I trust this finds you exceptionally well as we are into the final quarter, Christmas decorations have made their appearance and we are into the home stretch leading up to “the Great South African Shut-down”. I have yet to hear Boney M, but I’m sure it won’t be long now. It is time to start planning the year-end shut-down so please ensure that leave has been scheduled and cash-flow and logistics planned to ensure a smooth Christmas and pick-up next year.
Whew, Europe remains a train-crash in slow motion with new installments taking place each month – the political players are all committed to the United States of Europe with their electorates becoming increasingly unruly as the implications permeate ever-more through society and are becoming more and more understood in layman’s terms (some-one – that would be you the taxpayer, has to pay because some-one else (not you) has lived the life of Riley. So you didn’t get any benefit but you’ve still got to pay). The sovereign crisis is advancing quite nicely as is the existential crisis. In terms of the increasing liquidity crisis, Dexia Bank (a Franco-Belgian institution required a government bailout – after requiring a first bail-out in 2008). The bank has been effectively guaranteed by the Luxembourg, French and Belgian governments because the bank is too big to fail. By guaranteeing the bank, the governments are stepping up to the plate and taking on the debt – as though they don’t have enough already! This is a very familiar story – see the USA, Ireland, UK etc. Events will continue to lurch to the next crisis over the next few months.
With regards to the USA, the following quote comes from Richard Yamarone, chief economist for Bloomberg: “Fact is that monetary and fiscal policies have used up most of their available instruments. The budget deficit is still 10% of GDP, with the national debt at 100% of GDP and still spiraling higher. Interest rates are at zero, with an undertaking to be kept at this level for years (as long as it takes) and with the Fed having tripled its balance sheet to $2.8tn. This overall reality remains a formula for subpar growth as the country struggles to overcome its financial indigestion, create new engines to drive growth, corporate “animal spirits” remain cautious and its main policy levers are basically fully extended. It suggests a very long playout before American resource utilisation (and policy) can be said to be returning to a more normal condition.” Say no more, don’t take the doom and gloom from me, take it from someone who is much better qualified than I to dispense doom and gloom – but America is, remains, and will be for quite some time, in trouble.
The situation is ripe for “Invest in SA” and this is a fantastic opportunity for South Africa to entrench themselves as a market player and a great place to do business. However, given the number of own goals (no pun intended) that have been scored on the political front (Shiceka, Moegoeng, Malema et al), on the sporting front (the football qualification/ non-qualification fiasco beggars belief) and the Dalai Lama visit/ non-visit, visa/ non-visa fiasco (and all of this after the R235,000 don’t look in my handbag story), South Africa has done, and continues to do incredible damage her self-image and world perceptions. It is an absolute disgrace!
With regards to the ongoing disaster/ national embarrassment that is the CIPC (replacement body to the truly awful CIPRO), I’m told that there is some improvement. We submitted a change of director form in June and received it back with the director having been changed in October. So something is definitely happening some of the time.
As was mentioned last month and the month before, (and this is repeated verbatim as it is important and impacts on all taxpayers) another interesting little change coming forth from SARS is that, based on the change by SARS to self assessment, a goodly number of their hitherto processing staff have been promoted to auditors and the number of investigations/ audits performed has increased from some forty five thousand (45,000) per annum in 2007 to one hundred and fifty thousand per annum (150,000) in 2010/11. Effectively the focus is on bigger numbers but we are finding that persons/ entities all across the spectrum are being audited – PAYE, VAT and Income tax. This has meant that in the “good old days” taxpayers chances of an audit were (say) 1 in 60. They are now, down to about 1 in 15. It has also meant that your tax return/ financial statements would be done, submitted and then forgotten. We are now seeing ever-increasing instances where said financial statements/ tax returns are being recalled for various reasons, SARS instigated a HUGE amount of audits on the 2007/ 2008 tax years at the end of last year. All of this means extra time and cost for the taxpayer. There is now insurance available from QDos Consulting to cover costs relating to SARS audits. SARS audits, in our experience, often have no relation to the amount of the tax amount involved and SARS can decide to audit without supplying a reason.
Internationally, insurance against tax investigations is increasingly becoming the norm (due to ever-increasing costs and ever-increasing complexity) and given the way the world is moving in SA, I would suspect that this trend will be followed here as well.
October 1, 2011 By Mark Theron No comments yet Economic Commentary
I trust this finds you exceptionally well as we are into the final quarter, Christmas decorations have made their appearance and we are into the home stretch leading up to “the Great South African Shut-down”. I have yet to hear Boney M, but I’m sure it won’t be long now. It is time to start planning the year-end shut-down so please ensure that leave has been scheduled and cash-flow and logistics planned to ensure a smooth Christmas and pick-up next year.
Whew, Europe remains a train-crash in slow motion with new installments taking place each month – the political players are all committed to the United States of Europe with their electorates becoming increasingly unruly as the implications permeate ever-more through society and are becoming more and more understood in layman’s terms (some-one – that would be you the taxpayer, has to pay because some-one else (not you) has lived the life of Riley. So you didn’t get any benefit but you’ve still got to pay). The sovereign crisis is advancing quite nicely as is the existential crisis. In terms of the increasing liquidity crisis, Dexia Bank (a Franco-Belgian institution required a government bailout – after requiring a first bail-out in 2008). The bank has been effectively guaranteed by the Luxembourg, French and Belgian governments because the bank is too big to fail. By guaranteeing the bank, the governments are stepping up to the plate and taking on the debt – as though they don’t have enough already! This is a very familiar story – see the USA, Ireland, UK etc. Events will continue to lurch to the next crisis over the next few months.
With regards to the USA, the following quote comes from Richard Yamarone, chief economist for Bloomberg: “Fact is that monetary and fiscal policies have used up most of their available instruments. The budget deficit is still 10% of GDP, with the national debt at 100% of GDP and still spiraling higher. Interest rates are at zero, with an undertaking to be kept at this level for years (as long as it takes) and with the Fed having tripled its balance sheet to $2.8tn. This overall reality remains a formula for subpar growth as the country struggles to overcome its financial indigestion, create new engines to drive growth, corporate “animal spirits” remain cautious and its main policy levers are basically fully extended. It suggests a very long playout before American resource utilisation (and policy) can be said to be returning to a more normal condition.” Say no more, don’t take the doom and gloom from me, take it from someone who is much better qualified than I to dispense doom and gloom – but America is, remains, and will be for quite some time, in trouble.
The situation is ripe for “Invest in SA” and this is a fantastic opportunity for South Africa to entrench themselves as a market player and a great place to do business. However, given the number of own goals (no pun intended) that have been scored on the political front (Shiceka, Moegoeng, Malema et al), on the sporting front (the football qualification/ non-qualification fiasco beggars belief) and the Dalai Lama visit/ non-visit, visa/ non-visa fiasco (and all of this after the R235,000 don’t look in my handbag story), South Africa has done, and continues to do incredible damage her self-image and world perceptions. It is an absolute disgrace!
With regards to the ongoing disaster/ national embarrassment that is the CIPC (replacement body to the truly awful CIPRO), I’m told that there is some improvement. We submitted a change of director form in June and received it back with the director having been changed in October. So something is definitely happening some of the time.
As was mentioned last month and the month before, (and this is repeated verbatim as it is important and impacts on all taxpayers) another interesting little change coming forth from SARS is that, based on the change by SARS to self assessment, a goodly number of their hitherto processing staff have been promoted to auditors and the number of investigations/ audits performed has increased from some forty five thousand (45,000) per annum in 2007 to one hundred and fifty thousand per annum (150,000) in 2010/11. Effectively the focus is on bigger numbers but we are finding that persons/ entities all across the spectrum are being audited – PAYE, VAT and Income tax. This has meant that in the “good old days” taxpayers chances of an audit were (say) 1 in 60. They are now, down to about 1 in 15. It has also meant that your tax return/ financial statements would be done, submitted and then forgotten. We are now seeing ever-increasing instances where said financial statements/ tax returns are being recalled for various reasons, SARS instigated a HUGE amount of audits on the 2007/ 2008 tax years at the end of last year. All of this means extra time and cost for the taxpayer. There is now insurance available from QDos Consulting to cover costs relating to SARS audits. SARS audits, in our experience, often have no relation to the amount of the tax amount involved and SARS can decide to audit without supplying a reason.
Internationally, insurance against tax investigations is increasingly becoming the norm (due to ever-increasing costs and ever-increasing complexity) and given the way the world is moving in SA, I would suspect that this trend will be followed here as well.