I trust this finds you exceptionally well as winter approaches apace.
I trust this finds you exceptionally well as winter approaches apace. The months seem to be flying by faster and faster it is literally week, week-end x 4 and then “ching”, into a new month. Repeat cycle. Before we know it, spring will be springing and then it is Christmas. Whew. Somebody slow this bus down.
It has been a tricky four months to start this year and the data and the QFS perception is that things are not going to improve in the medium term. The European crisis continues to lurch ever onwards, as the Euro project is held together by Pratley’s Putty, sticky tape and Angela Merkel’s sheer force of personality (ahem – read will), with everyone hoping that something is going to work. The UK avoided a triple dip recession (which would have been the first in recorded UK economic history) by 0.3%. Whilst the pundits and politicians gleefully extolled the virtues of NOT slipping into a triple dip recession, the reality is that to miss it by 0.3% is hardly anything to get excited about. Doom and gloom will continue there and in Europe (and as our largest trading partner, will impact SA). Japan, having seen how poorly the Quantitative Easing program has gone over the pond in the USA, have decided that they can make it work for them and are literally priming the printing presses (shorting the yen anyone’). The USA are trying to solve their own debt crisis by adding more debt. [Please read those last two sentences again. The world has gone mad]. I’ve said it countless times before and I will say it countless times again – at a personal, family, organizational, provincial or country level, it matters not on your size/ importance/ status – if you spend more than you earn you are going to go bankrupt. I cannot believe that all the clever politicians in the world cannot understand that. Of course, it could be said that is why they are in politics and not doing a real job.
China too is disappointing in terms of growth (and it is my opinion that the reality is worse than the official slowdown data) and that has to impact on the commodity producers – a la RSA and Australia. At the same time an increasingly militant labour force (completed disconnected from economic reality) has released the wage demand genie from the bottle. The impact will be negative as these unsustainable increases being demanded will lead to job shedding. This coupled gold (down some USD 300 in mid-April) which recorded its biggest one-day fall since the plummet after the “gold rush” of late seventies and early eighties does not bode well for all those people demanding increases. Suffice to say that there is huge volatility with price pressure on the downside, coupled with the above inflationary increases that ANC policies have resulted in– viz a viz electricity, rates, road tolling – it is a fundamental oxymoron that the purportedly pro-poor ANC government have implemented policies which, with the law of unintended consequences, have increased living costs significantly in South Africa and the people that suffer the most are the poor. Maybe one day if any politician with any backbone or sense ascends to power, this will be seen for the travesty that it is.
The original QFS prediction, to loud assertions of doom-mongering in response to this prediction, was that slow growth and volatility would persist until at least the end of this decade. Given the mix of events and inputs into this primordial soup of stagnation/ stagflation, I am starting to think that even recovery by the year 2020 could be looking a little optimistic (and the unsecured lending bubble is just starting to wobble).
I have included the followed excerpt from Cees Bruggeman from 9 April 2013 (all bold emphasis mine):
The FNB/BER CCI declined from -3 index points in 4Q2012 to a 9-year low of -7 index points in 1Q2013.
Consumers’ rating of the outlook for the national economy, their own financial prospects and the appropriateness of the present time to buy durable goods all deteriorated notably during 1Q2013.
Not even at the height of the global financial crisis in 2008 were consumers as downbeat about the country’s economic prospects and their household finances as they are now. Combined with a slowdown in household income growth and credit extension, low consumer confidence levels foreshadow subdued growth in household consumption expenditure during the first half of 2013.
Having declined by 2 index points during 4Q2012 to -3, the FNB/BER consumer confidence index (CCI) slumped by another 4 points to -7 in 1Q2013. The CCI is currently at the lowest level since 1Q2004, when consumer confidence unexpectedly dropped to -7 index points. The CCI is presently at an even more depressed level compared to the low of -4 registered during the 2008 global financial crisis (in 4Q2008), but at a similar level compared to the reading of -6 recorded in 1Q2008 when an acute shortage of electricity led to a spate of power outages throughout the country. With the average reading for the CCI at +6 since 1994, the latest index number of -7 implies that consumer confidence is now very low and not supportive of growth in consumer spending.
The FNB/BER CCI combines the results of three questions posed to adults in South Africa between 13 and 27 March 2013, namely the expected performance of the economy, the expected financial position of households and the rating of the appropriateness of the present time to buy durable goods, such as furniture, appliances and electronic equipment.
During 1Q2013, consumers’ rating of the outlook for the national economy, their own financial prospects and the appropriateness of the present time to buy durable goods all deteriorated significantly.
The economic outlook sub-index of the CCI fell from -7 to -11 during 1Q2013, indicating that even more consumers now expect the economic situation in South Africa to worsen over the next 12 months. Similarly, the financial position sub-index of the CCI deteriorated from +12 to +6. In fact, both the economic outlook and financial position sub-indices are currently at lower levels compared to that which prevailed during the recession (i.e. between 4Q2008 to 2Q2009).
Given the deterioration in the outlook for fixed investment and job creation on the back of the violent wildcat strikes in the mining, transport and agricultural sectors, as well as threats of power failures in coming months, consumers are understandably concerned about the outlook for the domestic economy. According to the Quarterly Labour Force Survey by Statistics South Africa, the South African economy shed 68 000 jobs during 4Q2012, bringing employment growth down to only 0.6% year on year.
Apart from job losses, rising inflation and slower growth in credit extension have in all likelihood now also started to weigh on the financial positions of households. Since July 2012, the price of unleaded petrol has increased by R2,38 per litre, or 22%, to a record high of R13,20 per litre in Gauteng, eroding the purchasing power of households. While the recent deceleration in food price inflation and the decision by the National Energy Regulator of South Africa to grant lower electricity price hikes than Eskom requested is good news for the consumer, it will not be enough to check the inflation tide in the short-term.
The rand exchange rate has depreciated by 20% against the US dollar since the first quarter of 2012, leading to upward pressure on the prices of imported goods, not to mention food and fuel prices. A weaker exchange rate and substantially higher transport and food costs are widely expected to see the CPI inflation rate breach the 6% upper end of the inflation target over the next couple of months, putting further strain on the financial positions of households.
While the personal income tax cuts announced in the 2013 National Budget will bring some relief to low and middle income households, it will not be enough to counter the adverse implications of waning employment growth, higher inflation and slower growth in social grants expenditure by the government. In addition, there are signs that the growth in unsecured lending has started to slow – particularly to low income consumers. With their financial position sub-index of the CCI at a 5-year low of 0 index points, low income households (earning less than R 5 000 per month) are significantly more pessimistic about the outlook for their finances compared to high income households (with a reading of +9).
During 1Q2013, the time to buy durable goods index of the CCI declined from -12 to -15 index points, indicating that an even larger majority of consumers consider the present time as inappropriate to purchase durable goods. The combination of deteriorating real disposable income growth, slower credit extension and higher prices for imported durable goods probably persuaded many consumers to postpone their durable goods purchases.
In conclusion: The slump in consumer sentiment during 1Q2013 corresponds with the deterioration in the business confidence levels of retailers and the substantial slowdown in retail sales growth recorded in recent months. Apart from the decline in consumers’ willingness to spend (as measured by the CCI), their ability to spend will likely also be constrained by muted job creation, rising inflation, slower growth in unsecured lending and other credit facilities and the changes in government spending announced in the February 2013 budget. Whereas the growth in household consumption expenditure was the mainstay behind the domestic economic recovery between 2010 and 2012, the growth in consumer spending is expected to be subdued and much less supportive of economic growth in 2013.
Excerpt ends
For those who have not read the multiple missives, Michael Kumm from our office, after completing his Articles of Traineeship with this office, passed his Final Qualifying Exam and can now add the letters CA(SA), RA after his name.
CIPC continues their extremely successful efforts to frustrate and raise the barriers for entry to the South African economy. They have issued new guidelines on how the statutory charges for the annual return submission are to be levied. Suffice to say that the guidelines are comprehensible to most people who have more than ten years of tertiary education but rather opaque to everyone else. To really spice up the mix, these incomprehensible guidelines are then inconsistently applied and companies can be charged R100, R450, R2,000 R2,500, R3,000 and R4,000 with it being completely uncertain as to what the actual charge will be until it is levied. I ask you with tears in my eyes, how it is possible to be so absolutely awful.
As has been previously mentioned, SARS have added a truly vicious and malevolent beast to their arsenal known as an IT14SD. This is a reconciliation which requires reconciliation between the payroll numbers on the financial statements to the payroll reports (IRP5s and EMP501s) and a reconciliation of the VAT inputs and outputs (to cost of sales). This is an incredibly labour intensive reconciliation which easily takes 40 man hours. It is a VERY VERY expensive and time-consuming submission (and seeing as SARS developed this without informing the software providers, as of March 2013, there still isn’t, to my knowledge, a software provider in South Africa that has set up their software to generate the inputs/ reports in the format required). I asked the question at the annual Southern Suburbs SAICA/ SARS meeting, last year, if we could not submit the document and rather invite SARS to audit. We are also finding that, quite literally, one in three tax returns are going for review or audit. It is absolutely ludicrous! Basically if one is receiving a refund or has ANYTHING other than a plain vanilla type of the tax return the documents are required to be submitted. It is chewing up time and costing money that is unnecessarily spent due to poor risk profiling. It is making us change the way that we approach tax on an annual basis, as instead of aiming for a small refund, we are aiming to have to rather pay in and hopefully avoid the time and costs associated with an audit. Having said that, even then, where clients are having to pay in, we are finding an disproportionate amount of document requests/ audits. It really is a lose/ lose situation.
As noted previously SARS are still raping and pillaging bank accounts across the nation if they believe that you owe them money. It does also turn out that SARS aren’t always correct more often than you’d think – but try explaining that to your creditors! Kick him again SARS. (I don’t think that SARS can possibly comprehend the damage that they are doing to the business engines of the South African economy). It must be particularly special to be all-powerful and stupid.
SARS are also focusing on Value-Added tax in the worst way possible. What they are doing is denying VAT claims where a valid VAT invoice has not been issued (which actually sounds quite reasonable, until the implications are noted). This means that if the VAT number is wrong/ missing, the addressee is wrong/ missing, the address and or contact details are wrong/ missing then the VAT claim is denied. The worst example we have been made aware of (fortunately not a client of ours and we were in no way associated with it) was as follows: ACo issued BCo with a VAT invoice for R10m plus R1.4m VAT. BCo paid ACo the R11.4m. ACo recorded the output sale and paid SARS the R1.4m VAT. BCo recorded the input and claimed the R1.4m VAT. ACo’s invoice to BCo was incomplete so SARS, having actually received the R1.4m from ACo denied BCo the input and for the brazen effrontery of the BCo for daring to submit an incomplete invoice denied the R1.4m paid and issued a fifty percent penalty as well. Net effect is moving from a R1.4m refund to a R700k payment to SARS (that is a R2.1m smack in the crotch for what was really an administrative error at a clerical level). It is enough, given the incompetence at all levels of government, the ineptitude and complete ignorance about realities of business life in South Africa, to make one go and work for government. Arrive late, long lunch, leave early, get a big bonus, have a burning/ breaking festival once a year whilst striking for higher wages.
According to a missive from Moonstone (FSB compliance), there is a new SARS requirement in that your home loan balance and interest charged will be submitted to SARS from Feb ’13. This means that if one is declaring income of say R2.0m per year but has a residence costing (say) R250m then if you aren’t a really important government official who has friends leaving on a jet plane, SARS will investigate the mismatch.
In yet another diatribe, SARS have change the format of the company and close corporation tax returns. In their usual persecutory and oppressive fashion, they put a notice on their website on Friday 26 April saying that the tax return format was changing and that all tax returns which were saved but not submitted by 3 May (read one week) would be deleted. It is the QFS suggestion that to change something as fundamental as the tax return format should be communicated well in advance so that people are not saving their tax returns whilst obtaining signature/ authorisation/ clarification et al on a number of points. There are also thousands of people in South Africa who are not accountants and tax practitioners who have businesses to run and do not get onto the SARS website regularly so they will be unaware of this and there are going to be thousands of manhours lost/ wasted and a huge amount of frustration at the wastage of time when all of these tax returns are deleted. To give so little notice demonstrates a complete disconnect of the reality of the average business person.
Finally, with regards to SARS, they have now taken a position whereby interest free loan accounts between related parties are now the subject of scrutiny. This aspect of the legislation has been largely ignored by them but they are now taking the position that where a debit loan account exists e.g. a director has been loaned (say) R500,000 interest free by the company that this transaction is now a deemed dividend and STC or dividends tax is payable. It is thus vitally important that debit loan accounts are no longer run by related parties to entities.
Whew, that was a lot about SARS. All true. None of it good. The facts, I only give you the facts.
May 13, 2013 By No comments yet Economic Commentary
I trust this finds you exceptionally well as winter approaches apace.
I trust this finds you exceptionally well as winter approaches apace. The months seem to be flying by faster and faster it is literally week, week-end x 4 and then “ching”, into a new month. Repeat cycle. Before we know it, spring will be springing and then it is Christmas. Whew. Somebody slow this bus down.
It has been a tricky four months to start this year and the data and the QFS perception is that things are not going to improve in the medium term. The European crisis continues to lurch ever onwards, as the Euro project is held together by Pratley’s Putty, sticky tape and Angela Merkel’s sheer force of personality (ahem – read will), with everyone hoping that something is going to work. The UK avoided a triple dip recession (which would have been the first in recorded UK economic history) by 0.3%. Whilst the pundits and politicians gleefully extolled the virtues of NOT slipping into a triple dip recession, the reality is that to miss it by 0.3% is hardly anything to get excited about. Doom and gloom will continue there and in Europe (and as our largest trading partner, will impact SA). Japan, having seen how poorly the Quantitative Easing program has gone over the pond in the USA, have decided that they can make it work for them and are literally priming the printing presses (shorting the yen anyone’). The USA are trying to solve their own debt crisis by adding more debt. [Please read those last two sentences again. The world has gone mad]. I’ve said it countless times before and I will say it countless times again – at a personal, family, organizational, provincial or country level, it matters not on your size/ importance/ status – if you spend more than you earn you are going to go bankrupt. I cannot believe that all the clever politicians in the world cannot understand that. Of course, it could be said that is why they are in politics and not doing a real job.
China too is disappointing in terms of growth (and it is my opinion that the reality is worse than the official slowdown data) and that has to impact on the commodity producers – a la RSA and Australia. At the same time an increasingly militant labour force (completed disconnected from economic reality) has released the wage demand genie from the bottle. The impact will be negative as these unsustainable increases being demanded will lead to job shedding. This coupled gold (down some USD 300 in mid-April) which recorded its biggest one-day fall since the plummet after the “gold rush” of late seventies and early eighties does not bode well for all those people demanding increases. Suffice to say that there is huge volatility with price pressure on the downside, coupled with the above inflationary increases that ANC policies have resulted in– viz a viz electricity, rates, road tolling – it is a fundamental oxymoron that the purportedly pro-poor ANC government have implemented policies which, with the law of unintended consequences, have increased living costs significantly in South Africa and the people that suffer the most are the poor. Maybe one day if any politician with any backbone or sense ascends to power, this will be seen for the travesty that it is.
The original QFS prediction, to loud assertions of doom-mongering in response to this prediction, was that slow growth and volatility would persist until at least the end of this decade. Given the mix of events and inputs into this primordial soup of stagnation/ stagflation, I am starting to think that even recovery by the year 2020 could be looking a little optimistic (and the unsecured lending bubble is just starting to wobble).
I have included the followed excerpt from Cees Bruggeman from 9 April 2013 (all bold emphasis mine):
The FNB/BER CCI declined from -3 index points in 4Q2012 to a 9-year low of -7 index points in 1Q2013.
Consumers’ rating of the outlook for the national economy, their own financial prospects and the appropriateness of the present time to buy durable goods all deteriorated notably during 1Q2013.
Not even at the height of the global financial crisis in 2008 were consumers as downbeat about the country’s economic prospects and their household finances as they are now. Combined with a slowdown in household income growth and credit extension, low consumer confidence levels foreshadow subdued growth in household consumption expenditure during the first half of 2013.
Having declined by 2 index points during 4Q2012 to -3, the FNB/BER consumer confidence index (CCI) slumped by another 4 points to -7 in 1Q2013. The CCI is currently at the lowest level since 1Q2004, when consumer confidence unexpectedly dropped to -7 index points. The CCI is presently at an even more depressed level compared to the low of -4 registered during the 2008 global financial crisis (in 4Q2008), but at a similar level compared to the reading of -6 recorded in 1Q2008 when an acute shortage of electricity led to a spate of power outages throughout the country. With the average reading for the CCI at +6 since 1994, the latest index number of -7 implies that consumer confidence is now very low and not supportive of growth in consumer spending.
The FNB/BER CCI combines the results of three questions posed to adults in South Africa between 13 and 27 March 2013, namely the expected performance of the economy, the expected financial position of households and the rating of the appropriateness of the present time to buy durable goods, such as furniture, appliances and electronic equipment.
During 1Q2013, consumers’ rating of the outlook for the national economy, their own financial prospects and the appropriateness of the present time to buy durable goods all deteriorated significantly.
The economic outlook sub-index of the CCI fell from -7 to -11 during 1Q2013, indicating that even more consumers now expect the economic situation in South Africa to worsen over the next 12 months. Similarly, the financial position sub-index of the CCI deteriorated from +12 to +6. In fact, both the economic outlook and financial position sub-indices are currently at lower levels compared to that which prevailed during the recession (i.e. between 4Q2008 to 2Q2009).
Given the deterioration in the outlook for fixed investment and job creation on the back of the violent wildcat strikes in the mining, transport and agricultural sectors, as well as threats of power failures in coming months, consumers are understandably concerned about the outlook for the domestic economy. According to the Quarterly Labour Force Survey by Statistics South Africa, the South African economy shed 68 000 jobs during 4Q2012, bringing employment growth down to only 0.6% year on year.
Apart from job losses, rising inflation and slower growth in credit extension have in all likelihood now also started to weigh on the financial positions of households. Since July 2012, the price of unleaded petrol has increased by R2,38 per litre, or 22%, to a record high of R13,20 per litre in Gauteng, eroding the purchasing power of households. While the recent deceleration in food price inflation and the decision by the National Energy Regulator of South Africa to grant lower electricity price hikes than Eskom requested is good news for the consumer, it will not be enough to check the inflation tide in the short-term.
The rand exchange rate has depreciated by 20% against the US dollar since the first quarter of 2012, leading to upward pressure on the prices of imported goods, not to mention food and fuel prices. A weaker exchange rate and substantially higher transport and food costs are widely expected to see the CPI inflation rate breach the 6% upper end of the inflation target over the next couple of months, putting further strain on the financial positions of households.
While the personal income tax cuts announced in the 2013 National Budget will bring some relief to low and middle income households, it will not be enough to counter the adverse implications of waning employment growth, higher inflation and slower growth in social grants expenditure by the government. In addition, there are signs that the growth in unsecured lending has started to slow – particularly to low income consumers. With their financial position sub-index of the CCI at a 5-year low of 0 index points, low income households (earning less than R 5 000 per month) are significantly more pessimistic about the outlook for their finances compared to high income households (with a reading of +9).
During 1Q2013, the time to buy durable goods index of the CCI declined from -12 to -15 index points, indicating that an even larger majority of consumers consider the present time as inappropriate to purchase durable goods. The combination of deteriorating real disposable income growth, slower credit extension and higher prices for imported durable goods probably persuaded many consumers to postpone their durable goods purchases.
In conclusion: The slump in consumer sentiment during 1Q2013 corresponds with the deterioration in the business confidence levels of retailers and the substantial slowdown in retail sales growth recorded in recent months. Apart from the decline in consumers’ willingness to spend (as measured by the CCI), their ability to spend will likely also be constrained by muted job creation, rising inflation, slower growth in unsecured lending and other credit facilities and the changes in government spending announced in the February 2013 budget. Whereas the growth in household consumption expenditure was the mainstay behind the domestic economic recovery between 2010 and 2012, the growth in consumer spending is expected to be subdued and much less supportive of economic growth in 2013.
Excerpt ends
For those who have not read the multiple missives, Michael Kumm from our office, after completing his Articles of Traineeship with this office, passed his Final Qualifying Exam and can now add the letters CA(SA), RA after his name.
CIPC continues their extremely successful efforts to frustrate and raise the barriers for entry to the South African economy. They have issued new guidelines on how the statutory charges for the annual return submission are to be levied. Suffice to say that the guidelines are comprehensible to most people who have more than ten years of tertiary education but rather opaque to everyone else. To really spice up the mix, these incomprehensible guidelines are then inconsistently applied and companies can be charged R100, R450, R2,000 R2,500, R3,000 and R4,000 with it being completely uncertain as to what the actual charge will be until it is levied. I ask you with tears in my eyes, how it is possible to be so absolutely awful.
As has been previously mentioned, SARS have added a truly vicious and malevolent beast to their arsenal known as an IT14SD. This is a reconciliation which requires reconciliation between the payroll numbers on the financial statements to the payroll reports (IRP5s and EMP501s) and a reconciliation of the VAT inputs and outputs (to cost of sales). This is an incredibly labour intensive reconciliation which easily takes 40 man hours. It is a VERY VERY expensive and time-consuming submission (and seeing as SARS developed this without informing the software providers, as of March 2013, there still isn’t, to my knowledge, a software provider in South Africa that has set up their software to generate the inputs/ reports in the format required). I asked the question at the annual Southern Suburbs SAICA/ SARS meeting, last year, if we could not submit the document and rather invite SARS to audit. We are also finding that, quite literally, one in three tax returns are going for review or audit. It is absolutely ludicrous! Basically if one is receiving a refund or has ANYTHING other than a plain vanilla type of the tax return the documents are required to be submitted. It is chewing up time and costing money that is unnecessarily spent due to poor risk profiling. It is making us change the way that we approach tax on an annual basis, as instead of aiming for a small refund, we are aiming to have to rather pay in and hopefully avoid the time and costs associated with an audit. Having said that, even then, where clients are having to pay in, we are finding an disproportionate amount of document requests/ audits. It really is a lose/ lose situation.
As noted previously SARS are still raping and pillaging bank accounts across the nation if they believe that you owe them money. It does also turn out that SARS aren’t always correct more often than you’d think – but try explaining that to your creditors! Kick him again SARS. (I don’t think that SARS can possibly comprehend the damage that they are doing to the business engines of the South African economy). It must be particularly special to be all-powerful and stupid.
SARS are also focusing on Value-Added tax in the worst way possible. What they are doing is denying VAT claims where a valid VAT invoice has not been issued (which actually sounds quite reasonable, until the implications are noted). This means that if the VAT number is wrong/ missing, the addressee is wrong/ missing, the address and or contact details are wrong/ missing then the VAT claim is denied. The worst example we have been made aware of (fortunately not a client of ours and we were in no way associated with it) was as follows: ACo issued BCo with a VAT invoice for R10m plus R1.4m VAT. BCo paid ACo the R11.4m. ACo recorded the output sale and paid SARS the R1.4m VAT. BCo recorded the input and claimed the R1.4m VAT. ACo’s invoice to BCo was incomplete so SARS, having actually received the R1.4m from ACo denied BCo the input and for the brazen effrontery of the BCo for daring to submit an incomplete invoice denied the R1.4m paid and issued a fifty percent penalty as well. Net effect is moving from a R1.4m refund to a R700k payment to SARS (that is a R2.1m smack in the crotch for what was really an administrative error at a clerical level). It is enough, given the incompetence at all levels of government, the ineptitude and complete ignorance about realities of business life in South Africa, to make one go and work for government. Arrive late, long lunch, leave early, get a big bonus, have a burning/ breaking festival once a year whilst striking for higher wages.
According to a missive from Moonstone (FSB compliance), there is a new SARS requirement in that your home loan balance and interest charged will be submitted to SARS from Feb ’13. This means that if one is declaring income of say R2.0m per year but has a residence costing (say) R250m then if you aren’t a really important government official who has friends leaving on a jet plane, SARS will investigate the mismatch.
In yet another diatribe, SARS have change the format of the company and close corporation tax returns. In their usual persecutory and oppressive fashion, they put a notice on their website on Friday 26 April saying that the tax return format was changing and that all tax returns which were saved but not submitted by 3 May (read one week) would be deleted. It is the QFS suggestion that to change something as fundamental as the tax return format should be communicated well in advance so that people are not saving their tax returns whilst obtaining signature/ authorisation/ clarification et al on a number of points. There are also thousands of people in South Africa who are not accountants and tax practitioners who have businesses to run and do not get onto the SARS website regularly so they will be unaware of this and there are going to be thousands of manhours lost/ wasted and a huge amount of frustration at the wastage of time when all of these tax returns are deleted. To give so little notice demonstrates a complete disconnect of the reality of the average business person.
Finally, with regards to SARS, they have now taken a position whereby interest free loan accounts between related parties are now the subject of scrutiny. This aspect of the legislation has been largely ignored by them but they are now taking the position that where a debit loan account exists e.g. a director has been loaned (say) R500,000 interest free by the company that this transaction is now a deemed dividend and STC or dividends tax is payable. It is thus vitally important that debit loan accounts are no longer run by related parties to entities.
Whew, that was a lot about SARS. All true. None of it good. The facts, I only give you the facts.