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)

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)

Depreciation vs wear & tear

Tax , , , , ,

Deterioration, obsolescence and wear and tear are among the reasons why assets decrease in value. By realising a deduction on depreciation for tax purposes, your company can recover the costs of certain moveable assets that are used in the production of income.

 

Generally, businesses won’t be able to make use of assets like heavy machinery or computer equipment, for example, for an indefinite period. As assets work together to generate an income for your business, over time these assets will have to be replaced with newer, more efficient ones. This article briefly looks at the basic concepts of depreciation for accounting purposes and wear and tear allowances for taxation purposes.

 

Depreciation – Accounting

 

Depreciation is essentially the decline in the value of an asset over time due to the wear and tear that occurs as a result of the normal use of that asset. For accounting purposes, a company’s assets should be depreciated on a systematic basis over the assets’ useful life. In addition, the depreciation method used should reflect the way in which assets’ economic benefits are utilised by the company and should also be reviewed regularly. The different methods of depreciation include: the straight-line method, reducing balance method as well as the production unit method.

 

For accounting purposes, depreciation is charged as an expense in a company’s income statement and is not deductible for tax.

 

Wear & Tear – Taxation

 

Wear and tear refers to the method in which the South African Revenue Services (SARS) allows companies to write off an asset for taxation purposes over a predetermined period. This wear and tear allowance permits companies to deduct, over a period of time, the amount that was paid for the movable goods that are used in the production of income. This deduction will result in a reduction of your company’s tax liability.

 

The period over which wear and tear can be claimed depends on the type of asset, as each asset will have a different write-off period. SARS has a prescribed schedule (Annexure A of Interpretation Note 47) for all assets, as well as predetermined rates at which companies can claim ‘depreciation’ for taxation purposes.

 

Any assets purchased for less than R7 000 may be deducted in full in the year in which the asset is purchased.

 

Recovering Wear & Tear Allowances

 

When an asset is sold, the wear and tear allowances claimed need to be recouped for that asset. The wear and tear claimed for the periods that the asset was in use is then added back to the taxpayer’s taxable income in the year in which the asset was sold.

 

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)