News

Force Majeure And Property

A general “force majeure” (or “act of God”) clause is often included in lease agreements, and in most cases, its definition is termed broadly. Such a clause will only apply in circumstances which are beyond the parties’ control, which human foresight could not have anticipated, and which make performance in terms of the contract objectively impossible.

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South Africa Launches National Green Finance Taxonomy

South Africa’s Sustainable Finance Initiative, chaired by National Treasury, has launched the country’s first national Green Finance Taxonomy in April 2022. This responds to recommendations from National Treasury’s 2021 Technical Paper: Financing a Sustainable Economy, which calls for the development or adoption of “a taxonomy for green, social and sustainable finance initiatives, consistent with international developments, to build credibility, foster investment, and enable effective monitoring and disclosure of performance.”

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The Bounce Back Support Scheme comes into effect

The Bounce Back Support Scheme, a loan guarantee mechanism of R15 billion which was first highlighted in the February 2022 budget speech, has come into effect in April 2022. The scheme aims to facilitate job creation and economic growth in the wake of shocks such as the Covid-19 lockdowns, the July 2021 civil unrest in Kwa-Zulu Natal and Gauteng, and the ongoing flood disaster.

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Reserve Bank Increases Repo Rate

On the 24th March Lesetja Kganyago, Governor of the South African Reserve Bank, announced an increase in the repurchase rate by 25 basis points to 4.25% per year, with effect from the 25th of March 2022.

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2022/2023 Budget Highlights

The Minister of finance Enoch Godongwana tabled his Budget review on the 23rd February 2022. The following were the key tax issues arising.

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Budget 2022 – Economic Outlook

Following a weaker‐than‐expected third quarter, economic growth for 2021 has been revised down to 4.8 per cent, compared with 5.1 per cent estimated at the time of the 2021 Medium Term Budget Policy Statement (MTBPS). The medium‐term growth outlook has improved moderately. Treasury projects real economic growth of 2.1 per cent in 2022, the year in which the economy is expected to return to pre‐pandemic production levels. GDP growth is expected to average 1.8 per cent over the next three years.

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Budget 2022 – Fiscal Policy

Medium‐term fiscal policy is focused on reducing the budget deficit and stabilising the debt‐to‐GDP ratio. To support this consolidation, government will use a portion of higher‐than‐anticipated tax revenue to narrow the deficit while increasing non‐interest expenditure to support economic growth, job creation and social protection.

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The Mandatory Compliance Checklist

The Companies and Intellectual Property Commission (hereinafter referred to as “the Commission”) is tasked with ensuring, monitoring and enforcing compliance with the Act. In pursuance of this function, the Commission requires that a mandatory Compliance Checklist be completed and submitted by all categories of companies whose annual financial statements are audited or independently reviewed. This requirement does not apply to a Close Corporation. The checklist is required to be submitted within 30 business days after the anniversary of the company’s date of incorporation. The period for which the company declares its compliance is to be known as its “Compliance Year”, and is aligned to the anniversary date of its incorporation.

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Structural Reforms

Government remains committed to structural reforms designed to lower the cost of doing business and create a more competitive economy. Over the medium-term, the following reforms will be accelerated:

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Fiscal Policy

A highly disciplined fiscal policy is to be maintained if we are to enjoy economic growth and stability in the medium to long term. Below are some key points extracted from the Medium-Term Budget Policy Statement (MTBPS):

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Remote working and Technostress

Since the increasing availability of Information and Communications Technologies (ICTs) over the past decade, as well as due to the COVID-19 pandemic, remote working has become more prominent throughout the world. It has given employees and businesses great flexibility on how they conduct their everyday business, improved productivity as well as having shown many that physical offices are no longer necessary or can at least be downscaled to decrease costs. However, since the increase in remote working, there has been an evident increase in technostress experienced by those working remotely.

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SARS to implement emergency tax relief measures

President Cyril Ramaphosa announced several emergency tax relief measures in response to the continuing Covid-19 pandemic and recent unrest that are aimed at helping affected and tax compliant businesses to recover and ensure livelihoods for employees.

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SASRIA & Fiscal Budget

The South African Special Risks Insurance Association (SASRIA) will form a key part of the intervention to help insured businesses restore their operations. Together with reinsurers, SASRIA has already begun its claim administration process. Pay-outs will be provided to all covered businesses. Crucially, government has decided to provide full financial backing to SASRIA should it exceed its solvency limits. The National Treasury is putting in place the necessary arrangements to ensure that this commitment is met should it be needed.

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Cybersecurity during COVID-19

Since the beginning of the COVID-19 pandemic, governments have put their countries into lockdowns – forcing businesses to adapt and work remotely. This sudden surge in internet usage has also seen a large increase in cyber-attacks, according to Mimecast’s 2020 state of email security report. The report showed that 61% of companies suffered from a ransomware attack, a 64% increase in email threats and a total of 79% of organizations were negatively affected due to their lack of cyber preparedness.

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Jacob Zuma Judgement – What could this mean for South Africa

The recent ruling by the Constitutional Court sentencing Jacob Zuma to 15 months jail time can only be hailed as a victory for democracy and a booster for the South African economy. If one of the most powerful men in South Africa can be held accountable for their actions, then beware those who have been living off graft and corruption for the last decade.

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Doing Business in South Africa – Our New Normal

The economic effects of the coronavirus crisis have been extensive in South Africa (SA) and a recovery to pre-pandemic levels will take several years. While it is forecast that the SA economy will recover marginally in 2021, it is likely to be uneven and subdued.

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Information and Communication Technologies

(ICTs), have shown to be major contributors to the effectiveness of many different businesses throughout the world and are constantly changing the way people and industries operate. ICTs can be defined as an array of technologies that are designed to collect, store, process and communicate information both internally as well as externally of an organization. This makes ICTs quite a broad category of technologies but some of the most common examples are cloud computing, mobile apps, networked environments and even the Internet!

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Filing Season 2021 Dates

Filing season starts on the 1st of July this year. The good news is that a significant number of individual taxpayers will be auto-assessed again this year, and this process will start in July. SARS will send you an SMS if you are selected to be auto-assessed. SARS will auto-assess based on the data received from employers, financial institutions, medical schemes, retirement annuity fund administrators and other 3rd party data providers. If you accept your auto-assessment, any under or overpayment of tax will be processed as normal. If you want to edit your return, you can file your return on eFiling or the SARS MobiApp or alternatively contact us for professional assistance in this regards.

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Employer Annual Reconciliation: 1 April 2021 to 31 May 2021

Filing Season 2021 for employers, during which they must file the annual Employer Reconciliation Declaration (EMP501), opens on 1 April 2021 and closes on 31 May 2021. The EMP501 must reflect accurate payroll information about their employees, employees’ tax (PAYE) payments made and Tax Certificates (IRP5/IT3) (a)s generated, covering the full tax year from 1 March 2020 to 28 February 2021.

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