Data released by Statistics SA shows that South Africa has lurched into a recession for the first time in 17 years. Edwin Naidu of www.iol.co.za writes that the signs of an end to the recession for hard-pressed consumers are likely to be seen by October, but the good times - despite the sharpening decline in interest rates - will only start by January 2010, according to Professor Carel van Aardt, an economics expert at Unisa.

Consumers seem to be digging into their hard saved earnings and other sources of instant income to cover themselves in tight times. This includes turning their focus towards their retirement's savings as an option for immediate cash flow relief. Tapping into your retirement savings is not the best thing to be doing, especially since it impacts on your long term nest egg security, but for some this is their only alternative.

The draft Taxation Laws Amendment Bill of 2009 proposes legislation, the effective date being 01 March 2009, that will allow individuals to withdraw a lump-sum of up to R22 500, 00 tax free. The balance will be taxed in terms of the new tables for withdrawal benefits; this table is available in the tax exemptions and concessions article compiled by Elsjemar Bronn of Glacier.

Till next week.
Janine Connor
Executive Editor & Head of TAXtalk

TALK TO US: TAXtalk, PO Box 1650, Gallo Manor or email me at janine@taxtalk.co.za

Pastel Payroll

Companies that do not meet the South African Revenue Services 30 May deadline for the submission of all employee tax certificates and the final EMP501 reconciliation declarations face hefty penalties. The EMP501 reconciles all PAYE, SDL and UIF deductions from employees and provides the total of all remuneration paid to all employees. “The EMP501 is a critical return,” says Grant Lloyd, managing director of payroll and HR software developer Softline Pastel Payroll. “Not only will employers face penalties, their employees will not receive their personal income tax returns.”

Moneyweb Tax

In recent times we have seen a number of cases of companies which have entered into a transaction without the necessary exchange control approval, purely because they were not aware that such approval was required. It should be noted that based on the decision of the Pratt case (Pratt v First Rand Bank [2009] 1A11 SA 158 (SCA)) an agreement entered into will be null and void if such an agreement required prior exchange control approval and such approval was not obtained. In other words no party will be able to enforce its rights under such an agreement as a court will not enforce an illegal contract.

Steve Pinnock - PricewaterhouseCoopers

The new section 37C of the Income Tax Act gives farmers a tax incentive to engage in environmental conservation and maintenance. The recently introduced Section 37C of the Income Tax Act encourages the conservation and maintenance of land for environmental protection by allowing three different deductions to landowners (e.g. farmers) with land in environmentally important areas. Ordinarily when taxpayers incur expenditure on nature conservation, such expenditure would not meet the requirements for deduction from income as it would not be incurred in the production of income and not be expended for the purposes of trade.

Ina Meiring, Director - Werksmans

Set out below is a brief overview of the main functions of regulatory agencies to be established by the new Companies Act 71 of 2008 (“Companies Act”), and of the remedies and enforcement procedures which these entities will make available to any person entitled to apply for relief. The Companies Act intends to establish one new institution, namely the Companies Tribunal, and to transform the three existing entities, namely the Companies and Intellectual Property Registration Office (“CIPRO”), the Securities Regulation Panel (“SRP”), and the Financial Reporting Standards Council (“FRSC”), into new bodies to be established as discussed below.

eTaxjobs is a global job portal exclusively for tax professionals, and an online resource for employers and recruitment firms to advertise their vacancies. eTaxjobs operate in the UK, Europe, USA, Canada, Australia, New Zealand, Africa and around the World.

Available tax jobs for this week are:

The Perfect Portfolio

The typical asset price bubble is characterised by failure, greed and fraud and the stock market, credit and commodity price bubbles of 2007/08 are no exception. In terms of the market bubble, we have seen failure on at least two fronts: there has been policy failure and company failure. Failed companies which have been taken over, nationalised or bailed out in some way include Lehman Bros, Bear Stearns, Royal Bank of Scotland, Lloyds, Citigroup, American Insurance Group, Bank of America, Freddie Mac, Fannie Mae, Northern Rock and Merrill Lynch.

TAXtalk invites you to write an article in which you share your views and expertise on tax. Your article can be published in the newsletter for 7000 readers to view, on our website for over 100 000 viewers to see and in the TAXtalk magazine(with your photo) for more than 16 000 readers to read. Make an impression, submit your article NOW.

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