The South African Revenue Service (SARS) has embarked on a digital transformation journey to modernise and enhance its tax administration capabilities. The aim is to improve service delivery, compliance, efficiency and effectiveness, as well as to combat tax evasion and fraud. Some of the key initiatives that SARS has implemented or is planning to implement include:
In terms of the Companies Act, the business and affairs of a company must be managed by or under the direction of its board, which has the authority to exercise all of the powers and perform any of the functions of the company.
A living will is not the same as a last will and testament. A living will is a document that lets you express your preferences for medical care in case you become unable to communicate them yourself. A living will can help you avoid unwanted or unnecessary interventions, such as life support, resuscitation, or tube feeding, that may prolong your suffering or go against your values. A living will can also help your family and doctors make difficult decisions on your behalf, and reduce the potential for conflicts or disputes. A living will should be prepared separately from your last will and testament. Your last will and testament only takes effect after your death, while your living will takes effect while you are still alive but incapacitated.
SARS has increased the reporting requirements for trustees of resident trusts. As from the 1 September 2023, trustees, as representative taxpayers for a trust, are required to submit an IT3(t) form to SARS electronically – relating to the trust for which he or she acts as trustee. The IT3(t) will be due on the 30th September of each year in which the trust’s tax year ends. Trustees will be required to supply information about all distributions made from the trust to beneficiaries or other persons (in respect of any amount vested in a beneficiary including income (net of expenditure), capital gains and capital amounts distributed by 30 September during the preceding tax year of assessment, which ended at the end of February of the same year. In addition to the information about distributions, demographic information about the trust and beneficiaries will also be required to be submitted.
Knowledge of and compliance with both the common law and legislation is essential for good governance. Not only do directors need to make sure that they are maintaining the highest standard in respect of their duties, but they must also ensure that they are complying with the administrative provisions of other legislation, such as the Income Tax Act. In addition, it is important that directors have a working knowledge of the guidance provided in King IV ™.
The Ministry of Finance has published the draft legislation for the "two pot" retirement system for comment. The draft legislation aims to implement the reform of the pension system that was agreed upon by the government and social partners in 2020. The "two pot" system consists of a mandatory basic pension that covers the minimum subsistence level, and a voluntary supplementary pension that allows individuals to save more for their retirement. The draft legislation also introduces incentives for longer working lives, such as a gradual increase in the retirement age and a bonus for working beyond the statutory retirement age. The Ministry of Finance invites all interested parties to submit their comments and suggestions on the draft legislation by August 31, 2023.
One of the duties of trustees is to maintain accurate and up-to-date records of the beneficial owners of the trusts they administer. Beneficial owners are those who have a direct or indirect interest in the trust property or who exercise control over the trust. The information that must be kept by trustees in relation to beneficial owners includes:
Taxpayers who have a dispute with the South African Revenue Service (SARS) can now benefit from new rules that aim to simplify and expedite the resolution process. The new rules, which came into effect on 1 July 2023, replace the previous dispute resolution rules that were in place since 2003.
The General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act (no. 22 of 2022) came into force on 1 April 2023, and amends the Trust Property Control Act [as well as the Nonprofit Organisations Act (no.71 of 1997), the Financial Intelligence Centre Act (no.38 of 2001), and the Companies Act (no.71 of 2008)]. It is hereinafter referred to as “the Amendment Act”.
When you apply for a Tax Compliance Status (TCS) in respect of foreign investment allowance for individuals, you are required to submit the following supporting documents:
The recent pandemic has seen a dramatic move towards the use of technology in the business world. While the use of technology has in some instances increased productivity and eased the way of doing business, cybercrime has become is a global phenomenon with company data being hacked on an all to regular basis. The big question is who is responsible for the safety of data and privacy of information. South Africa has world class legislation which at times does not deter cyber criminals due to the lack of enforcement by authorities. Legislation clearly puts the onus on directors of a company to take all reasonable steps to protect sensitive data.
Employers are required to submit their annual reconciliation declarations (EMP501) that reflect accurate and the latest payroll information about their employees, monthly employer declarations (EMP201) for PAYE, UIF and SDL; payments made (excluding penalties and interest paid); and employee tax certificates (IRP5/IT3(a)s generated, covering the full tax year from 1 March 2022 to 28 February 2023.
The first phase of legislative amendments to the retirement system is due to take effect on 1 March 2024. The intent of these amendments is to enable pre-retirement access to a portion of one’s retirement assets, while preserving the remainder for retirement. Retirement fund contributions will remain deductible up to R350 000 per year or 27.5 percent of taxable income per year – whichever is lower. Permissible withdrawals from funds accrued before 1 March 2024 will be taxed according to the lump sum tables. Withdrawals from the “savings pot” before retirement will be taxed at marginal rates. On retirement, any remaining amounts in the savings pot will be taxed according to the retirement lump sum table (for example, R550 000 is a tax-free lump sum on retirement).
In 1897, Vilfredo Pareto, and Italian economist, observed that the distribution of wealth was unequal within every country. That is, 5% of the population might own 50% of the wealth, 10% of the population might have 65% and 20% might own 80%. Whilst this is not very remarkable (we see it all the time) what Pareto discovered was that this pattern repeated itself in almost every country he examined.[i] Consequently, he concluded that there was a predictable mathematical relationship at work that determined the distribution of wealth: in short, 20% of the population would hold 80% of the wealth.
The South African Revenue Service (SARS), in terms of the Tax Administration Act No. 28 of 2011, has made provision for the Voluntary Disclosure Programme (VDP) to be permanently available to a qualifying individual, company or trust that seeks to voluntarily disclose and regularise their tax affairs. This step is aligned to the SARS’ strategic objective, which seeks to provide clarity and certainty as well as make it easy and seamless for taxpayers and traders to comply with their obligations.
Some of the recent trends in the business world, which directors should take cognisance of, are:
Trusts can be used in a number of ways including inter alia estate planning. In order to establish a trust the following are essential requirements.
Many may think that they are not old enough or wealthy enough to warrant
The 2022 Draft Revenue Laws Amendment Bill released on 29th July 2022 contains key amendments on retirement reform to move towards a “two-pot” retirement system. The amendments enable South Africans to also save for non-retirement purposes (e.g. emergencies) via their retirement funds, whilst preserving more of their savings for retirement. These amendments aim to encourage members to preserve their retirement savings by making it more flexible to accommodate unforeseen pressures that members face during the span of their working life. It makes it possible for workers not to resign from their employment merely to access their retirement funds and would have assisted members during a crisis like the COVID-19 pandemic, when many employees faced reduced salaries or were not paid at all during that time.
When planning your estate it is important to know the ramifications of any bequests one may make. Below we table issues relating to fixed property
The global agenda on sustainable development is best expressed through the SDGs, what one can best describe as the ultimate measure of progress which is about prosperity for people and planet. The SDGs, a set of 17 “Global Goals”, 169 targets, and 230 indicators, are a standard for evaluating if progress is being made across the world to reduce poverty, improve quality of life, and realize aspirations of the masses of people towards development.
The Companies and Intellectual Property Commission (CIPC) embraces international best practices and the impact of the use of iXBRL when submitting Annual Financial Statements (AFS) online and in improving efficiencies. iXBRL will make it easier for Companies to report their financial information in an electronic format. CIPC mandated the digital reporting system for all qualifying entities from 1 July 2018.
The South African gross domestic product (GDP) expanded by 1,9% in the first quarter of 2022, representing a second consecutive quarter of upward growth. The size of the economy is now at pre-pandemic levels, with real GDP slightly higher than what it was before the COVID-19 pandemic. The National State of Disaster was lifted as from 5 April 2022, and the rules on wearing masks indoors and the limitation on public events and gatherings were all repealed on the 23 June 2022.
In spite of the ongoing uncertainty about how trusts will be taxed in South Africa in the future, trusts remain a very useful estate planning tool and are widely used for a number of purposes. However, if a trust is not formed or administered correctly, it can create a nightmare that acts against the very reason for forming it in the first place. Anyone thinking of setting up a trust needs not only to make sure that they are creating a valid legal structure, but also to understand the nature of the trust, the duties of trustees, and the rights of beneficiaries.