A warm welcome to the new year! January is always the month of predictions and this year the common thread is to be cautiously optimistic and agile. Business leaders are being advised to gear resources and organisational thinking, and to be ready for action at the first signs of improvement. Yes, we’re still in the fall out of the global financial crisis but issues closer to home are setting the pace for all strategic planning.

The smart organisation is looking to mitigate risk and is focusing inward to drive operational efficiencies. The company who is best prepared to take advantage of an upturn in the market is the one who has the skills required to do so.

It is a widely covered topic— using times of flat or negative growth to invest in R&D— but companies should include the ‘S’ in that to make it Research Skills and Development. If the HR manager is unable to recruit the skills required by an organisation to thrive, or to up-skill from within, productivity and profitability take a direct hit. Never has the saying “an organisation is only as good as its people” been more true!

In a month’s time, we’ll all be unpacking the budget, one likely to be informed by South Africa’s ongoing slow recovery from the recession and pressures affecting growth and job creation.

Given the credit rating downgrades hanging over South Africa, this year’s budget needs to get things right. The Minister may well receive a backlash from Cosatu on efforts to address unemployment and growth. Needless to say, the labour landscape is set to be a rocky one this year with strikes and discontent among workforces expected to cause disruptions.

Legislation continues to change the way organisations operate too. The Companies Act has meant directors of companies are now personally liable for the outcome of their decisions. Because it is relatively new, the legislation also means that compliance is now more risky than it might otherwise have been, with risk management a key point on Board agendas, and this includes IT risk.

Boards are also becoming more accountable to stakeholders, not just shareholders. The tax landscape will also become more challenging, with penalties and anti-avoidance rules growing in complexity and too onerous to bear. We’ll continue to make you aware of the changes as they take effect. Be sure to read the article below on the tax rules you can’t afford to disregard.

Cloud strategies still hold weight and most organisations have now incorporated the cloud at some level in their operations, although a cautious attitude still prevails. Also based on the recessionary challenges, cloud storage solutions as a means to reduce operational costs will be a key feature of the smart organisation’s strategic business decisions this year.

Environmental issues will add weight to the green IT and cloud argument too as managers seek to implement more sustainable practices. At CRS we’re upping the ante with regards to our cloud offering, minimising risk and ensuring flexible cloud deployment..

It all sounds a little gloomy but rest assured the climate does present opportunities for growth. Positive outlooks and game faces do however have to be supported by sound strategies that incorporate strategic alliances and trusted business partners.

In 2012, CRS will partner you in this unsettled and mercurial environment and help you remain compliant, taking into account the pressures on your business while giving you solutions centred on operational gains.

We ‘get’ the shift towards to short-term planning over long-term commitment during an economic crisis and while prudence must be applied, now is not the time to revert to the silo attitude nor neglect, or even skimp, on your organisation’s infrastructures and human capital.
Do you see the tremendous opportunities ahead, lurking behind the day-to-day challenges? Drop me a line and share your outlooks for 2012. Tell us how you define collaboration?

Until next time
James McKerrell

Diarise this – 8 tax rules you can’t miss in 2012!

1. Give SARS an IT14SD to clear your name

  • In November 2011, SARS introduced a new form that companies must complete. Called the IT14SD, it’s basically a declaration where you reconcile your information for PAYE, income tax, Vat and Customs. SARS uses it to check if there’s any mismatch in the information you supply to SARS.

2. Submit your TT03 Turnover Tax return by 31 January 2012 – completed in 6 easy steps

  • If you’re a small business, and you’re registered for Turnover Tax, make sure you submit your return to SARS on time!

3. Submit your provisional tax return by 29 February 2012

  • If you submit your provisional return late, SARS will slap you with administrative penalties, ranging from R250 to R4 000 for each month the submission is late. Late payment of the actual tax sees another 10% added to the penalty amount. Ouch! The bad news is that you can’t escape the penalty. But you can shrink the interest charges by using the voluntary third payment.

4. On 1 March 2012, kiss medical aid deductions goodbye!

  • In the 2011 Budget Speech, the Minister of Finance announced the proposed conversion of medical deductions to medical tax credits, with effect 1 March 2012. What’s more, SARS has approved the new list of medical expenses that will qualify for a deduction.

5. Dividends Tax comes into effect on 1 April 2012

  • South Africa is phasing out the Secondary Tax on Companies (STC) paid on company dividends. And that this is being replaced by a withholding tax on dividends (WTD). Caution! Management or shareholders of the company paying the dividend could become personally liable for the tax, penalties and interest if they get it wrong.

6. Section 11(bA) deductions dry up on 1 April 2012

  • The Tax Laws Amendment Bill (TLAB) is proposing that Section 11(bA) be deleted from our tax laws. It applies to interest or finance charges you incur when you buy assets for your business – but before you actually bring the assets into use. It allows you to accumulate the interest, known as pre-production interest – and then deduct it as a lump sum in that same year of assessment.

7. Your PAYE annual reconciliation will be due on  31 August 2012

  • By now, you should have the process of submitting EMP501s and EMP201s down to a fine art!

8. The property tax break expires on 31 December 2012

  • SARS has a tax break for you – a property transfer window period. It allows you to transfer property out of a trust, CC or company and into your name and without paying Capital Gains Tax (CGT) (paragraph 51A of the Eighth Schedule to the Income tax Act), Secondary Tax on Companies (STC) transfer duties as well as dividends tax.

Source: Labour Bulletin / Tax Watch. To read this article online, click here.

New Dividend Tax will impact companies & shareholders

Shareholders, trusts and companies need to ensure they are aware of the looming changes to dividends tax legislation as the new Dividend Withholding Tax (DWT) will be effective from April 1 2012.

The new way dividends will be taxed can have consequences on both the shareholder and the company declaring the dividend which neither party may be aware of. We therefore encourage companies and shareholders to increase their awareness of the new regime so as not to be caught off guard.

To read the full article on Moneyweb Tax, click here

Have South African employment equity measures failed?

The first two decades of post-apartheid South Africa have been times of intense change at all levels of society. A key aspect of this change is economic empowerment: creating space in senior positions in tertiary, corporate and professional organisations for previously marginalised people.

Progress in this regard has been monitored annually by the Commission for Employment Equity (CEE), among other bodies. According to its most recent report, released in early August 2011, there has been very “minimal improvement for black and female employees, particularly in penetrating top and senior management level positions.”

To read the full article on BBQ Online, click here

Training modules

We continue to offer a selection of training on our modules. Please click here for the dates and venues.