MSI wins ‘Rising Star Association’ and ‘Communications Campaign’ awards

MSI Global Alliance, one of the world’s leading international associations of independent legal and accounting firms, has won two awards in the prestigious International Accounting Bulletin Forum & Awards.

MSI Global Alliance is delighted to have received the two awards: ‘Rising Star Association of the Year’ and ‘Communications Campaign of the Year’ at the annual International Accounting Bulletin Forum & Awards judged by an independent panel of accounting experts.

The ‘Rising Star Association’ award recognises MSI’s highly effective Strategy for 2015-2018 and its successful implementation across the four priorities of growth, marketing, member services and member engagement. Separately, MSI’s innovative and engaging internal marketing campaign ‘MSI Month’ was selected as the ‘Communications Campaign of the year’.

Tim Wilson, chief executive of MSI, comments, “I am absolutely delighted to have received these two awards, which represent the hard work of our entire team and the engagement of our members worldwide. I am proud of MSI’s continued development and the strength of our association and I am excited by the future as we move forward into our next chapter.”

The International Accounting Bulletin is the leading authority of the global accounting industry and regularly analyses firm performance and best practices.

MSI was presented with the ‘Rising Star Association’ and ‘Communications Campaign’ awards during the gala dinner of The Digital Accountancy Forum & Awards 2017 in London on 4th October 2017.

For further information please contact

MSI Global Alliance
Pauline Rottstock, Marketing and Business Development Manager
Tel: +44 20 7583 7000
Email: prottstock@msiglobal.org

About MSI Global Alliance

MSI is one of the world’s leading international associations of independent legal and accounting firms with over 250 carefully selected member firms in more than 100 countries. MSI was formed in 1990 in response to the growing need for cross-border co-operation between professional services firms.

MSI members worldwide work closely together to provide integrated, multidisciplinary services to meet each client’s legal and regulatory obligations and growth ambitions. MSI is ranked among the Top 20 international accounting and legal networks, associations & alliances.

Visit our website: www.msiglobal.org

SARS to intensify action against tax offenders

Despite the fact that SARS has upheld their philosophy of education, service, and thereafter enforcement, they have noticed an increase in taxpayers not submitting their tax returns by the stipulated deadlines, and not settling their outstanding debt with SARS. This is not limited to the current tax year but includes substantial non-compliance across previous tax years.

It is for this reason that from October 2017 SARS will intensify criminal proceedings against tax offenders. Failure to submit the return(s) within the said period could result in:

  • Administrative penalties being imposed on a monthly basis per outstanding return.
  • Criminal prosecution resulting in imprisonment or a fine for each day that such default continues.

Types of tax

SARS has reminded all taxpayers that, according to the Tax Administration Act No. 28 of 2011, it is a criminal offence not to submit a tax return for any of the tax types they are registered. These tax types are:

  • Personal Income Tax (PIT)
  • Corporate Income Tax (CIT)
  • Pay as You Earn (PAYE)
  • Value Added Tax (VAT)

It is also important to note that should any return result in a tax debt it must be paid before the relevant due date to avoid any interest for late payment and legal action. To avoid any penalties, interest, prosecutions as well as imprisonment, taxpayers are urged to rectify their compliance by submitting any outstanding returns as soon as possible. Please contact your tax advisor for assistance.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.  Errors and omissions excepted (E&OE)

The importance of having a good accounting system

If your business doesn’t have an effective accounting system in place, you run the risk of making serious errors in your finances. Furthermore, a good accounting system simply makes life easier and allows you to focus more on growing your business. 

  • It helps you evaluate the performance of your business: A good accounting system gives you a thorough overview of the financial performance of your business. If you don’t have an accounting record, how will you know if your business is growing or shrinking? So, your account records help you know if your business is growing, stagnant or slowing down.
  • It helps you manage cash flow and meet deadlines: Cash flow management means knowing what you do with the cash that comes into the organisation. Your accounting system helps you know areas that need cash. For instance, cash may be needed to finance your debts, or make major renovations or order for new stocks, and it is your accounting system that will help you know this. In short, no business will growth further without a good cash management system. Also, your accounting books help you know when bills like your rent needs to be paid.
  • It’s needed for business goal setting: Cash flow management means knowing what you do with the cash that comes into the organisation. Your accounting system helps you know areas that need cash. For instance, cash may be needed to finance your debts, or make major renovations or order for new stocks, and it is your accounting system that will help you know this. In short, no business will growth further without a good cash management system. Also, your accounting books help you know when bills like your rent needs to be paid.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.  Errors and omissions excepted (E&OE)

Siseko Tose appointed to ABASA National Committee

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We are proud to announce that Siseko Tose, currently Chairperson of the ABASA Free State branch, has been elected at the ABASA National Conference held in Durban into the National Committee for the following two portfolios:

1. Head of Transformation
2. Head of Education

He is the youngest member ever to serve on the National Committee and to top it off, he is the first ever member to be elected into two portfolios.

5 Common small business money mistakes

Of all the roles, a small business owner takes on, often the most challenging is managing the business’s finances. You can improve your chances for success – and your profitability – by being aware of and steering clear of these common small business money mistakes. 

  1. Insufficient Cash

Insufficient cash is one of the leading causes of business failure. Startups often overestimate how quickly they’ll start making money, and underestimate all the expenses they’ll incur. But startups aren’t the only businesses prone to failure due to insufficient cash. Once you have a steady flow of business you can run into cash problems in a couple of ways. One is a failure to realize the difference between cash flow and sales. You can have plenty of sales on record, but unless you get paid in advance for those sales, you’ll have expenses to pay before you collect from your customers.

  1. Waiting Too Long to Seek Credit

The worst time to look for a business loan or line of credit is when you most need it. If your business is paying its bills late and is on the brink of failing, finding funding will be difficult or impossible. The time to seek funding is when your business looks solid enough to convince a lender you will be able to repay what you borrow.  

  1. Mixing Business and Personal Funds

Whether you are starting a new business, or you’re running an established business, mixing personal and business funds is a recipe for disaster. Assuming you are the sole owner and you buy business supplies with your personal credit card or use a business check to pay for a personal purchase, you’re going to have difficulty keeping track of how much money the business is actually making or losing throughout the year.

If there are times when you have to use personal funds for your business – or vice versa – the correct way to handle the situation is to make a formal transaction and document it. If you have business partners, get them to sign off on the transaction, too.

  1. Not Staying on Top of Record keeping

As a business owner, your focus is usually on winning business and making sure the customers get it in a timely fashion. Along the way there are so many things to do that it’s easy to let recordkeeping fall by the wayside. Receipts for inventory or other purchases get shoved in a folder, envelope, drawer, or the proverbial shoebox, until such time as you “get around” to recording them. Invoices for items you’ve purchased on credit maybe wind up in your inbox – with dozens of other pieces of paper.

Records for business travel may wind up on the back of a receipt or napkin, or stuck in a note on your smart phone. Receipts from people who still pay you wind up in the same folder or drawer, and credit card payments show up in your bank account based on the credit card used to make the purchase, with no convenient way of matching any one day’s credit card receipts to specific purchases made. 

  1. Under Pricing

Determining the right price to charge for products or services is seldom an easy decision. Charge too much, and you could lose sales to a competitor. Charge too little, and you won’t make much profit – or worse, you’ll lose money.

Small businesses – particularly those just starting out – often charge too little. Sometimes they rationalise that the low price is a way of “getting their foot in the door.” Sometimes the price is low because a new business owner isn’t taking into account the cost of his or her own labour, or hasn’t accurately determined all of the costs that have to be considered in setting prices. If you’re just starting out, remember to account for all your costs in figuring out what to charge, and check to see what competitors are charging for what you sell.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.  Errors and omissions excepted (E&OE)

References:

Attard, Janet. “5 Common Small Business Money Mistakes”. Business Know-How. N.p., 2017. Web. 29 June 2017.

Treasury moves to close CGT avoidance loophole through share buybacks

Where one company previously sought to dispose of its shares in another company, it was able to do so without incurring an exposure for capital gains tax (“CGT”) or dividends tax, if that disposal were structured as an issue of shares by the target company to the “purchaser”, followed by a corresponding buyback of shares by the target company from the “seller”. For example: Company A holds 50% of the shares in Company X (which stake is worth R500,000). A had acquired the 50% interest for R50. B approached A with an offer to purchase the 50% for R500,000. A straight sale of the 50% would give rise to a tax effect of little less than R112,000 for A (being R499,950 x 80% x 28%). To ensure that the aforementioned tax charge does not arise, A agrees with B that the effective transfer of the 50% interest will be structured by B subscribing for shares in X for R500,000. B will now have effectively acquired a 33% interest in X. X will utilise that R500,000 to buy back the shares that are already in issue to A. When A’s shares are cancelled therefore, it will have received the R500,000 contributed by B, while B will have 50% in X by virtue of A’s interest being cancelled. From a tax perspective, the buyback of shares is treated as a dividend, which is both income tax and dividends tax exempt for A. The result: A effectively disposed of its shares in X for R500,000 without incurring any attendant tax cost.

The use of linked share issue and buyback transactions to avoid CGT has been on SARS’ radar for quite some time already, yet without any meaningful remedy to counter such (we would argue, legitimate avoidance) transactions. Where such transactions were in excess of R10 million, those transaction had to be reported to SARS though in terms of section 35(2) of the Tax Administration Act, 28 of 2011.

National Treasury has now moved to close this “loophole” through the proposed introduction of paragraph 43A in the Eighth Schedule to the Income Tax Act, 58 of 1962. The proposed amendments to paragraph 43A are contained in the draft Taxation Laws Amendment Bill, and if accepted by Parliament in its current form, will become operational with effect from 19 July 2017 (being the date of publication of the draft Bill).

In terms of the proposed amendments, tax exempt dividends declared to shareholders (which could hold as little as 20% in the declaring company with the dividends being declared either 18 months prior to the disposal of those shares, or in anticipation of their disposal) will be treated as a capital gain in the hands of the shareholder and taxed accordingly when the shares held are disposed of. In our example above therefore, the share buyback of R500,000 will be taxed as a capital gain.

As noted above, the current draft legislation has not yet been enacted, and we will closely monitor developments to consider implications of the final version of the legislation ultimately introduced.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice.  Errors and omissions excepted (E&OE)