Well, one of the first big milestones of the year is already behind us – the 2012 Budget, by and large a safe one and without many surprises. This year it was the tax payers who did well with the R9.5 billion in personal tax cuts for individuals – 72% of them for people earning under R600,000 a year.

There was also a notable change in respect of medical aid, the capping system to be replaced as of 1 March 2012 with a tax credit system that will see improved benefits for low earners and those under 65 years of age —a move more in line with international best practice in this realm. From a payroll perspective, it means administration will become a lot more streamlined and we are busy updating the CRS systems accordingly. Read on for more on this.

As expected, increased job creation and local empowerment was a key focus area in the Budget. Unemployment is still deemed high at 23,9% and over and above creating five million jobs by 2020, a more rapid improvement has been called for. South African businesses are being urged to equip themselves with a deeper understanding of the incentives offered to those creating the jobs and thus investing in the bigger picture. Skills development programmes and related benefits are indeed complex but training that allows one to upskill yet also bolster bottom lines are opportunities that every leader and HR manager should consider in 2012. Take for example the Job Fund, offering co-funding for any organisation that is expanding and who demonstrates an innovative approach to job creation.

Budget aside, it has been a busy start to the year at CRS, specifically with our new ventures further north. Throughout Africa, we continue to grow our footprint and are engaging in a number of strategic alliances. Because the tax landscape is so variable on the continent, by partnering with experts in their own territory, we tap into their local compliance and legislative framework and they tap into our technical savvy and IP. The end result is a highly tailored and cost effective HR and payroll offering, rolling out in previously unexplored and historically under-serviced territories and in some cases, new sectors too. We’re also encouraged by the surge in interest from UK- and US-based organisations with African branches, all looking to CRS for their African tax, HR and payroll requirements. It is safe to say that CRS is truly global!

To read more about CRS’ African offering, please click here. CRS will be at all the continent’s major HR and IPM gatherings this year, including those in Namibia, Botswana, Zambia, Tanzania and Zimbabwe. Drop me a line if you’d like to meet us while we’re there!

Finally, please be advised that all new tax tables and rebates have been updated on the CRS server and are currently in testing, available to clients on 2 March 2012. And so began 2012…
Until next time
James McKerrell

CRS is pleased to announce receipt of its BBBEE Rating 4 Certificate. Please visit our website to download the certificate

2012 Budget

– – New Medical Aid Tax Credit – –

One of the most interesting changes to taxation legislation to be implemented in the 2012/2013 tax year is the change in treatment of medical scheme contributions. Up to now, taxpayers qualified for a set monthly deduction on their taxable income, based on their family composition. It was contended that these monthly deductions were more rewarding to wealthier taxpayers. The new system ensures the same monetary benefit to everyone in the form of tax credits. This will operate in a similar fashion as the tax rebates afforded to individuals in that it reduces the tax payable by an individual (and not the taxable income).

Click here to read the full article on Business Live .

On the same topic, SARS believes that this a first taxation step towards the introduction of the national health insurance (NHI).

Click here to read the full article on Fin24.

Please be advised that the medical aid changes required a CRS programming update, which is now in the testing stage, going live on 2 March 2012. Should you require a copy for testing beforehand, please chat to your CRS consultant directly.

– – Possible VAT increase to cover the NHI – –

Ways to find the billions needed for the National Health Insurance (NHI) scheme could include an increase in the VAT rate, a payroll tax on employers, and a surcharge on the taxable income of individuals, says Finance Minister Pravin Gordhan. The new system would require funding over and above current budget allocations to public health, he told MPs, tabling his 2012/13 Budget in the National Assembly.

Click here to read the full article on iol.

– – 2012 Budget—Executive Summary – –

For a quick bite-sized executive summary of the Budget, please click here.

Accountants Defend Tax Practitioners

Not all tax practitioners are lax, incompetent, and non-compliant, the SA Institute of Professional Accountants (Saipa) has said, responding to comments made by Finance Minister Pravin Gordhan during his 2012 budget speech.

“Analysis of compliance among the country’s 3 000 tax advisers shows practitioners owe over R260m in outstanding taxes and have more than 18 000 income tax returns outstanding in their personal capacity,” said Gordhan. “If that is their attitude to their own tax compliance, one shudders to think what advice they are giving to their clients.”
Click here to read the full article on Fin24.

South Africa’s White Collar Crime Problem

While the digital age has and will continue to transform our lives in every conceivable way, it is not without risk, especially for organisations lax about their IT security. The 2011 White Collar Crime Survey from Price Waterhouse Coopers released at the end of 2011 revealed some alarming statistics. Cybercrime has been included in the report for the first time, a category ranked the fourth most reported economic crime. The World Economic Forum Global Risks 2011 report says: “Cyber security issues now top the list of risks to watch, ahead of weapons of mass destruction and resource security.” Overall, South Africa is ranked number two in the economic crime stakes globally.

According to PwC, Cybercrime is gaining in popularity among criminals since its rewards are impressive while the risks involved in committing it are negligible. Cybercriminals are not physically present at the scene of the crime; there is less chance of being identified; and they often work in a different jurisdiction to where the crime occurs. In addition, current laws are not mature enough to prosecute cybercriminals. As technology changes, the methods used to perpetrate cybercrime change as well, so organisations have to constantly update their systems to remain ahead of the game.

Currently, it is perceived that much of the threat of cybercrime is from external sources, at 45% in South Africa and 46% globally, but PwC believes this perception may be misplaced and a bigger internal threat may be present. 46% of South African respondents said their board has never performed a cybercrime risk assessment, or did not know whether an assessment was done; 56% engage with cybercrime experts – but only after a crime has been committed; and 40% had not received any awareness communication or training on cybercrime – despite its growing prevalence. Although the overall responsibility for IT security should lie with the board, it’s not the sole responsibility of senior management and needs to be properly executed across the organisation.

Which begs the question—when was your last cybercrime risk assessment?
To learn more about the PwC survey, click here, or download the full survey here.
Source: IT-Online, PwC

Training Modules

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