Today is the end of the tax year.  Later in the year, your tax advisor (hopefully us!) will be requesting information as of today's date.  To help you avoid the pain and effort involved in trying to reconstruct this information later, we have prepared a spreadsheet of the information you will need - relax its short and sweet!

The spreadsheet is free, and can be used whether we do you tax or not.  It can be downloaded by clicking on this link : http://www.twigg.co.za/Tax Information.xls

Yesterday saw the presentation by Finance Minister Pravin Gordhan of the annual budget speech.

What does this mean for you and I?  

Any budget is about balancing the amount of money that comes in with the amount of money that goes out.  Increase what goes out (“creating jobs, reducing poverty, building infrastructure and expanding our economy”) and you must either increase what comes in (taxes) or borrow (deficit). 

Minister Gordhan’s challenge was to increase spending (we all want more money spent on education and healthcare) while decreasing our tax burden – oh yes, we are not too keen on the idea of borrowing money either….how has this been achieved?

In his Medium term budget speech,  Pravin Gordhan announced the relaxation of certain foreign exchange allowances.  In particular, the  Foreign Capital Allowance and the Single Discretionary Allowance, which have both been significantly increased "to encourage diversification of portfolios and remove unnecessary limitations"

SARS has widely reported the changes to the provisional tax system in the media.  Part of these changes relate to those who do not need to submit an IRP6 (provisional tax return) anymore. 

A common misunderstanding is that if you have no tax to pay, ie the net result of your return would be nil, then you don't have to submit a return.  This is NOT the case. 

The South African Revenue Services has come a long way in recent years.  As a young man just entering the working class, I can remember braving the walk down Rissik Street in Johannesburg to stand in long queues in overcrowded rooms with people who clearly did not share my sense of hygiene...

Those days are thankfully gone!  You can (and almost have to) now submit your tax return online.  Great....or is it?

A good Bookkeeper is a valuable resource who will take care of all the financial issues and keep you apprised of the financial health of your business. A bad one can destroy your business. Here’s a practical checklist to guide you through the process:

What is the current status of the new companies Act of 2008? And when and how will it start to affect you?

Current status

The new Companies Act will come into force on a date to be notified by government, probably during the third quarter of 2010.  The new Act will replace the old Companies Act of 1973.  The Act has already been promulgated, but a significant number of errors have been identified and acknowledged by the Department.  It is unclear how these errors are being addressed and when we will see the final, corrected legislation.  A set of regulations has also been published, but only for public comment at this stage.  The regulations will be finalised in the months to come.  The answer, then, is that the Act will probably come into effect somewhere between July and September 2010, unless the correction of errors occasions further delay.

Implications for close corporations

Existing close corporations will be entitled to continue operating.  You will be able to convert a corporation to a company under the new Companies Act, but will not be obliged to do so.  However,as from the date of effect of the new Companies Act, it will not be possible to register new close corporations – so if you are thinking of establishing one in the future, you  should acquire a shelf corporation as soon as possible.

Implications for companies

Imagine that the IRB announces that it has replaced the rules of rugby.  The new rules, says the Board, are based on the old rules, but are intended to modernise the game and therefore introduce some fundamental new principles.  The new Companies Act will have exactly the same effect on business. The Sharks are lectured by professional referees at the start of each season on the implications of any rule changes made during the off-season.  Business people are going to need to do much the same in order to come to terms with the new rules of business.
Other than understanding the new rules, every company will need to take at least two legal steps.
Firstly, you will have two years from the implementation date to replace your existing Memorandum and Article of Association with a new Memorandum of Incorporation.  During this grace period your existing Memorandum and Articles of Association will prevail in the event of a conflict with the new Act.  Thereafter, the new Act prevails and your company may be left in a state of great uncertainty if there are conflicts.

Secondly, you will need to review your shareholders agreement.  These agreements will have dealt with matters that are not or could not be included in the Memorandum and Articles of Association under the old Act, and they are critical to the smooth operation of many companies, as well as the protection of shareholder interests.  Under the old Act, shareholders agreements were valid even if they were inconsistent with the Companies Act.  This is set to change and shareholders' agreements will be invalid to the extent that they are inconsistent with the new Act.  Unlike your existing Memorandum and Articles of Association, shareholders' agreements do not enjoy a grace period.  As soon as the new Act becomes effective, shareholders' agreements will immediately be invalid to the extent that they conflict with the new Act.

We believe that the sensible approach is to review your shareholders' agreements and Articles of Association at the same time – they cannot be looked at separately – and to do this as soon as possible.  This will ensure that the new Act does not pose any unexpected problems for you and your company.

 Tim is the Commercial Director at Venn, Nemeth & Hart Attorneys.  He can be contacted at tim@vnh.co.za

"Europe's ash cloud has triggered a flurry of anguished calls for the EU to improve its crisis response"1

This morning's mountain bike ride in the dark (with lights) was characterised by discussion around the impact that the volcanic ash is having on local business - with some staff and sub-contractors being stranded on the wrong end of the world. (the wrong end being defined as the end other than the one you want to be on)

The ride ended with me ploughing head first into a ditch and spending the better part of the day recovering from the concussion and whiplash that resulted.

Unlike the volcanic eruption, my fall cannot be considered an Act of God.  It does however present a similar risk to my business.  If I had not had a helmet on, I most certainly would not be writing this article now...

The important question is do you have a helmet on - what is your disaster plan?

The Consumer Protection Act which was signed into law on 29 April 2009, becomes effective between April and October 2010.  It affects a broad range of consumers and transactions - for example if you receive a product as a gift from family, you are entitled to protection under the act even though you did not contract with the supplier directly.

The act also affords protection to small businesses whose turnover or asset value is less than a threshold - The National Credit Act uses R1m as a threshold, so expect something similar here.

The implications for you as a provider of products or services are:

Do not hold your breath...  Getting a simple task such as a name reservation - which used to take 24 hours - is now taking 4 weeks!

Woes of CIPRO unfortunately affect us all.  The New Companies Act cannot be fully implemented without CIPRO functioning, neither can businesses register trade marks, or business names as required by the Consumer Protection Act.

The only advice is PLAN AHEAD.  Make sure you allow plenty of extra time for changes you may require to your statutory records.