ACCA and GCRA Partner to Education 250 Learners

ACCA joins hands with the Gauteng City Regional Academy in the bid to challenge some pertinent issues that face the SA environment. The partnership seeks to make the best use of the online learning tool that has been developed by ACCA, commonly known as ACCA-X, for the transformation of the lives of youth that have matriculated but find themselves excluded from further education and training or employment for various reasons.

250 learners from the 5 corridors of Gauteng will be taken through the programme for a year commencing in April. The ACCA-X programme is the ideal starting point for future business leaders, accountants and entrepreneurs. It consists of four online learning modules designed to develop knowledge and skills, at foundation level, in financial and management accounting.

Upon completion of the four modules (Introductory and Intermediate Certificates in Financial and Management Accounting), learners will be equipped to perform a range of accounting administration roles within an accounting department of a larger organization or financial shared service center.

This programme comes just in time to deal with the shortage of accountants in the country and also to support the promotion of entrepreneurship in youth.  Details of the launch date are as follows:

Date: 31 March

Venue: University of Johannesburg (Auditorium room number to be confirmed)

Time: 9am -12pm

Event details: 100 of the 250 learners and their parents will be present, as well as the Gauteng MEC for Education and the ACCA Sub Saharan Markets director, Mr Jamil Ampomah.

Guest Blogger: Budget 2016 Summary – tax proposal

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Overview

Tax revenues in 2015/16 are projected to be R11.6 billion below the 2015 Budget forecast: corporate income tax collection is estimated to be R13 billion lower, value-added tax (VAT) R5.7 billion lower and personal income tax R1.9 billion lower. These lower revenue outcomes will be partially offset by an increase of R4.3 billion from customs duties.

 

Ensuring a sustainable tax burden

South Africa’s tax burden sits roughly between the average for developing and developed economies. While personal and corporate income taxes are relatively high, the VAT rate is lower than in most other jurisdictions, especially those with high levels of social spending.

 

Keeping the tax system progressive

South Africa’s tax system is highly progressive. Individuals below the age 65 whose annual taxable income exceeds R1 million pay 31 % of such income in tax, while those earning below R250 000 pay less than 15 per cent. Of the 13.7 million registered taxpayers, fewer than 1 million individuals contribute 64 % of personal income tax revenue.

 

The current tax mix suggests that there may be greater room to increase indirect taxes, such as VAT.  South Africa’s VAT rate lower than most countries.

 

Protecting the corporate income tax base

Increased focus on multinational tax avoidance and evasion, of particular concern are:

 

  • Unacceptable transfer-pricing practices, where the value or nature of cross-border transactions is manipulated to reduce overall tax liability.
  • Treaty shopping, where related companies in different countries establish a third entity in another location to obtain tax-treaty benefits.
  • Highly geared financing structures that reduce companies’ tax liabilities with excessive interest-expense deductions.

 

Additional steps have been taken by SARS to reduce such abuse are the following:

  • Improving the quality of information firms must provide to SARS, enabling it to identify aggressive or abusive tax-planning schemes.
  • Taking action on transfer pricing- Large multinationals will be required to submit reports for each country in which they do business to the tax authority where their head office is located this will be in line with country by country reporting. Tax authorities will share this information starting from 2018. SARS will have access to country-by-country information on all large multinationals operating in South Africa.
  • Enhancing rules on foreign companies controlled by a South African resident, so that a portion of profits earned by a South African-owned subsidiary operating in another country is taxed in South Africa if no meaningful economic activity took place in the other country
  • Introducing rules that limit excessive interest deductions- S23M

 

Voluntary disclosure

  • Voluntary disclosure rules will be relaxed for a period of six months, from 1 October 2016, to allow non-compliant individuals and firms to disclose assets held and income earned offshore.

 

Other

  • Review of employment and learnership tax incentives under way
  • Government to increase incentive for employer bursaries

Personal taxes

  • Primary rebate and the bottom three income brackets be adjusted by 1.8 per cent and 3.4 per cent respectively:
  • Primary (for all taxpayers) R13 257-R 13500
  • Secondary (aged 65 and over) R7 407 unchanged
  • Tertiary (aged 75 and over) R2 466 unchanged
  • Marginal personal income tax rates remained unchanged at 41%.
  • Tax free income threshold has been increased as follows:
  • persons under 65 years from R 73 650 to R 75000,
  • persons between 65-74 years from R114 800 to R116 150
  • Persons over the age of 75 years from R 128 500- R129 850

Employees earning R75 000 p.a. or less will not be subjected to PAYE.

  • Medical scheme contribution credits will increase from R270 to R286 pm for the 1st two beneficiaries and from R181 to R192 for additional members effective 1 March 2016. Please note employees are allowed to tax credits related to medical scheme contributions t for both monthly PAYE deduction and provisional tax purposes.
  • Retirement savings- From 1 March 2016, an important change to the tax treatment of contributions to retirement savings and how they are withdrawn at retirement comes was to come into effect, the proposal to annuitize the withdrawal from provident fund has been postponed to 1 March 2018. Cosatu lobbied for the postponement of the legislation.

 

Corporate tax

  • The corporate tax rate remained unchanged at 28%
  • Proposal to address double non-taxation in hybrid debt instruments- to eliminate mismatches associated with hybrid debt instruments where the issuer is not a South African resident taxpayer, this rules will be effective with effect from 24/02/2016.

 

Value added tax

The VAT rate remained unchanged at 14%.

 

Capital gains tax

Capital gains tax rates on the disposal of assets will increase with effect from 1 March 2016:

  • Individuals and special trusts-13.7% to 16.4%
  • Companies- 18.6% to 22.4%
  • Other trusts- 27.3% to 32.8

 

Other taxes

Transfer duty on properties above R10 million will crease from 11% to 13% from 1 March 2016

Analysis by Mpho Lefakane

Guest Blogger: A macroeconomic analysis of the Gordhan budget of 2016

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The most urgent economic question has been and possibly is whether the RSA sovereign debt is going to be designated junk status. The Gordhan budget of 2016 demonstrates the willingness of the republic to repay its debt beyond any shadow of doubt. This has been demonstrated by a modest but positive economic growth rate at an average of 1.8% p.a. in the next 3 years coupled by a reduction in the budget deficit of half a percent over the next 3 years on average. This demonstration has certainly reduced the threat of a downgrade; however it has not done away with it completely. From the start, it was never cast on stone that RSA was to be downgraded to junk status. However it was on a fast and slippery slope towards that status and the budget has certainly placed some speed breaks on that.

Our economy is stalling and the risk of a recession is still a reality as espoused by the Worldbank indicators of 2015/16. As a currency, the rand seems to be oversold and undervalued. The Gordhan budget has failed to address these two key fundamentals as it has not brought forward adequate austerity measures which would be reflective of a significant policy change on the part of government. In the absence of such policy change -the combination of muted global growth, low business level confidence, drought and persistently low resource prices will result in South Africa continuing to lose its attraction as a destination for capital.

A very positive approach in the Gordhan budget is the realization that when considering raising additional revenue for the republic, tax is not the only solution. Some key parts of the solution in his budget include expenditure cuts of approximately R8 billion p.a. over 3 years on average, curbing the size of the civil service (although there is no clear plan for how this is going to be achieved), having a growing economy at 1.8% p.a. on average over 3 years and creating jobs. When it came to the numbers, the only accounted for increase in revenue of R18billion is underpinned on an increase and introduction in levies. Levies in essence are an indirect tax as they still result in the increase in the cost of living for everyone.

In conclusion the budget is factually a very reactional statement which is not indicative of a major economic policy changes by the government of the republic. It has been well crafted to say the right words, terms and figures to avoid the downgrading of our sovereign debt to junk status. It is indeed a missed opportunity because of its short-termism, hollow but clever statements and primarily its speculative nature.

http://www.fin24.com/Budget/recession-risk-still-a-reality-expert-20160225

Women Work for Free for Four Months of the Year

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While research shows that complete gender equality, with the efforts being put in now, will only be possible in 2095, the gender pay gap will only be totally bridged in 50 years.

Despite the benefits of gender equality released through research results yearly, the gender pay gap has widened over the years. In South Africa the gap between males and females is standing at 35%. This means that females get in a year what males get in eight months – meaning women work for free for four months as opposed to their male peers.

There are several factors that contribute to this gap widening. The ACCA report, gender diversity to boost business performance, highlights the lack of commitment from companies to gender equality. This one barrier is by far the most contributor. “Women with a degree earn on average 30% less than their male peers with similar levels of education, whereas the gap is lower for those with a basic or high-school education”, says Sandra Burmeister, CEO of the Landelahni Recruitment Group. In the past the pay gap was attributed to differences in skills and the experience women brought to the labour market; research shows that women that have the similar skills and the same qualifications still earn less than their male peers.

The pay gap seems to widen with age. The WageIndicator survey indicates that women under 25 years the gender pay gap is 15%. Between the ages of 25 and 34 years, it widens to 19%. This widening trend accelerates in the middle-age group (35-50 years) to reach 25%. Finally, during the later years of their working career, the earnings gap widens at a slower rate, with women over 50 experiencing a pay gap of 27%.

According to the World Economic Forum, closing the male-female employment gap would have huge economic benefits, boosting GDP by as much as 16%. By drawing on the full complement of available talent at all levels of the organisation, particularly in top leadership teams, companies have been shown to produce better financial results, particularly as opportunities grow in the knowledge economy. It makes sound business sense for pay inequality and job barriers for women to be removed.

There is an influx of females entering the finance profession; approximately half of ACCA students are female. The growing numbers of women accountants and their ever growing influence is perhaps most keenly evident among ACCA students and members in Singapore, where a staggering 75% are estimated to be female. It is imperative that this team entering the field finds the ground cultivated, females have proven their ambition and their ability to produce profitable results as much as their male peers. It is only fair that they get the same remuneration.

If research results have proven the link between women participation and improved financial performance then this gap is not just an issue of compliance, but it has become a moral issue that needs to be looked into and amended quickly.

Budget Brief: David vs Goliath

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ACCA recently held the 2015 Budget Brief. The round table focused on the 2015/2016 National budget. The key discussion points were the impact areas for SMEs and how these impact areas can be gauged as detrimental or positive for the industry. Panellists, representing Government, Industry and ACCA Membership, collectively agreed that it is a challenging time for SMEs. Factors like rent appreciation; make it difficult for SMEs to function efficiently. Panellists John Benson, Tax Practitioner and Hassen Kajie, SAB&T Representative seemed to agree that government’s effort’s in improving prospects for the SME Sector will help the sector increase overall revenue contribution to the economy. However, Brian Joffe, CEO of Bidvest recently highlighted his concerns on governments focus on SMEs. According to Joffe, big business plays a vital role and is a significant contributor to the economy. South Africa has traditionally relied on bigger business for economic indication and activity.  The question remains, can smaller business float the South African economy? According to the IMF, the SME sector may hold the financial answers for South Africa. Smaller companies can adapt quicker to change in markets and have the ability to employ a significant amount. It is seen to many as the untapped market in South Africa. The counter argument is that SMEs are susceptible to financial problems and the success rate of SMEs in South Africa is estimated to be less than 20%. 1 in every 10  remains operational after 2 years. Manenzhe Manenzhe, Panellist and CFO in Parliament, argued that SMEs can increase chances of success by focusing on benefiting from governments initiatives through compliancy. CFO’s operating in smaller to medium companies need to be aware of state incentives and engage with the revenue service on employee based rebates. It has become vitally important for CFO’s to focus on compliancy in order to reap the financial rewards. The Goliath is no longer fellow competition from other SMEs. Goliath is the struggling economy and it is up to the CFO’s (David’s) to push through by taking advantage of government incentives to ensure a higher success rate. Accountants for Small Business, is a Campaign launched by ACCA in 2013, aiming to raise awareness of the value of professional accountants in SMEs. A report forms the centrepiece of the campaign, which will build partnerships between ACCA and business associations, government agencies, and service providers in order to provide practical resources and support for SMEs. The 2015/2016 South African projected growth rate is 2%. Government has targeted SME contribution to the economy, to increase by a minimal 20%. CFO’s, working in the SME sector would need to navigate the economic downturn and increase compliancy to untimely win the David vs Goliath battle. ACCA SA Blog encourages feedback. Comments are welcome.