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TAXtalk Magazine Issue 14, Jan/Feb 2009

IN THIS ISSUE

	Your own worst enemy. What if the biggest threat to your livelihood this recession was you?

	Being retrenched or forced into early retirement
	Cost optimisation dominates corporate agendas
	Crime makes us pay in more ways than one

	See this months Contents page

Dear Reader
Dear reader Now is not the time to feel depressed or stressed about the economic environment. By no means am I saying ignore the situation; what I am saying is take note of what is happening around you and become more in tune with your surroundings. There are numerous opportunities awaiting us, they are just not staring us in the face or shouting from the roof tops. They are, however, waiting for us to find them through our own innovative ways of approaching and dealing with this situation.

Your own worst enemy - What if the biggest threat to your livelihood this recession was you?
New vehicle sales in South Africa dropped by 21 per cent in 2008, forcing retrenchments, dealership closures and a flurry of repositioning as smaller outlets were gobbled up in a last ditch bid for survival. In the UK “the worst recession since the Second World War” has already seen Woolworths (which would have celebrated its 100th birthday this year)close the door of its last store on 6 January, spelling unemployment to 27 000 people. At time of writing, ABSA parent Barclays Bank lost 50 per cent of its share value in a single week’s trading … 30 per cent of which was lost in a single dark hour just before closing one bleak Friday afternoon. ABSA itself is shedding 1 210 jobs.

Crime makes us pay in more ways than one
Crime is a sad reality that everyone (whether directly or indirectly) has to deal with. Although the South African Police Service (SAPS) reported a decrease in serious crimes (from 2001 to 2007), citizens and corporates still incur enormous expenses to prevent and combat crime. Currently there are no tax incentives in the form of deductions for having personal security (even though private costs are shouldered by citizens to prevent them from becoming a burden on state resources such as the police and courts). This is very similar to the costs to be a member of a private medical scheme to prevent becoming a burden on state health resources.

Long-awaited dividend tax finally announced
Details of the long-awaited replacement of Secondary Tax on Companies (STC) with dividend tax were announced recently. This ends months of speculation on how the new tax system will actually work. Conceptually we have moved away from a company tax to an effective tax on shareholders and it is payable on the distribution of dividends by a company. However, the new rules are still a work in progress requiring further consultation with business and the renegotiation of double tax treaties with several countries to allow for the dividend tax to qualify for tax treaty relief. Treasury has announced that its objective is to allow for treaty relief at 5% and that the new tax will take effect in late 2009 or early 2010.

Time is running out for recreational clubs exept tax status
The playing field in which recreational clubs operate has changed drastically with regard to income tax obligations. SARS has set a deadline of 31 March 2009, by which time existing clubs need to apply for approval to enjoy partial exemption. Clubs in general have for many years enjoyed the much sought after tax exempt status with regard to their receipts and accruals, in terms of the now deleted section 10(1)(d)(iv) (aa) of the Income Tax Act.

Tax system better yet tough issues remain
Chief operating officer of the South African Revenue Services (SARS), Edward Kieswetter, warns that there will be greater focus on these two tax issues in the near future. The main reason for this is that the risk of revenue losses in these areas increased dramatically since the effects of the global financial crisis started hitting home. Kieswetter sounded the warning bells during a panel discussion of PricewaterhouseCoopers (PwC) in Johannesburg at the African launch of the Paying Taxes 2009 survey.

Controversy around provisional tax payments
Last year ended on a controversial note with significant changes to the system for provisional tax. These changes caused a huge outcry from taxpayers and tax practitioners. Parliament last year approved an important change to the provisional tax payments process and the imposition of additional tax on underestimates relating to these payments.

Revenue authorities: law enforcers or bounty hunters?
The Wild West was a tough place, especially if you were a law enforcement officer. Back then you were pretty high up in society if you were an officer of the law. In a town called Tombstone lived some of the most famous law enforcers of all times, the brothers Earp with Wyatt, of course, the most well-known. They, together with their gambling friend Doc Holiday, maintained law and order. However, the Wild West also had bounty hunters, an industry that is still very much alive today. These cowboys had no policing powers. Bounty hunters could make arrests without warrants and they could even break and enter into homes.

Cost optimisation dominates corporate agendas
The recent turbulence in the global economy has put renewed pressure on executive management to drive down company costs. Organisations are preparing themselves for difficult times. KPMG research in the Netherlands and Belgium shows that cost optimisation is dominating corporate agendas. This trend is also visible closer to home; organisations across the Western Cape are integrating cost optimisation initiatives into their 2009 strategic objectives. Towards the end of 2008, KPMG performed a survey amongst large organisations in the Western Cape, with the aim of identifying their cost optimisation agendas. According to Hilda Mulock Houwer, head of markets in Cape Town, interesting findings become visible. “Cost optimisation is a key focus for everyone; it is, however, about answering the ‘how’questions. What approach should we follow; where do we focus on; and how do we maximise the benefits are questions keeping the organisations busy.”

Being retrenched or forced into early retirement
The flood of newspaper articles before Christmas dealing with retrenchments at mines, vehicle dealerships, factories and retailers left a bitter taste in the mouth. Internationally it is tough times that require drastic decisions by companies in order to survive. That, however, does not make retrenchments and ‘forced’early retirement less traumatic. It is for this reason that experts warn against undue haste and ill-considered decisions. It is probably easier said than done, but people should think with a clear and sober head if they do find themselves in a position where they could be retrenched or forced to retire.

Tax rules for companies bringing skills in from overseas
Kemp Munnik, tax director at BDO Spencer Steward Services was interviewed on tax rules that should be followed by companies bringing skills in from overseas and what South Africans planning to work outside the country can expect. Question: Kemp, this week we look at immigration and the tax consequences for short-term assignments into and out of South Africa. Tell us a little bit about people coming into South Africa for short-term contracts. What are the tax consequences for their employers?

TAXtalk News
Reminders of how the 2009 Budget has affected you

Be organised for a stress-free tax return
If you are an individual, you more than likely do not have your own accounting department getting your records ready for tax return. This ends up being a last minute scramble and results in stress and sleepless nights. Even if you have a tax consultant who completes and submits your tax return, you still have to get all the relevant documents needed for your consultant to complete the return. The good news is that there is a way to reduce the stress and effort. The secret is to keep your tax records organised throughout the year. Even though filing season for individuals came to a close on 23 January, you can start organising right now. All you have to do is to follow this easy, five-step programme to take charge of your tax returns.

Dont take it sitting down: the office workout
Do you ever get the feeling that as you spend most of your waking hours slumped over a desk, your spine is slowly curving, your once-firm muscles shrivelling and your right hand morphing into a mouse-shaped claw? We have a solution: the work workout. You can enjoy the physical and psychological benefits of exercise without even setting foot outside your office.

Book Review
Your MBA Game Plan – Proven strategies for getting into the top business schools Omari Bouknight and Scott Shrum Career Press

Business Plan in a Day – Get it done right, get it done fast ! Rhonda Abrams and Guy Clapperton Capstone Publishers

The Logic of Life – Uncovering the new economics of everything Tim Harford – the Undercover Economist Collins Publishers

Archived Issues

Issue 21 March/April 2010

Issue 20, January/February 2010

Issue 19, November/December 2009

Issue 18, September/October 2009

Issue 17 July/August 2009

Issue 16, May/Jun 2009

Issue 15, Mar/Apr 2009

Issue 14, Jan/Feb 2009

Issue 13, Nov/Dec 2008

Issue 12, Sept/Oct 2008

Issue 11, Jun/Jul 2008

Issue 10, Apr/May 2008

Issue 9, Jan / Feb 2008

Issue 8, Nov/Dec 2007

Issue 7, Sept/Oct 2007

Issue 6, June/July 2007

Issue 5, March/April 2007

Issue 4,Dec06 - Feb 2007

Issue 3, Aug-Nov 2006

Issue 2, April 2006

Issue 1, December 2005

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