competitive workplace, time management is critical. With automation, faster technology, and greater connectivity in the world, there's indeed no place to hide from poor time-management skills. That is where harnessing the power of technology is going to be an incredible asset. 10. Adaptability and flexibility As we've discussed, automation and the role of Artificial Intelligence will likely continue to increase at a rapid rate. Though this promises exciting innovations and efficiencies in a variety of fields, it's going to create rapid changes. That is where the ability to adapt becomes an incredibly valuable soft skill asset. You can have all the education, training, and potential in the world, but if you cannot rapidly adapt to the changes that are set to occur in the workplace, you will have a difficult time transitioning in the future. The most fascinating and elusive aspect of soft skills is that they work together in perfect harmony. For example, it's difficult to engage in effective collaboration and communication without empathy. Without integrity and established trust, it's hard to be a good leader. And without the ability to adapt to changes in the workforce, you'll never develop your skills efficiently. ENDS MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za ABOUT Tax Consulting SA: Tax Consulting SA offers a streamlined service in the calculation and filing of individual income tax returns, provisional income tax returns or any other more complex individual tax relate matters. Our highly qualified team of Tax practitioners are registered with SARS under controlling body of the South African Institute of Tax Practitioners (SAIT). As tax specialists, we remove the burden from clients to keep their tax affairs in good order, achieving optimal tax savings while ensuring full compliance. For more information on Tax Consulting please visit: Website: http://www.taxconsulting.co.za/ LinkedIn: Tax Consulting South Africa Facebook:Tax Consulting South Africa  Author: Jean Du Toit, Senior Tax Attorney at Tax Consulting South Africa
Last week we were asked what Mr Edward Kieswetter’s first actions should be when he takes over the reins at SARS on 1 May. The answer for us was a no-brainer, crack down on those implicated in the State Capture Inquiry, starting with the beans spilled on Bosasa. Maybe SARS was listening or perhaps a fortunate stroke of serendipity, but this past weekend saw a media report on SARS investigating 83 taxpayers implicated in the State Capture Inquiry, an announcement that many South Africans welcomed. However, this could also just be pre-election manoeuvres, as the Sunday Newspaper that published the aforementioned announcement, may have some moral debts owing from the Rogue Unit saga. We should also be reminded that the Guptas have yet to be found guilty of any tax offenses, while former President Jacob Zuma has apparently not paid fringe benefit tax on Nkandla and that SARS acted quickly to confiscate documents during the start of the Bosasa scandal, but, to our knowledge, no tax offenders have been arrested to date. But what if SARS has the resolve this time with unfettered political and National Prosecution Authority backing? In the interest of balancing the scales, here are some tips if you have not been paying your tax dues and your nerves are setting in. Tip #1: Professional Legal Privilege Make sure your tax advisor comes with “legal professional privilege”. It is a known SARS tactic to ask for tax opinions, tax advice or other information known to your advisors or auditors. A skilled SARS auditor makes quick work on getting to the bottom of tax advice not covered by legal privilege. In our firm, it is a golden rule that an admitted attorney should always be present during all client consultations, especially where voluntary disclosure of non-compliance is involved. Legal professional privilege is explicitly recognised by the Tax Administration Act (TAA) under section 64, which must be read with section 42A and is afforded only when there is an admitted attorney or advocate as a taxpayer representative. Tip #2: SARS Audit Mistakes and First Mover Advantage The abovementioned media report was perplexing, as it noted that the affected parties had not necessarily been formally notified that they are being audited by SARS under section 42 of the TAA. This means that either SARS deliberately wants to give those implicated a chance to avoid penalties or criminal prosecution; or we have an inexperienced SARS audit team; or SARS’ quoted media spokesperson gave a tactical response. This gives first mover advantage to any implicated taxpayer who has not been formally informed, as they can lodge an application for relief under the Voluntary Disclosure Programme (VDP) with SARS, which, if done correctly, will halt any SARS audits until the VDP process is concluded. Tip #3: Do not become the SARS orange uniform example The undeclared taxes of Bosasa, even if collected to the last penny, will be a drop in the ocean taken our overall budget deficit. If SARS wants to make up the shortfall, there are areas where they can collect so much more revenue with less effort and resources. Besides the fact that it is SARS’s job to ensure tax compliance, why are they going after these persons now? It will only be a fruitful strategy where a message of tax compliance causes reverberation through the tax base, especially to those seemingly not on the SARS system, i.e. persons who are living amongst us but never bothered to register for tax. This message will only start to carry conviction where tax offenders are prosecuted and spend time in jail, the higher the profile, the better, of course. Tip #4: VDP Gives Full Legal Protection and Taxpayer Confidentiality The VDP process comes with indemnity from criminal prosecution, waiver of penalties and gives taxpayer confidentiality even within the ranks of SARS. This is the best possible defence if you are getting anxious about the possibility of 200% penalties or, even worse, criminal prosecution. Tip #5: Lifestyle / Integrated Audits SARS is not allowed to raise a willy-nilly tax assessment, as there must be a valid prima facie case of non-compliance. This goes beyond testimony of witnesses at the State Capture Inquiry and SARS will have a definitive audit strategy, typically involving a lifestyle audit that would track bank accounts and assets, Facebook posts etc. You will be asked to justify your lifestyle and assets, including those in trust. Banks, financial institutions, Department of Home Affairs, estate agents, car dealerships, and even envious neighbours or those jealous in your friendship circle will all be crucial parts of a properly conducted tax audit. Tip #6: Come clean if you are wrongfully implicated Fiscal laws protect criminals from being exposed to the public, as the theory goes that they should feel safe in paying their taxes. As ridiculous as this may sound in the current South Africa, the taxpayer confidentiality provisions in the TAA contains a watertight prohibition against disclosure of taxpayer information. Where a SARS official shares this information, even in some cases internally, this comes with its own criminal sanction. But what do you do where you are wrongfully implicated? Section 69(6) of the Tax TAA allows a taxpayer to “waive confidentiality”. If you have genuinely nothing to hide and you have shown the world on social media your lifestyle, the benefits of making your tax records public may outweigh the downside. Photo caption: Jean Du Toit, Senior Tax Attorney at Tax Consulting South Africa ENDS MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, www.atthatpoint.co.za ABOUT Tax Consulting SA: Tax Consulting SA offers a streamlined service in the calculation and filing of individual income tax returns, provisional income tax returns or any other more complex individual tax relate matters. Our highly qualified team of Tax practitioners are registered with SARS under controlling body of the South African Institute of Tax Practitioners (SAIT). As tax specialists, we remove the burden from clients to keep their tax affairs in good order, achieving optimal tax savings while ensuring full compliance. For more information on Tax Consulting please visit: Website: http://www.taxconsulting.co.za/ LinkedIn: Tax Consulting South Africa Facebook: Tax Consulting South Afric  Authored by: Jerry Botha, Managing Partnert At Tax Consulting SA & Jonathan Goldberg, CEO of Global Business Solutions
The Companies Act 71 of 2008 sets out a broad range of duties that company directors need to abide by. Specifically, section 76(3) provides the following with respect to the standards of care that company directors must follow in the execution of their duties as directors for a company. A director of a company, when acting in that capacity, must exercise the powers and perform the functions of director:
It is not possible to have directors who are merely figure heads, appointed for their reputation and the contacts that they will bring to the particular company. By all means, a company director may have been a celebrity cricket, soccer or rugby player in a previous life (as many ex- players have gone on to do). However, before taking up the position on the board of a company, they will need to upskill in what is expect of them as directors. With this imperative placed on company directors to be scrupulous, the following question arises. If a director is paid a bonus based on the expectation that he or she will render a certain level of performance, but the required performance is not rendered, should not the bonus be repaid to the company if the director has not delivered. It is clear if the required performance demanded by the company and / or shareholders, said director must repay the bonus. This should not even be something which the new of remuneration committee should be requesting or demanding from the director. An ethical director would do the right thing without being asked. What makes the question more interesting and the predicament so much larger is where large bonusses have been paid to top executives and company directors in well-known public, private and state-owned entities and through various disclosure the evidence coming to light that the basis for paying these bonusses were incorrect. According to Goldberg, this “the decision to do the right thing in these circumstances goes to the core of being a responsible director, not just ethically, but also from a Companies Act perspective. We increasingly assist Boards in making the tough, but correct decision. When they do not act in the interest of shareholders and stakeholders, they operate outside the law and become part of the problem.” This means that a new Board cannot just look forward and towards the future, there is an equal responsibility to ensure accountability for the past. Incentives and bonusses approved by a Board on incorrect, incomplete or, even worst, fraudulent information, must be recouped. There is no tax disadvantage to reimbursing bonuses If one were to put forward the notion that company directors and executives needed to reimburse performance-related bonuses that should never have been paid in the first instance, the following question would be asked: “I’ve already paid a sizeable sum of tax on this bonus. Will I get this back if I repay it?” In 2009, Section 11 (nA) was introduced into the Income Tax 58 of 1962 to allow a taxpayer to take a deduction of any amount into account - which is refunded by the taxpayer– when calculating taxable income in the year of assessment that the amount is refunded. This only applies if that amount had been previously included in his or her taxable income. “This means that,” says Jerry Botha: managing partner at Tax Consulting South Africa, “should a company director be required to pay back a bonus, he or she will be able to claim back the tax paid on this bonus – or a portion thereof – in the fiscal year when the repayment has been done.” He adds that “this has always been one of the principles of our tax system, that a taxpayer should not be taxed where there is no net enrichment, and we have never encountered a problem with SARS to allow this deduction where done on a first-time accurate basis.” Thus, from a governance and tax perspective there appears to be no reason why directors should not be required to pay back bonuses where the simple fact is later established that it was improperly paid in the first instance. Despite this, there are very few (if any) company directors who do, in fact, repay these monies. In our next article, the consequences of the practice of non-repayment will be looked at from a labour law perspective. ENDS MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za ABOUT Tax Consulting SA: Tax Consulting SA offers a streamlined service in the calculation and filing of individual income tax returns, provisional income tax returns or any other more complex individual tax relate matters. Our highly qualified team of Tax practitioners are registered with SARS under controlling body of the South African Institute of Tax Practitioners (SAIT). As tax specialists, we remove the burden from clients to keep their tax affairs in good order, achieving optimal tax savings while ensuring full compliance. For more information on Tax Consulting please visit: Website: http://www.taxconsulting.co.za/ LinkedIn: Tax Consulting South Africa Facebook: Tax Consulting South Africa  Authored by: Tanya Tosen, Tax and Remuneration Specialist at Tax Consulting South Africa
After retrenchment has taken place in a company, surviving employees typically suffer from something akin to temporary post-traumatic stress. They may experience feelings of powerlessness and, subconsciously, being betrayed by the organisation to which they offered their allegiance. These emotions can be exasperated by the confusion caused by changes in management, differing responsibilities and increased workload, merging with other teams, and other events associated with downsizing. Commitment and performance The result is that they experience higher levels of stress that foster a negative attitude towards organisational commitment and reduce job performance. So how can employers break this pattern and motivate their workforce to become productive again? In a 2004 a study titled Perceived Control as an Antidote to the Negative Effects of Layoffs on Survivors’ Organizational Commitment and Job Performance, researchers from several US universities measured the effects of perceived control on workers one month after downsizing had taken place at a selected company. The paper reports that remaining employees were more negative when retrenchments were thought to have been handled unfairly, trust in management was low, survivors were emotionally close to those retrenched, and the threat of future layoffs was relatively high. However, in all cases, if staff felt they had some form of control over their circumstances, they were less haunted by perceived threats to their wellbeing and were better able to resume working normally. It follows that employers must find ways to provide that sense of control. With their budgets being constrained, an ideal option is to offer workers more say over how they are remunerated. Flexible benefits Flexible benefits is a remuneration model that allows employees to restructure their contributions to benefits on a sliding scale. This means they can decide what percentage of their pay to allocate towards compulsory employer provided benefits in general and how much to reserve as cash for their living expenses. Under post-retrenchment circumstances, the approach empowers employees to take control of something important to them; in the midst of a situation over which they may have little say. Employees whose lifestyle needs change over time or even suddenly, are now equipped to deal with their circumstances as they see fit. For example, a CEO whose wife was retrenched, was able to continue paying his bond by temporarily reducing all compulsory pension savings contributions to a minimum amount and taking thereby increasing his take-home cash. A single person may want more cash for entertainment; a newlywed couple may want more money for a home deposit; nursing mothers typically need better medical aid for their babies; those suddenly afflicted by a chronic illness may want increase their healthcare benefits and dread disease insurance cover; and people nearing retirement might opt to go for the tax benefits of increasing their pension contributions. Flexible benefits can be mixed and matched accordingly to each employee’s personal and financial requirements. The types of benefits an employer offers are also important. An educational bursary scheme, for instance, allows employees or certain classes of their dependent children to get a tax break and thus increase the employee’s take-home pay. Employers should keep abreast of benefits that can legally be structured into their remuneration package which would assist their staff to gain value more from their pay. In addition, the fact that an employer offers flexible benefits, also makes employees feel valued as it underscores the unique circumstances of each employee. Statement of benefits What about those employers who already provide flexible benefits? They can still promote the notion of control by emphasizing how employees can take command of their lifestyle needs by properly utilizing their flexible benefits, which directly impacts their take-home pay. The leading employers compile a customisable benefits statement for each employee at a predefined interval, for example, every quarter. The statement is a powerful tool for highlighting each worker’s earning profile and benefits contributions. Surprisingly, employees often aren’t even aware of the benefits they receive or how to manage them effectively. So the statement can create the opportunity for employers to start a discussion around the value employees receive in return for their work and how to leverage it to their advantage. Again, the effect is that the employees will gain a sense that there is something they have control over and can focus on in circumstances they still consider difficult or threatening. Employees can also receive training from a remuneration specialist on understanding flexible benefits and the direct impact on their package and take-home pay. A financial services provider will also be able to provide guidance on optimizing the ideal mix of employer provided benefits for their current lifestyle needs, as company provided benefits are almost always more cost and tax effective than employee personally procured benefits. That their employer took such interest in their well being signals that they are valued by their organisation. Conclusion In the aftermath of retrenchments, employers with limited budgets must help stressed workers reignite their commitment and productivity. They can start by offering flexible benefits to give staff a sense of control and emphasise this control by regularly issuing benefits statements or providing training on benefits management. ENDS MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za ABOUT Remuneration Consultants: Remuneration Consultants South Africa provides market leading remuneration and employee benefit consulting services.Our competitive advantage is adding a layer of tax optimization to the solutions we deliver. This enables us to optimally structure your Total Rewards System from the ground up to be fully compliant, where tax is planned proactively and not a mere afterthought. Our team consists of full-time tax attorneys, tax professionals, reward specialists, global remuneration professionals (GRP), chartered accountants, professional accountants and psychometrists. For more information on Remuneration Consultants please visit: Website: www.remunerationconsultants.co.za LinkedIn: Remuneration Consultants Facebook: Remuneration Consultants  Authored by: Marisa Jacobs, Director at Xpatweb, Tax Consulting SA
In his budget speech, the Minister of Finance, Tito Mboweni, touched on the importance of attracting skilled people to South Africa in order to support growth. Marisa Jacobs, Director, Xpatweb, says that we need to combat the misconception that foreigners take jobs from South Africans when the truth is that skilled foreigners benefit the country in multiple ways. “The President’s State of the Nation address highlighted how important his ongoing efforts to attract more foreign direct investment into the country are. Investors however need to know they can access the right skills here, and that they can bring some of their own key personnel into the country to oversee their investment,” she points out. “Skilled people are the dynamos of modern economies, and as such we need to remain at the forefront of competing for and attracting scarce skills.” Research shows that the popular view that immigrants steal jobs is simply mistaken. At a national level, the presence of immigrant workers has no significant effects on the employment of native workers. At a national level, immigrants make a positive impact on the gross domestic product (GDP). It is estimated that immigrant workers may raise South African income per capita by up to 5 percent. Immigrants also tend to pay more tax, notably income and value-added taxes. In 2011 immigrants’ net fiscal contribution ranged between 17 percent and 27 percent depending on the scenario used to make the calculation, whereas native-born individuals contributed -8 percent on both scenarios. “Huge opportunities like the recently announced gas finds off Mossel Bay could kick start growth in the area and across the economy,” Ms Jacobs says. “We should also not ignore the upside of ensuring that their skills are transferred to our people, who in turn could also offer their services worldwide, creating a stream of remittance income for the country.” It seems as though government is relying on skilled people from outside South Africa to help turn Eskom around, another instance of how important it is to have the right conditions in place to attract skilled professionals. Having a visa regime and overall business culture that is welcoming to immigrants is also important when it comes to positioning South Africa as the gateway to Africa, says Ms Jacobs. “South Africa’s ability to compete for and attract critical skills globally and the projects they enable, is key to realising our growth aspirations and increasing job opportunities and economic stability.” she concludes. ENDS MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za For more information on Tax Consulting please visit: Website: http://www.taxconsulting.co.za/ LinkedIn: Tax Consulting South Africa Facebook: Tax Consulting South Africa  Authored by: Jean du Toit, Senior Attorney at Tax Consulting SA
The President has entrusted Edward Kieswetter as the new Commissioner for the South African Revenue Service. Boasting a stately CV and with an impressive track record, the Commissioner certainly looks to be the right man for the job under normal circumstances. But these are extraordinary times and the increasing question being asked by compliant South African taxpayers are why we should pay our taxes when SARS have in the past clearly not been doing their job. South Africans are already grateful to the Zondo Commission on State Capture Inquiry, where the quality of Deputy Chief Justice Zondo as Chairman and the evidence leaders have made short work in exposing absolute blatant tax evasion, seemingly going on for much longer than just the past 4 years. We now know that the SARS media statements claiming that they cannot comment on taxpayer information are just an excuse for nothing to be done. What are some of the key challenges the new Commissioner will face? Game of Chess Where you have been non-compliant on your taxes, you can still do a SARS Voluntary Disclosure Program (“VDP”) which waives penalties, but critically also prohibits SARS or the NPA from prosecuting. Dealing with the SARS VDP team on a near daily basis, we can attest that this is not a process which should be taken on where you do not have the correct legal expertise. However, where done correctly, you are fully protected and your sins of the past will be forgiven under law. But there is a catch. A valid VDP can only be submitted where you are not being audited, which means we have a game of chess on our hands. The general rule of thumb is that where you have an ounce of wisdom, you will immediately submit a VDP, which in our experience makes a subsequent SARS audit very difficult. Or will the Commissioner issue audit notices to everyone as they are named in the Zondo Commission, to prohibit them from applying for VDP and face the full might of the law? We may have a case of first mover advantage. Make the Accountant Sing The mafia was broken by getting their accountant to testify. For Bosasa, it may very well be their tax advisor, Peet Venter, who critically is not an admitted attorney and thus offers no legal privilege for his client. Some cats he set amongst the pigeons with allegations he made; • Bosasa artificially increased its expenditure for tax purposes by using a dormant company, Miotto Trading and Advisory Services (“Miotto”) and Tax Risk Management Services (“TRM”). Peet Venter testified that TRM is directly associated with a tax litigator, Dr Daniel Erasmus. On Peet Venter’s version, he seemed to imply the whole arrangement was one big fraudulent tax affair. We expect that the directors of the implicated companies and Dr Erasmus will want to set the record straight before the Zondo Commission. • Payments to various beneficiaries were made from Bosasa, including payments toward Mr Hlaudi Motsoeneng’s legal bills and to Mr Andile Ramaphosa’s Foundation, amongst others. The Commissioner will no doubt be interested in whether donations’ tax declarations and / or payment of personal taxes where made hereon, depending on the true nature of these payments. • Mr Venter testified that he was instructed that he must handle the annual tax returns of the Bosasa directors, as well as that of Messrs Patrick Gillingham and Linda Mti. In the Tax Court case of ABC (Pty) Ltd v CSARS (IT13775), the rules were spelled out when personal tax services provided to employees constitutes a taxable fringe benefit. It would be amusing if there was tax compliance hereon, in context of the other alleged infringements. • Mr Venter was instructed to alter Mr Louis Passano’s (sequestrated Chief Financial Officer of Bosasa) payslip to reflect a reduced salary of R90,000, as opposed to his full cost to company of R135,000. The balance he alleged was paid by Mr Gavin Watson in cash, ostensibly to hoodwink Mr Passano’s creditors. This raises a myriad of tax compliance questions. SARS Resources – Asset or Liability? The Commissioner has two enemies to overcome on high profile and complex investigations - • Mr Venter testified that when it became apparent that Mr Watson’s associates would tell on him at the Inquiry, he informed Mr Venter that he knows a gentleman at SARS by the name of Gorbi who would assist in making any troubles with SARS go away. We note that failure by SARS to make quick work of those implicated in tax evasion at Bosasa (we have seen no arrests) may give some semblance of truth to a purported backdoor at SARS. • It takes a rare breed of tax auditor to properly unravel complex tax matters. This will require a team of investigators, who are given the space and mandate to throw the book at those implicated. There is no time to start recruiting now and outsourcing hereof is not an option. The Commissioner will have to search his ranks for a well-resourced team that can go to war. Section 50 – A Secret Weapon? Section 50 of the Tax Administration Act creates a legislative provision for an “Inquiry” whereby a judge gets appointed to preside in getting to the bottom of instances of tax non-compliance. This is a very powerful provision, but rarely used by SARS. The Commissioner may decide to invoke this section to hold an inquiry into those implicated under state capture. Everyone implicated will then be able to state their case before the judge, as Venter hardly makes an exemplary witness, and one of the principles of legality is to always let both sides be heard. More importantly, this will contribute greatly in both restoring public trust as well as a much-needed reminder that getting on the wrong side of SARS is not worth the risk. ENDS MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za ABOUT Tax Consulting SA: Tax Consulting SA offers a streamlined service in the calculation and filing of individual income tax returns, provisional income tax returns or any other more complex individual tax relate matters. Our highly qualified team of Tax practitioners are registered with SARS under controlling body of the South African Institute of Tax Practitioners (SAIT). As tax specialists, we remove the burden from clients to keep their tax affairs in good order, achieving optimal tax savings while ensuring full compliance. For more information on Tax Consulting please visit: Website: http://www.taxconsulting.co.za/ LinkedIn: Tax Consulting South Africa Facebook: Tax Consulting South Africa  Authored by: Jean du Toit, Senior Tax Attorney at Tax Consulting SA
For those who have been subjected to a SARS audit, it may be hard to imagine a reality where this experience can be any more agonising. If this resonates with you, perhaps consider a world where SARS makes you pay for the resources it had to expend in putting you through this ordeal. The truth is, it can. The Supreme Court of Appeal (SCA) in the recent matter of Purlish Holdings (Pty) Ltd v The Commissioner for the South African Revenue Service (76/18) [2019] ZASCA 04 confirmed that taxpayers may be held to account for the additional time and human capital employed by SARS when it conducts an audit. Facts During the 2011 to 2014 tax periods, the taxpayer in question paid provisional income tax to SARS. Subsequently, the taxpayer filed returns for these periods that stated that it earned no income, resulting in a refund due by SARS. This prompted SARS to audit the taxpayer, which revealed that the taxpayer had in fact earned income during these periods. Pursuant to the audit, SARS issued assessments imposing additional tax and understatement penalties. The assessed tax liability, however, was still less than the provisional tax already paid by the taxpayer. Issue in dispute One of the key issues before the court was SARS’ entitlement to payment of understatement penalties in accordance with section 222(1) of the Tax Administration Act No. 28 of 2011 (the TAA). Broadly speaking, in terms of section 222 of the TAA, SARS may impose understatement penalties if the taxpayer’s conduct, within certain parameters, results in prejudice to SARS or the fiscus. The taxpayer contended that SARS did not suffer any prejudice, as the taxpayer had in fact paid provisional tax due to SARS in excess of its assessed tax liability, which could have been set off against the amount standing to its credit. SARS, however, had a different response angle and argued that the prejudice in question, resulted from the fact that it had to allocate additional time and human capital to audit the taxpayer’s affairs, to ascertain if the taxpayer’s request for a refund ought to be allowed. The court confirmed that prejudice is not only determinable in financial terms and held as follows: “Given the circumstances of this matter, I agree that the use of additional SARS resources for purposes of auditing the appellant’s tax affairs indeed prejudiced SARS.” On this basis, the SCA found that SARS was entitled to impose understatement penalties, as contemplated by section 222 of the TAA. Analysis It is important to note that taxpayers would not be liable for penalties on the mere basis of being audited. Understatement penalties can only be imposed in such instances if the audit reveals that the taxpayer indeed understated the amount of tax payable. The intriguing part of this judgment is the fact that the SCA confirmed that there is a legislative measure that can be invoked to penalise taxpayers who wastefully consume SARS’ time and resources. Of course, one can understand the rationale for a mechanism that would deter such behaviour, as there are undoubtedly taxpayers who take chances when completing their returns, only to plead ignorance when an audit exposes the fact that this was not done correctly or truthfully. Taxpayers should welcome this decision, as our tax system would be brought to its knees if it becomes necessary for SARS to audit each and every taxpayer. Imbalance of SARS’ powers and taxpayer rights In saying that, one searches in vain when looking for a similar provision in the TAA that would protect the taxpayer’s interests. There is no balancing mechanism that similarly gives effect to the taxpayer’s constitutional right to administrative action that is lawful, reasonable and procedurally fair, which, by the way, the SARS Service Charter undertakes to uphold. One need not look very hard to find examples (ask any tax practitioner) of cases where SARS officials treat taxpayers’ matters with palpable apathy, resulting in massive delays and additional costs for the taxpayer. As things stand, there is no accountability and no potential cost-implication for SARS until the matter ends up in Tax Court. At the current service trend, SARS may be inundated with cost orders, which would simply translate to a larger collection shortfall. Where does this leave taxpayers? The intrinsic takeaway from this judgment is, first, that taxpayers ought to ensure that full disclosure of their income is done and done correctly. Intentional or not, SARS is obligated under section 222 of the TAA to impose the highest applicable understatement penalty percentage if your income is not declared correctly. As a standard, this will be 100% and it will be on you to prove why you are deserving of a more lenient penalty. Secondly, whilst the TAA does not make provision to penalise SARS for being obstructive, there are measures that one can take to bring SARS to the table and it is worth involving a tax attorney sooner rather than later, who knows how to traverse these obstacles. ENDS MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za ABOUT Tax Consulting SA: Tax Consulting SA offers a streamlined service in the calculation and filing of individual income tax returns, provisional income tax returns or any other more complex individual tax relate matters. Our highly qualified team of Tax practitioners are registered with SARS under controlling body of the South African Institute of Tax Practitioners (SAIT). As tax specialists, we remove the burden from clients to keep their tax affairs in good order, achieving optimal tax savings while ensuring full compliance. For more information on Tax Consulting please visit: Website: http://www.taxconsulting.co.za/ LinkedIn: Tax Consulting South Africa Facebook:Tax Consulting South Africa  Authored by: Marisa Jacobs, Director and Immigration Specialist at Xpatweb, Tax Consulting SA
In September last year, then Minister of the Department of Home Affairs, Malusi Gigaba announced that a new critical skills list is expected to be released in April 2019. The industry is in turmoil as business and providers scramble to submit visa applications prior to the list being published and certain categories removed. Marisa Jacobs, Director and Immigration Specialist at Xpatweb says “There is no need to panic,yet!” No need to panic The Department of Home Affairs confirms the critical skills list will first be published in draft format and distributed for public consultation prior to finalising and legislating the new list. The draft list is expected to be signed off by the Minister and distributed in April 2019. Cooperation with Business to ensure a comprehensive the new list On the one hand there is no list which will always be absolutely complete and comprehensive, in a specific place and time. The requirements always evolve with time. Such as with the new oil and gas opportunities, we know there will be expansion in this area on the critical skills list. “We have never failed to obtain a work permit for a foreigner where we can show that a local job is not taken and there is valid commercial rationale.” -Says Jacobs The critical skills list is but one of various categories of obtaining a work visa. Preview of anticipated draft list The new list is much shorter than the current list, probably as Home Affairs saw many of the old categories not being used. A positive development is that the draft version of the new list is more concentrated, by adding certain categories together. The removal of the Corporate General Manager category has received much attention. “We believe this category has been largely abused by many given rise to the proposed removal thereof.” In its current form it is in need of a revamp. “We agree that this category will or should not be removed in its entirety and the consultative process will provide the input required for the Department of Home Affairs to more directly and suitably define this skill and the form it should take on this list to curb abuse.” Says Jacobs Submissions Where anyone foresee a category not catered for, they are most welcome to email Marisa Jacobs on marisa@xpatweb.com with motivation and we will ensure that Home Affairs is made aware hereof before the list is finalized. Also, where a category is not added under critical skills list, there are other categories under which a valid work permit can always be obtained. ENDS MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za For more information on Tax Consulting please visit: Website: http://www.taxconsulting.co.za/ LinkedIn: Tax Consulting South Africa Facebook:Tax Consulting South Africa |
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