Well, what an interesting year 2010 has been for South Africa….
The year kicked off with much hope for an economic recovery, albeit a slow one. Hopes for growth and foreign investment were also pinned on the World Cup and while there is a mixed bag of opinions of what the World Cup actually did for South Africa, no one can forget what it did for our nation’s morale and how it galvanised a population with fresh optimism in a post-recession phase. Then, in the last quarter, banks cut their lending rates by 50 basis points, bringing them to their lowest level since mid 1974. And at an industry level, I also see encouraging signs every day. For example, at the Qlikview 2010 User Conference, I learnt that the JSE is using Qlickview to report on over a billion rows of data and effectively so. And ABSA Capital now has more Qlikview users than Microsoft Excel users, trends that merely demonstrates the opportunities ahead for our own Analytics modules.
That’s not to say that 2010 has been a walk in the park for everyone and we have all seen and experienced challenges in a still-sluggish business environment.
But let’s not dwell on the past. The stage is set for a cracking 2011, bringing a fresh set of challenges and opportunities for all of us. We can expect a very nervous marketplace out there, and if the current Irish crisis is a harbinger of what’s to come, I think we should be buckling our seatbelts and preparing for a bumpy ride.
2011 is going to be a year of working smarter. Budgets will still be under pressure and we will all be fighting for a piece of a shrinking pie. Corporate governance and SARS compliance is only going to grow in complexity. We urge you to make use of the quieter time over the holidays to find ways you can improve efficiencies. If there remains even one small element of your HR and payroll processes not yet automated, you are well advised to deploy intelligent software and processes wherever possible – agility is key.
I’d also like to thank our clients and my teams for yet another fantastic CRS year of raising standards. In 2011, we’ll continue to forge ahead, empower human capital and break new ground in the ever-changing HR and payroll environment.
We will be with you every step of the way next year, so if you have any thoughts or concerns, please drop us a line or give us call and we would be delighted to help in any way we can. And watch out for the unveiling of a savvy, sexy new CRS product early next year!
We wish all of you and your families a safe, blessed, and well deserved break.
Until next year,
Company Cars: the Taxation Laws Amendments Bill
Treasury’s Taxation Laws Amendment Bills tabled in August sought to balance perceived tax loopholes with the provision of tax relief. While the tightening of tax legislation through anti-avoidance measures was expected, the regular amendments to the Income Tax Act actually make for a more complex tax landscape.
Remember that the amendments relating to company cars will have significant adverse implications for tax payers so employers are well advised to implement processes and get ahead of the changes now. Herewith a recap of the salient points regarding this particular amendment:
The fringe benefits tax is currently worked out an assumed value of the vehicle. The amendment results in an increase in value of the taxable perk. From March 2011, this value will increase from 2.5% (excluding VAT) to 3.5% (including VAT) per month per vehicle made available for use by the employee, reducing to 3.25% if the vehicle is subject to a maintenance plan. To reduce the taxable value, one will need to keep proper records of both business and total kilometres travelled. This record-keeping could become a tedious task but employees need to be vigilant in maintaining accurate log books. Furthermore, monthly cash flows will also be adversely impacted due to the fact that benefits will be taxed at an increased rate on a monthly basis, while employees will have to wait for assessment before benefitting from any reductions applicable.
Company vehicles were just one part of the tax amendments. Other amendments will affect:
- Executive share scheme changes
- Group relief
- Retirement benefits: post-retirement conversion of annuities into lump sums, retirement fund benefit payouts to third parties, and severance award payouts
- Transfer of residential properties out of companies or trusts
NB: the definition of ‘dividend’ has also been amended. For more details on these tax amendments, feel free to contact us and we’ll guide your organisation through the compliance procedures.
During the next month we’ll be offering a selection of training on our modules. Please click here for the dates and venues.