NEWSLETTER APRIL 2016 - withtank.commedia.withtank.com/ad87023a64/newsletter_april_2016.pdf ·...
Transcript of NEWSLETTER APRIL 2016 - withtank.commedia.withtank.com/ad87023a64/newsletter_april_2016.pdf ·...
NEWSLETTER APRIL 2016
SERVICES WE OFFER:
· Auditing and Independent Reviews
· Tax planning
· Due diligence
· Special investigations
· Accounting and bookkeeping
· Registration of trusts, companies and taxes
· Management and financial advisory services
· Planning and installation of information systems
1
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Incentive for employers to provide bursaries – no effective date of implementation
“To support skills development, government proposes to
increase the fringe benefit tax exemption thresholds for
bursaries provided to employees or their relatives. The income
eligibility threshold for employees to access the relief will be
increased from R250 000 to R400 000. The value of qualifying
bursaries will be increased from R10 000 to R15 000 for National
Qualifications Framework levels 1 to 4, and from R30 000 to R40
000 for levels 5 to 10.”
Accordingly, the existing thresholds remain in force until such time as the proposals
are given effect by the appropriate legislation. We will keep you informed of any
developments in this regard.
The bulk of the proposals made in Minister Gordhan’s budget speech have been
"ratified" in the relative legislation. The legislation does not contain any amendments
to the exemption relative to the fringe benefit tax exemption thresholds for bursaries.
As such the proposal is not dealt with in the legislation on the table and can
therefore only be dealt with the Taxation Laws Amendment Bill that will be released
probably in September or October this year. In this Bill SARS/ National Treasury can
decide on the effective date, probably 1 March 2017 or they can potentially
backdate to 1 March 2016. There is also the third possibility that they might drop the
proposal and not legislate it at all.
2
Barclays gets ‘Out of Africa’
Africa’s economy faced another blow on 1 March 2016, when global banking
group, Barclays announced plans to cut its majority stake in Barclays Africa Group.
Barclays Plc will be reducing its 62.3% holding in JSE-listed Barclays Africa Group to a
non-controlling stake of less than 20% over the next two to three years.
Barclays has been operating in Africa for around a century and so this
announcement has set alarm bells ringing. Rating agencies Standard & Poor’s (S&P)
and Fitch have both reacted by downgrading the credit rating of Barclays Africa,
further shaking investor confidence in the continent.
Barclays Chief Executive Officer, Jes Staley, emphasised that this decision resulted
from regulatory pressures, including the level of capital Barclays Plc is required to
hold in respect of their shareholding in Barclays Africa. With little control over
Barclays Africa’s liquidity risks, Barclays Africa is considered a high risk for the parent
company.
Maria Ramos, CEO of Barclays Africa, said the group was in safe hands and that it
would continue with African expansion plans.
Following a drastic drop in group profits, Barclays Plc is being radically restructured
to focus on two core divisions – Barclays UK and Barclays Corporate & International.
Barclays, together with several other banks, is recovering from heavy penalties
imposed for activities such as illegal forex trading and involvement in rigging the key
London inter-bank rate (Libor). These activities have led to stricter and costly
regulatory reforms which are impacting on the global investment climate.
It is important to note that Barclays restructuring is not just aimed at Africa: in
January 2016 Barclays announced that it was moving out of Russia and closing
offices across Asia.
The Barclays sell-off is not necessarily a reflection on Africa, but this announcement
does not send a positive message for investment in the continent . .
3
Electronic signatures
One of the final barriers to the paperless office is the ‘electronic signature’.
While South African law recognises electronic signatures, many people are worried
about whether an electronic signature is legally binding and whether it protects
them in the same way as a handwritten signature.
According to the Electronic Communications and Transactions (ECT) Act of 2012, an
electronic signature is a piece of data attached to an electronically transmitted
document as verification of the sender’s identity and his or her intent to sign the
document.
The ECT Act recognises a variety of digital formats as an ‘electronic signature’ as
long as they comply with the criteria of intention and relationship to the document.
Generally speaking, there are 2 main categories of electronic signature:
• A ‘normal’ electronic signature - used to sign agreements, letters, e-mails, and
other documents when there is no legal requirement for an advanced
electronic signature
• An advanced electronic signature – used where there is a legal requirement
that a document be signed. This digital signature has to be accredited by a
verification process which utilises a signing tool to provide an accredited
digital certificate
Advantages of electronically signed documents:
• Efficient - no need to search for important documents
• Secure - solid audit trail, documents are much less likely to go missing
• Prepare and send any document anytime, from any device and file securely
• Eliminates paper clutter and promotes ‘greener’ business
• Saves time and archiving costs and space
• Quicker internal and customer approval processes
• Cost saving – new contracts and quotes can be approved electronically
instead of faxing or couriering paperwork
• Streamlines internal approval processes – e.g. board meeting minutes can be
electronically signed by directors
Digital signatures are therefore more reliable than old fashioned physical signatures
where it is more difficult to identify authenticity of signatures or document
tampering.
4
Tax treatment of trusts
In his recent budget speech Minister Gordhan made the following proposal:
“An important role of the tax system is to reduce
inequality. Some taxpayers use trusts to avoid
paying estate duty and donations tax. For
example, if the founder of a trust sells his or her
assets to the trust, and grants the trust an interest-
free loan as payment, donations tax is not
triggered and the assets are not included in his or
her estate at death. To limit taxpayers’ ability to
transfer wealth without being taxed, government
proposes to ensure that the assets transferred
through a loan to a trust are included in the estate of the founder at death, and to
categorise interest-free loans to trusts as donations. Further measures to limit the use
of discretionary trusts for income-splitting and other tax benefits will also be
considered.”
There are a number of concerns around this proposal, primarily in that we cannot
see how the assets can be included in the founder's or even the donor's estate as
they could possibly have long predeceased the effective date of legislation. In all
probability this should be the "lenders estate". The entire proposal requires careful
consideration and we will keep you informed with updates.