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

ACCA_ThinkAheadLogo2

 

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

Reflecting on SDG’s in Relation to the WEF Resolutions

 

ACCA Blog WEF

World Economic Forum (WEF’s) theme for the year of “Mastering the 4th Industrial Revolution” presented some of the challenges that developing countries face, although opportunities of creating new markets, re-engineering on the existing business strategies seemed to be the focus. A shift in mind set and capacity building to support national plans stemmed up as an engine for building towards a positive socio – economic activity in the near future. The core of the conversations aligned directly and indirectly to the Paris agreement and the Sustainable Development Goals (SDG’s) of supporting responsible business practises, narrowing the gap between the developed and developing countries and “making the world a better place”.

Progress Review

As an emerging market, South Africa (SA) is currently not yielding the expected growth prospects. Progress has been uneven in whether it is in ensuring access to internet connection or in being innovative in the prevention of illnesses instead of treating diseases. Limitations to internet connectivity impede transfer of knowledge, business expansion and creation of small businesses – while the latter tends to decrease the rate of production and adversely having a ripple effect in the economic activity of the country. Entrepreneurship has been cited as the driver of change for the African economies. However, gender imparity, quality education, access to finance, data sharing, sound governance structures, bridging human capital and infrastructure gaps are the keys to unlocking the full realisation of a transformative, inclusive and sustainable economic growth path. SA has taken great strides in addressing gender equality and women empowerment in both corporate and public enterprises, but there is still some rhetoric that needs to be transformed into action. Authentic support thereof for entrepreneurship through industrialisation still needs to be re-invented.

With climate change revolutionising the way business is done, SA and Africa at large have an opportunity to turn the renewables market into a massive growth area. According to the World Bank “one investor characterized the renewable programme as the most successful public-private partnership in Africa in the last 20 years. Important lessons can be learned for both South Africa and other emerging markets contemplating investments in renewables and other critical infrastructure investments”. The role of regional infrastructure development is critical in building a continuing socio and economic development.

Like many of the developing countries SA has the world’s youngest population to train and develop in building agile and robust sustainable business and government strategies in the future.  With climate change threatening food security and exacerbating slow economic growth. The emergence of new technology, as in biotechnology can be further developed in building a resilient and sustainable agriculture. Each country has to consider the ethical issues that this new wave of technology also brings forth as it develops its policies and regulations.

Whilst the prime responsibility to deliver rests with the government, according to PwC 87% of SA businesses are aware and understand that company responsibility lies beyond profit and that its performance is interlinked to the triple bottom line. The accountancy profession has a critical role to play in supporting the building blocks of a

The Fourth Industrial Revolution: Tech Savvy Accountants

ACCA_Tech Savvy

The 2016 WEF in Davos sees leaders from across the world gathering to discuss pertinent issue that will shape the economic structure of the world. The theme of this year’s conference is “The Fourth Industrial Revolution”, referring to the advent of economy-changing technologies. Technology is changing the way business is conducted, one of the industries that has and will continue to change its methods of doing is the accountancy industry. There is a huge demand for tech-savvy accountants. Wesley Rashid explains the importance of technology for the modern accountant and how it can benefit both the profession and clients.

Why is it important for a modern accountant to be technologically aware and capable?

Love it or hate it, technology is ever changing and accountants are now expected to stay up to date with these advances in order to keep their clients happy. The ones that are capable are the ones that stay connected with their clients and adopt a proactive approach, the ones that stay retrospective – well, its time to pack up your calculator and pen.

How do you increase your technological competency?

I’m presuming most students are of the millennial generation, those who are used to using tech every day. Increase your competency by getting out there and attending meet ups, using social channels and surfing the web – there’s lots of information to digest online, even on Facebook and Twitter.

What specific doors can being tech savvy open for an accountant?

Technology makes accountancy practices as user-friendly for staff and clients as possible, reducing fixed costs in running the practice and a need for clients to see them as tech-friendly. So there are lots of opportunities for the tech-savvy accountant. Look at us – accountants for tech start ups using tech to offer real time financial analysis and support for tech start ups so they can make quick decisions and grow faster. This has a massive impact on client satisfaction.

Where and how do you see technology changing the accounting profession?

Accountants and tax professionals will become advisers and software specialists. Focus is on cloud and harnessing good data to provide clients with sound advice, and automate processes – thus giving you more time to add value to the client’s bottom line.

Is technology making accounting/accountants more innovative or the other way round?

Yes, the ability of using the right tech tools will create profitability for both the firm and the client. Drilling down to data, automating processes such as auto-population of tax and VAT returns and collaboration by use of cloud accounting packages can speed things up and leave the accountant open to spending time on what they do best.

Source: http://yourfuture.accaglobal.com/global/en/blog/in-demand-tech-savvy-accountants.html

What is occupying the Minds of CFOs?

ACCA

ACCA’s market position as leader in support and research provides assistance to members and industry, drawing on current and future trends. ACCA as an association calls on members to provide feedback from the industry in order to assist with the correct support and research data.

The financial landscape brings a fair share of stress. CFO’s are required to juggle multiple tasks in order to remain loyal to a prescribed objective. This juggling “effect” is found in majority of local and international companies as they go about their day-to-day duties. In a recent networking, CFOs and Finance Directors shared what is occupying their minds and also the challenges they face in trying to find success in their roles.

CFO SA director Melle Eijckelhoff kicked the discussion off, asking guests what’s keeping them occupied at the moment. Amanda Albäck, Financial Director at Tongaat Hulett, replied – “the margin squeeze” as the biggest consumer of mind focus. The paradox of balancing ever-increasing operating costs against keeping customer price increases reasonable, and showing satisfactory profit growth is a reality that businesses find themselves having to deal with every day.”

Peter Walsh, Group CFO at Servest, mentioned “expanding into Africa” as one of the most stressful parts of his work. “There is a lot of pressure to get it right, but people we deal with quite unashamedly ask for facility payments, as they call it. There are massive opportunities in the continent, but there are also plenty of headaches.” Domestically, Walsh sometimes senses distrust for his company, because it can provide an integrated package of many different services, ranging from security to lawn mowing. “When we manage a property, there is one point of contact. If any part, regardless if it is security or landscaping, does not do well, it brings risks for the whole development. That is certainly a risk that we face.”

The challenges of Jobo Moshesh, CFO of SITA, are different. His parastatal company consolidates and coordinates the State’s information technology resources, leading to some unique issues. “A significant majority of our clients get money from National Treasury.  My role at SITA requires consistently maintaining a creative balance between ensuring the financial sustainability of the organisation, while effectively lowering the cost of delivering ICT services and solutions to our clients. This environment is governed with laws such as the Public Finance Management Act (PFMA), a piece of legislation that requires a combination of sound fiscal management and a commitment in practice to implementing effective governance” (http://cfo.co.za/profiles/blogs/cfos-discuss-their-challenges-during-successful-executive-dinner )

The mark that truly sets successful CFOs and Financial Directors from those that fail is the ability to; handle the challenges that exist currently and ensure that sound solutions are crafted to turn them to success; and further to look at the future and see the trends that may have direct or indirect impact on the business and the operations.

The upcoming ACCA event titled the Future of Finance Leadership Summit on the 20th August 2015 will look at future challenges on the horizon that will affect the way finance professionals in South Africa do business. Borrowing from the findings of the ACCA research reports titled, Future Pathways to Finance Leadership, one of the subjects discussed will be the twin peaks model of regulation. This regulation that will be monitored by the SARB and the FSB will modify the methods of operation that finance practitioners are used to.

The summit will also delve into the issue of Generation-Y (Report: Generation Y: Realising the Potential) and the motivations that drive this market. The need to understand this market needs no emphasis; this cohort will in the years to come be the backbone that the country leans on. The transfer of skills from the old generations to Generation-Y cannot be ignored by HR Specialists. This market is important to employers and also to the industry.

The rapid speed that the financial sector is evolving requires constant learning and re-learning. The ability to learn from the past, manage the present and anticipate the movements of the future will be the difference between efficient finance practitioners and those that struggle to confirm.

The Role of Fraud in the Economy

ACCA_Fraud

According to various reports, fraud is South Africa’s number one economic crime and considering that fraud accounts for 7% of company revenue worldwide, any further increases in this figure could prove detrimental to an organisation in these difficult economic times. In South Africa alone, it is estimated that fraud costs the economy in excess of R2 billion a year. There are a number of reasons why people fall victim to the pressures of fraud. In the economic state that we find ourselves in there is scarcity of jobs and this has resulted in people using unethical methods for financial gain. On the other hand, in an attempt to reduce costs, companies usually resort to measures like retrenching staff (which may affect the segregation of duties doctrine), reduced training, abandoning cheques and balances which may be in place, or cutting back on internal audits, amongst various other things. In such conditions, an organisation is susceptible to fraudulent behaviour from its employees both internally, as well as externally in transactions binding the firm. Ever since the 2008 downturn the relationship between the finance industry and consumers has changed. According to an ACCA report titled Culture vs regulation: what is needed to improve ethics in finance, “the crisis shattered the public’s trust in the banking system and as the examination of financial institutions continues the relationship between the bank and the public continues to deteriorate as ever more scandals are announced”. A number of policies have been drafted to aid this situation, but policies and regulations can only go so far. Regulations and policies alone will not be able to combat fraud in business. Regulation failed to prevent the 2008 crisis; risk was constantly discounted. In some instances it was considered non-existent. Technological developments and complex products can be created rapidly, which means that the regulator will always be playing “catch-up”. So maybe in highlighting the impacts of fraud on the economy and how these affect each of us directly there might be some improvements that emerge. Below are some of the impacts of fraud on the country:

  • Corrupt activity hinders development
  • Contributes to the depletion of the public purse and distorts markets
  • Hinders local and foreign direct investment.

Countless studies around the world show how corruption can interrupt investment, restrict trade, reduce economic growth and distort the facts and figures associated with government expenditure. But the most alarming studies are the ones directly linking corruption in certain countries to increasing levels of poverty and income inequality. The issue of ethics comes to play, and these are determined by the culture of an organisation. The ACCA report looks at the culture of tolerance in an organisation, for instance, is profit valued more than the means. Does an organisation promote a culture of high risk overlooking regulations and policies? It is important that business managers realise that these “insignificant” hints lay foundations to bad or good behaviour. Over-reliance on regulators has been found wanting in days of old when dealing with fraud and corruption, it is therefore important that business managers understand that the most power lies in the culture of the organisation and they have the most influence on this than external regulators.