Belastingbeplanning: Minder ja, maar nie niks nie

Accounting , ,

Belastingbeplanning is noodsaaklik om te verseker dat jou welverdiende Rande, binne alle wette en regulasies van die Suid-Afrikaanse Inkomstediens en die Inkomstebelastingwet, te rek vir die nabye toekoms maar ook vir jou goue jare.

Dit is ‘n gegewe dat almal iewers belasting sal betaal, ongeag hoe haarfyn jou beplanning is.

 

Daar is ‘n diverse verskeidenheid produkte, strategieë en instrumente waarvolgens doeltreffende belastingbeplanning oor jou leeftyd gedoen kan word om te verseker dat jou bates groei terwyl voorsiening ook gemaak word vir boedelbelasting sou jy tot sterwe kom.

‘n Trust is ‘n nuttige instrument om te gebruik in jou soeke na doeltreffende belastingbeplanning. Die aankoop van bates, met langtermyn groei potensiaal, binne ‘n trust verseker dat die bate groei binne in die trust en nie in jou boedel nie. Daar moet wel deeglik aandag geskenk word aan artikel 7C van die Inkomstebelastingwet wat van toepassing is op gelde wat rentevry aan trusts gemaak word deur trustbegunstigdes om bates aan te koop.

‘n Trust bied aan die oprigter ‘n nuttige instrument om bates te beskerm en te behou tot die voordeel van die erfgename van die oprigter, die oprigting kan die bates deur trustees, beide verwante en onafhanklike persone, sodanig laat bestuur dat daar deur generasies voldoende voorsiening gemaak kan word vir die nasate van die oprigter. Die beperkte insae van begunstigdes in die besluitnemingsproses kan verhoed dat partye met lang vingers die trust se bates vir hul eie gewin in te palm.

Hierdie artikel is ʼn algemene inligtingsblad en moet nie as professionele advies beskou word nie. Geen verantwoordelikheid word aanvaar vir enige foute, verlies of skade wat ondervind word as gevolg  van die gebruik van enige inligting vervat in hierdie artikel nie. Kontak altyd ʼn finansiële raadgewer vir spesifieke en gedetailleerde advies. (E&OE)

Managerial accounting: The key to making better decisions

Accounting , ,

As a manager of an organisation, there is a great responsibility for decision making. The question lies in how a manager can utilise accounting information to make better decisions. Managerial accounting is a common practice within an organisation where accounting information is identified, measured, analysed, interpreted and communicated to relevant parties to pursue a goal.

Accounting information can be analysed in different ways and be used for different purposes. It’s important to identify the type of decision that needs to be made to ensure that the correct accounting information is gathered and analysed for the best decision making.

For instance, an organisation that wants to attract investors will depend mostly on cash flow statements and cash flow forecasts, the income statement and a balance sheet, whereas an organisation that needs to apply for a loan will rather look into certain ratios such as debt to equity and debt to service coverage ratios.

Managerial accounting is mostly used in scenarios where quick decisions need to be made to help managers optimise business operations. Accounting information is used by managers to plan, evaluate the company performance and manage risks. Budgeting is a great part of an organisation and financial reporting can help a manager to set a realistic budget and identify the need for funding. To measure the company’s performance certain ratios can be used such as the liquidity ratio which measures the company’s ability to generate cash to meet the short-term financial commitments, efficiency ratio that mostly relates to the inventory turnover and the profitability ratio can be used to measure the return on assets and net profit margins.

The first step to making an informed decision is to have information that is reliable and up to date, thereafter the accounting information can be utilised in different ways to ultimately form a report that would help management to make better decisions.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Your payroll administration questions answered

Accounting , ,

As payroll administrators ourselves, we encounter a few frequently asked questions that employers, business owners or those responsible for payroll administration within organisations struggle with.  Below we have a detailed answer for you on these burning questions you are facing.  We hope that you find them insightful.

  1. Question: At what stage is an employer required to register for PAYE and UIF with the South African Revenue Service?

 

Answer: An employer is required to register for PAYE and UIF the moment he/she employs an employee whose salary exceeds the tax threshold.  For the 2020 tax year, this threshold is R 79 000 per annum.

 

  1. Question: If an employer is already registered with SARS for UIF, does the employer also have to register with the Department of Labour for UIF purposes?

Answer: Yes. Although UIF payments are made to SARS and not to the Department of Labour, UIF Registration with the Department of Labour still needs to be completed and a UI19 form, in which the employer declares the amounts paid over to SARS, must be submitted monthly.  The UI19 form can be submitted via e-mail.

  1. Question: At what stage is an employer required to register for SDL (Skills Development Levy) with SARS?

 

Answer:  An employer is required to register for SDL as soon as the total gross salaries of the organisation (all employees’ salaries) for any 12-month period exceeds R 500 000. Please note that SDL can only be claimed back for training provided from the relevant SETA to which the organisation belongs when the total salaries exceed R 500 000.

 

  1. Question: I have submitted my W.As. 8 return to the Department of Labour but didn’t receive my W.As. 6 assessment. Why is this happening?

 

Answer: In most cases where this happens, we find that the e-mail address of the company is completed incorrectly on the return. For many organisations, this has resulted in significant amounts of interest incurred on these amounts.  The original returns are no longer sent to organisations via post and are only sent via e-mail.

 

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Revised standard on auditing accounting estimates and related disclosures – ISA 540 (Revised)

Accounting, Auditing , , , , ,
During March 2016, the International Auditing and Assurance Standards Board (IAASB) released a project proposal with the intention to revise ISA 540, Auditing Accounting Estimates, Including Fair value Accounting Estimates and Related Disclosures. During April 2017, the IAASB released the proposed Exposure Draft. During October 2018, the IAASB released the revised ISA 540 standard and indicated that the effective implementation date is set for financial statement audits for periods beginning on or after December 15, 2019. The revision mainly ensures that the standard continues to keep pace with the changing market and fosters a more independent and challenging sceptical mindset in auditors.

 

The International Regulatory Board for Auditors (IRBA), acknowledged through their 2018 Public Inspections Report that the theme of estimates and judgements attracted the most inspection findings both locally and globally over the past few years and that it will continue to be a key focus area during inspections due to the inherent subjective nature of estimates.

 

The following key enhancements have been made to ISA 540 by the IAASB[1]:

 

  • Explicitly recognised spectrum of inherent risk;
  • With respect to external information sources, conforming and consequential amendments;
  • New and enhanced application material;
  • Expanded documentation requirement;
  • Emphasised requirement when communicating with those charged with governance;
  • Enhanced requirements addressing disclosures;
  • Introduced concept of inherent risk factors;
  • Enhanced risk assessment procedures;
  • Required separate assessment of inherent risk and control risk;
  • Emphasised the importance of the auditor’s decisions about controls; and
  • Introduced objectives-based work effort requirements.

 

Professional scepticism plays a significant role in the auditing of estimates. The auditor’s application of professional scepticism is therefore enhanced by the revised ISA 540. The following has been implemented in order to enhance the auditor’s professional scepticism[2]:

 

  • Requirement to design and perform further audit procedures in a manner that is not biased towards obtaining audit       evidence that may be corroborated or towards excluding audit evidence that may be contradictory;
  • Requirement to stand back and evaluate the audit evidence obtained regarding the estimates;
  • Use of stronger language (“challenging”, “question” and “reconsider”) in application material to reinforce the      importance of exercising professional scepticism; and
  • Focus on management bias in risk assessment and work effort.

 

From the above, it is evident that estimates will remain a “hot topic” in the audit industry for an undetermined period due to the nature thereof. It is therefore crucial for auditors to upskill themselves in obtaining the proper knowledge required in order to implement the revised ISA 540 in the audits of financial statements.

 

The above article only highlights certain aspects of the revised standard and should not be deemed as a replacement of the revised standard.

 

[1] As per the IAASB’s ISA 540 presentation.

 

[2] As per the IAASB’s ISA 540 presentation.

 

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

The accountant’s new dawn

Accounting , ,

By Jerry Schuitema.

 

Seeing the numbers through a different lens.

 

Few professions have been through as much scrutiny and criticism as the accountants have in recent times. This in the wake of a number of high-profile scandals that not only questioned their lack of oversight, but whether they were indeed part of the malfeasance in some cases.

 

It may have been somewhat overdone, but not unexpected. When things go wrong, it is fashionable to blame the watchdog rather than the perpetrator: especially when there is a popular perception that the accountant’s primary role is oversight and compliance. Coupled with the concept that the main purpose of corporate capital is to maximize capital- and tax efficiencies in a highly complex maze of multinational structures; and constantly expanding and differing legislation and rules around ethics, governance and sustainability; the accountant’s role in reconciling all of these with financial performance has become far more critical and exposed to public scrutiny and accountability.

 

This has placed them firmly as standard bearers in a particular camp that seeks to defend and protect the classic “institutional” and metric-driven understanding of business. That understanding gave birth in the 80’s to the “shareholder-value” model and is still largely followed today. At the same time, however, some notable thought leaders have baulked at this “dehumanizing” of business and new organisational theories such as the Stakeholder approach; Triple Bottom Line; the Balanced Scorecard, Servant leadership and more recently our own King IV governance prescriptions, tried to redefine business’s role in society and counter the exploitive institutional profit driven view.

 

So there are basically two perspectives of business:

  • Institutions driven by maximum gain for shareholders or
  • Collectives fostering meaningful and mutually enabling relationships between people.

 

It is too simplistic to categorise this as “people versus profits”. That is 19th century ideological rhetoric and ignores the fact that the two are not mutually exclusive. Nor are they irreconcilable and contradictory. It is purely a matter of changing perceptions around purpose — from reward to contribution; from profit to service (which most companies do anyway in their mission and vision statements). There is also an existential reality that to create tangible value, business has to make a difference to others; has to add value to people’s lives through the service or product they provide. An obsession with numbers, costs and profits, will be to no avail if that existential reality is not met in the first place.

 

Can the accounting profession awaken to that new dawn? With some recalibration of their current accounting lens, I believe they not only can, but could become a critical contributor in ensuring not only profitability and sustainability for their institutions or clients, but take a huge leap in improving their current image as well as becoming the most important catalyst in enhancing the understanding of business as collectives creating value for all.

 

Most of what is out there in 3BL, BS and King IV is seen to be burdensome additions; as collateral to the narrow purpose of enhancing shareholder value. I have yet to witness any of these highly costly and cumbersome processes have any effect on popular perceptions of business. In addition, there is little, if any proof that they have indeed specifically contributed to greater shareholder value.

 

What is needed is an accounting lens that aligns all participating parties to a single common purpose of value or wealth creation and a common fate in wealth distribution. The King IV creed of “creating value for all” cannot be captured in a single measurement such as profit. But it can in value-added, or wealth creation which is not only the oldest economic principle known to mankind, but also the most powerful that sustains all other benefits. I have referred to it as the “magnificent metric.”

 

Over many years, I have examined and researched the value added statement as the most suitable lens that can do that. I came to the conclusion that both the VAS and the Cash-Vas were still looking at the numbers from a shareholder perspective and after many discussions with leading practising accountants, I came up with a format called the Contribution Account©. It is neutral in stakeholder priorities and palatable to and understandable by all the participants.

 

Working with this format automatically draws one into the “meaningful relationships” perspective of business. It should, but need not be the main strategic driver but can become a highly effective operational process in transforming perceptions and behaviour. It is the ideal method of sharing financial information with all in the company: and through many different media: print, electronic, social and even role play. It also offers accounting practitioners the opportunity to become communicators, teachers and enablers on a much broader scale.

 

They then take a significant step in becoming part of a new understanding of business in society.

 

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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