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No wealth tax yet, but bigger administrative burden awaits taxpayers

Taxpayers may be forced to submit a statement of all their assets and liabilities from 2020 to inform a future decision about a wealth tax in South Africa. The Davis Tax Committee this week published its final reports including one on wealth taxes. It did not recommend the introduction of a wealth tax, saying more work is needed to ensure that a “recurrent net wealth tax” is well designed to at least generate more revenue than the costs of administering it. The committee was appointed by the Minister of Finance in July 2013. Its purpose was to inquire into the role of the tax system “in the promotion of inclusive economic growth, employment creation, development and fiscal sustainability”. Patricia Williams, tax partner at Bowmans, says the reporting of assets at market value will place quite a burden on taxpayers. The committee also suggested that “substantial penalties” should be charged on incorrect reporting. “This process would be potentially costly, either for the time a
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Reimbursement of Travel allowance

If you had to choose, would it be company car or travel allowance? It’s a question that regularly plagues both employers and employees. In light of new Sars requirements for travel reimbursements, it needs to be carefully revisited. Important changes The limit of 12 000km that was previously applied to reimbursements has now been removed. If travel exceeded this distance in the past, it was reimbursed at a per kilometer rate higher than that prescribed by Sars and the total amount needed to be reflected under code 3702. However, reimbursement paid at or below the prescribed rate was declared under code 3703. Either way, PAYE was not deducted from the employee’s income. From March 1, if an employer reimburses staff at a per kilometer rate higher than that prescribed by Sars, they have to split any reimbursement into two components. The portion that falls within Sars’s rate must be declared using code 3702 while the portion above that rate must be reflected under a new code, 3722.
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DIRECTORS’ MEETING MINUTES: WHY ARE THEY SO IMPORTANT?

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  The Companies Act (the Act) gives directors the power to run and manage the company’s business. In return it places responsibilities and personal liabilities on directors who do not fulfil their fiduciary duties. What is required of directors’ meeting minutes?  Meetings of directors are to be kept and must contain at least: All resolutions passed at meetings (these need to be sequentially numbered and dated), and Any declarations of conflicts of interest.  As meetings of directors decide on the strategic direction of the company, the recording of these meetings is critical in reflecting what decisions are taken and how they are arrived at. The Act also requires that directors understand the issues facing the company and take time to formulate their own, independent views, so they can actively contribute at directors meetings. The minutes should also reflect
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Wills and testaments

It is quite interesting that we are experiencing that a number of clients, old and young, do not have their Will and testament in place. Some have been outdated for a long time and to get the legalities sorted out to assist clients in the efficient handling of the distribution and especially providing for minor children and students are cumbersome. We would like to urge clients to update their will and testament and to consider the effect of taxation rules and structuring of policies. Lives of people change fast and this includes divorces, children growing older, new marriage, new born children which are forgotten in wills even after 20 years, multiple marriages and divorces and where spouses fall away at young ages.  Plan better now while you have the time to ensure that your loved ones are sorted after you passing away. A  will  or  testament  is a legal document by which a person, the  testator , expresses their wishes as to how their property is to be distribu
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