Capital gains tax on donations and bequests

apr-03Paragraph 12(5) of the Eighth Schedule to the Income Tax Act was scrapped on 1 January 2013 and replaced with a new paragraph 12(A) which, in certain circumstances, provides relief on the payment of capital gains tax when debt is written off.

These new provisions came into effect on 1 March 2013.

In terms of these changes capital gains tax is still payable when a debt of a debtor is reduced or written off, but that there are two exceptions:

  • Where the amount owed to a deceased estate is regarded as the “property” of the estate (as described in the Estate Duty Act), and this debt is reduced to the benefit of the legatee or heir; and
  • When the debt that is written off can be regarded as a donation for the purposes of donations tax.

The relevant amendments to the law therefore determine in essence that:

  • It is no longer required that a donation be made in cash; and
  • there will be no liability for capital gains tax if the donation represents a reduction or writing off of debt for the receiving party.

The latter provision is especially to be welcomed considering the problems that have occurred in the past with the wording of wills in cases where heirs or a family trust owe a loan debt to a testator. It is now again possible to merely bequeath a loan account between a legator and a trust as a legacy to the trust, which amounts essentially to the reduction of a debt obligation of the trust.

In view of these recent changes to the Income Tax Act we once again encourage clients to make a donation in order to ensure a saving in estate duty in the longer term.

To make the most of the benefits of a donation the following should be borne in mind:

  • The donation should not exceed R100 000 otherwise donations tax of 20% is levied on the amount by which the tax-free limit (R100 000) is exceeded;
  • A book entry can simply be made in the place of a cash donation; and
  • The donation must be supported by a written deed of donation and, where a trust is the beneficiary, also a resolution of the trustees indicating acceptance of the donation.

This article is a general information sheet and should not be used or relied on as 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.

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Directors could be liable for company’s tax debts

apr-02Although companies or close corporations, as legal entities in their own right, bear the responsibility of debts incurred, and although directors, shareholders and members of these entities generally are not personally liable for such debts if the entities should become incapable of settling them, the Tax Administration Bill, 11 of 2011, contains several provisions in terms of which directors, shareholders and members can incur personal liability for such entities’ tax debts. Section 180 of the bill stipulates as follows:

A person is personally liable for any tax debt of the taxpayer to the extent that the person’s negligence or fraud resulted in the failure to pay the tax debt if (a) the person controls or is regularly involved in the management of the overall financial affairs of a taxpayer, and (b) a senior SARS official is satisfied that the person is or was negligent or fraudulent in respect of the payment of the tax debts of the taxpayer.

Accordingly, personal liability is not limited to income tax, but extends to “any tax debt”; the trigger for such personal liability is “negligence or fraud”; such negligence or fraud must have been the cause of the failure to pay the tax debt; potential personal liability extends to any person who “controls or is regularly involved in the management of the overall financial affairs of a taxpayer”, and a senior SARS official must be “satisfied” that such negligence or fraud occurred.

This article is a general information sheet and should not be used or relied on as 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.

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Minutes of the board meetings

apr-01Clients are reminded of the legal requirements relating to board meetings as stipulated in Art. 73 (6), (7) and (8) of the Companies Act, 71, 2008.

The Act requires a company to keep minutes of meetings of the board and of any of the board’s committees, and that a majority of the directors must be present before a vote may be called at a meeting of the directors. Each resolution taken by the board and also any statement made by a board member must be recorded in the minutes. A board resolution takes effect on the date that the resolution is made unless another date of implementation is recorded in the resolution. Attention is drawn in particular to the requirement that resolutions must be dated and numbered sequentially.

Providing that a company’s Memorandum of Incorporation allows therefor, a board meeting may also be held by means of electronic communication, or one or more directors may participate in a meeting by means of electronic communication. This is conditional on the electronic communication facility enabling all participants in the meeting to communicate with each other without an intermediary.

Minutes of a meeting, or a resolution, signed by the chair of the board meeting or by the chair of the next meeting is evidence of the proceedings of that meeting or adoption of the particular resolution.

This article is a general information sheet and should not be used or relied on as 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.

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Financial statement and accompanying reports: An overview

03BThe commencement of the Companies Act No 71 0f 2008 created more awareness amongst company directors, shareholders, investors and other users of financial statements, of the different types of financial statements that exist. The following brief overview attempts to place these instruments in some perspective.

There are, amongst others, financial statements with an audit report, financial statements with a review report, financial statements with a compilation report, provisional financial statements, and management statements. The type of financial statement to be drawn up depends on several factors, namely the requirements of the Companies Act No 71 0f 2008 together with the memorandum in the case of acompany or close corporation, the trust deed in the case of a trust, the constitution in the case of a non-profit organisation, the investors in the entity, and other users of the financial statements. If, in terms of the provisions of the Companies Act No 71 of 2008, only a review report or a compilation report is required, the directors, shareholders, investors or any other user of the financial statements may require a voluntary audit.

What is the difference between an audit report, a review report and a compilation report?

An audit report provides the user of the financial statement with assurance that the financial statement is in all essential respects a reasonable account of the entity’s financial state. An audit comprises an in-depth investigation of the entity’s controls, and the execution of validation tests and analytic tests to obtain applicable and adequate proof that the financial statements are in all essential respects a reasonable account. An audit report can be modified in one of three ways: the auditor may qualify the report, he may hold back his opinion or he may express a negative opinion about the financial statements. A qualified audit report means that the financial statements are in all essential respects a reasonable account except for certain audit areas that are pointed out. If the auditor holds back his opinion it means that he does not express assurance about the financial statements and has not found applicable and adequate audit proof to support an unmodified audit opinion. If the auditor expresses a negative opinion about the financial statements it means that he wishes to warn the user of the statements that the statements are faulty.

An audit report may only be issued by a registered auditor.

A review report provides limited assurance to the users of the financial statements. A review mainly involves obtaining proof by means of enquiries made to management, and the execution of analytic procedures.

The number of procedures executed are fewer than in the case of an audit. A review report may only be issued by a registered auditor or a chartered accountant. A compilation report is issued for entities which are not subject to an audit or a review. A compilation report provides no assurance that financial statements are free of misrepresentation in all essential respects.

When is an entity obliged to be audited?

In the case of a company or a close corporation, the provisions of the Companies Act No 71 0f 2008 apply. A Public Interest Score is calculated based on the company or close corporation’s number of employees, its turnover, its third party debt, and the number of individuals who have a direct or indirect interest in the entity. If the Public Interest Score exceeds 350 the company/close corporation must be audited. If the score is less than 350 but more than 100, a review report is required, while only a compilation report is required if the score is less than 100. Regardless of the size of the Public Interest Score an audit must be done if required by the company’s deed, or if the directors are not the shareholders, or if the company holds assets of more than R5 million in a fiduciary capacity on behalf of third parties.

A trust deed may require that the trust be audited, and the constitution of a non-profit entity may likewise require that an audit be done.

In terms of an announcement by the Estate Agency Affairs Board (EAAB) on 21 June 2011, the trust accounts and business accounts of all estate agencies must be audited. The Attorneys Act 87 of 1989 determines that the trust accounts of attorneys must be audited.

What is the difference between a provisional financial statement and a management statement?

A provisional financial statement is one that has been drawn up but is not yet complete and is therefore subject to change. It is not accompanied by a report. A management statement is drawn up by an entity’s accountant or financial manager as required by the user of the statement (usually the management of the entity). It is usually done monthly. Management statements are simply an indication of the financial state and performance in the review period and do not provide any assurance.

This article is a general information sheet and should not be used or relied on as 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.

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Tax administration Act 2011

01BThe following are extracts from the SHORT GUIDE TO THE TAX ADMINISTRATION ACT, 2011  regarding records that are to be kept in terms of the Act.

Record retention:

The duty to keep records.

This Act imposes a duty on a person to retain the records, books of account or documents needed to comply with a tax Act. It is important to note that certain taxpayers, for example employers and vendors, are required to keep additional specific records in terms of the relevant tax Acts.

In what form must records be kept?

Regarding the manner of keeping records, a new requirement is added. This is to ensure the orderly and safe retention of the records and efficient access thereto by SARS, for purposes of an inspection or audit, during the prescribed retention period. To ensure that records are kept in the correct form, provision is made that SARS may inspect the records for this purpose, in addition to an examination, audit or investigation under the Act.

A person obliged to keep records must:

  1. Keep the records in:
    • Their original form;
    • The form generally prescribed by the Commissioner by public notice; or
    • The form authorised by a senior SARS official upon request by a specific taxpayer for the retention of information contained inrecords or documents by that taxpayer in a different but acceptable form;
  2. In an orderly fashion;
  3. In a safe place; and
  4. Open for inspection, audit or investigation by SARS.

SARS can do an unannounced inspection to ensure that the records that have to be retained are actually retained and a taxpayer has the duty to keep the necessary records open for inspection by SARS in South Africa.

For what period must records be retained for?

The periods for which persons are required to keep records are set out in Table 3.

Table 3: Record retention periods.

Person Period
A person who has submitted a return From the date of the submission of the return until the last day of a period of five years
A person who is required to submit a return for the tax period and has not submitted a return Indefinite, until a return is submitted, as from when the period of five years applies
A person who is not required to submit a return but has, during the tax period, received income, has a capital gain or loss or engaged in any other activity that is subject to tax or would be subject to tax but for the application of a threshold or exemption Until the audit is concluded or the applicable five year period, whichever is the latest
A person who has been notified or is aware that the records are subject to an audit or investigation. If required to submit return: Date of submitting returnIf not required to submit return but received income: End of the tax periodIf failed to submit return: End of the tax period
A person who has lodged an objection or appeal against an assessment or decision under this Act. Until the disputed assessment or decision becomes final or the applicable five year period, whichever is the latest

This article is a general information sheet and should not be used or relied on as 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.

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Standard acknowledgements of debt and the National Credit Act (NCA)

2BThe new NCA not only regulates instalment sale agreements and lease agreements in respect of movables as was done by its predecessor,  the repealed Credit Agreements Act 75 0f 1980. The NCA applies to a much wider variety of credit agreements and has no monetary cap.  Instead of instituting legal action a creditor often gets a debtor to sign an acknowledgement of debt to facilitate repayment.This document could contain a provision for instalments and interest and fees. The question arises whether this agreement in confirmation of an existing obligation constitutes a credit agreement for purposes of the NCA.

The purpose of this Act is to promote and advance the social and economic welfare of South Africans, promote a fair, transparent, competitive, sustainable, responsible, efficient, effective and accessible credit market and industry, and to protect consumers.

“Credit”, when used as a noun, is defined in the Act as a deferral of payment of money owed to a person or a promise to defer such payment; or a promise to advance or pay money to or at the direction of another person.

“Agreement” includes an arrangement or understanding between or among two or more parties which purports to establish a relationship in law between those parties.

The parties to a credit agreement governed by the NCA are referred to as the “consumer” and the “credit provider” and these definitions should be considered. An acknowledgement of debt normally refers to a historical event of cause and does not constitute a credit guarantee or any of the named credit transactions such as a pawn agreement, discount agreement, incidental credit agreement, instalment agreement, lease, secured loan or mortgage agreement or credit facility.

However, the fact that it contains a deferral of payment and requires the payment of interest, fees and other charges, will cause it to fall within the ambit of the catch-all term “credit transaction” provided for in Section 8(4)(f) of the Act.

Section 2(1) provides that the Act must be interpreted in a manner that gives effect to the purposes set out in Section 3. The question really is whether the legislature intended the rearrangement or the repayment terms of an existing debt,  for instance where money has already been advanced to a consumer a considerable period of time ago or where damages were suffered as a result of a delict or breach of contract, to constitute a credit agreement or transaction for purposes of the NCA.

Due to the elements of deferral and the charging of interest, fees and other charges in a standard acknowledgement of debt, and in the absence of any express or implicit indication to the contrary, it seems an inescapable conclusion that the agreement could be defined as a credit agreement within the meaning of the NCA. The relevance of this is that it might be that the credit provider would be required to register as such with the National Credit Regulator, affordability assessment would have to be done prior to conclusion, the consumer could become overindebted and apply for debt review, and many other onerous requirements will be applicable.

It is submitted that where the cause of action in relation to which the acknowledgement of debt was entered into is based on a contract or agreement which constitutes a credit agreement, the insertion of a no-novation clause into an acknowledgement of debt will not serve to exclude the agreement subsequently concluded, from the ambit of the NCA.

However, where the debt initially arose as a result of a delict, the insertion of a no-novation clause might have the effect of preserving the original cause of action, namely the delict, and thus cause the matter to fall outside the scope of the NCA.

One thing to be kept in mind is that a “consumer”, in respect of a credit agreement to which the NCA applies, means

  1. the party to whom goods or services are sold under a discount transaction, incidental credit agreement or instalment agreement;
  2. the party to whom money is paid, or credit granted, under a pawn transaction;
  3. the party to whom credit is granted under a credit facility;
  4. the mortgagor under a mortgage agreement;
  5. the borrower under a secured loan;
  6. the lessee under a lease;
  7. the guarantor under a credit guarantee; or
  8. the party to whom or at whose direction money is advanced or credit granted under any other credit agreement.

This definition might provide the answer as the acknowledgement of debt might, as a different cause of action, not qualify the consumer under the above definition.

So, too, is the underlying cause of action to the acknowledgement of debt, and it deserves no debate that signing an acknowledgement of debt is not something to go about without due consideration.

Should a court be convinced that the written acknowledgment of debt is subject to the NCA the court could be required to make a ruling in terms of Section 130(4)(b) of the NCA, which states:

In any proceedings contemplated in this section, if the court determines that – … the credit provider has not complied with the relevant provisions of this Act, as contemplated in subsection (3)(a), or has approached the court in circumstances contemplated in subsection (3)(c) the court must – adjourn the matter before it; and make an appropriate order setting out the steps the credit provider must complete before the matter may be resumed.

In Adams v SA Motor Industry Employers Association 1981 (3) SA 1189 (A) at 1198 – 1199, the court held that there is a presumption against novation and that, where novation was not intended, it was possible for two obligations to co-exist. These obligations would be interdependent, and the creditor does not have a free election to enforce the original obligation.

An acknowledgment of debt, sometimes referred to as an IOU, is evidence of a debt which is due, but differs from a promissory note as it does not contain an express promise to pay. However, where the acknowledgment of debt is coupled with an undertaking to pay, it will give rise to an obligation in terms of that undertaking.

The case of Rodel Financial Service (Pty) Ltd v Naidoo and Another 2013 (3) Sa 151 (Kzp), and its annotations is recommended for reading and getting a better understanding of the applicable principles.

This article is a general information sheet and should not be used or relied on as 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.

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POPI Act

3BThe Protection of Personal Information Bill, which will soon become law and is commonly referred to as POPI, seeks to regulate the processing of personal information. It must be read with other relevant statutes such as:

  • ELECTRONIC COMMUNICATIONS AND TRANSACTIONS Act 25 of 2002 (‘ECT’);
  • PROMOTION OF ACCESS TO INFORMATION Act 2 of 2002 (‘PAIA’);
    REGULATION OF INTERCEPTION OF COMMUNICATIONS Act 70 of 2002 (‘RICA’);
  • CONSUMER PROTECTION Act 68 of 2008 (‘CPA’).

Personal information of both employees and clients is – given e-commerce and technology used in connecting businesses – becoming instantly accessible to third parties.

POPI aims to introduce certain protection principles to establish minimum requirements for the processing of personal information. There are eight information protection principles contained in chapter 3 of the Bill, namely:

Accountability; Processing limitation; Purpose specification; Further processing limitation; Information quality; Openness; Security safeguards; Data subject participation.

The intention is to promote transparency with regard to what information is collected and how it is to be processed. This might be the end of all those unsolicited sales calls and spam we receive on a daily basis.

Processing means broadly anything done with personal information, including collection, usage, storage, dissemination, modification or destruction (whether such processing is automated or not).

POPI compliance involves capturing the minimum required data, ensuring accuracy, and removing data that is no longer required. These measures are likely to improve the overall reliability of the organisation’s databases.

Compliance further demands identifying personal information and taking reasonable measures to protect the data, like tracking the workflow of client documents and ensuring that vital information is not misplaced or falls into the wrong hands.

The POPI Act is very much in line with similar legislation that exists in about 70 to 80 other countries, and South Africa is finally set to fall in line with international standards for the collection and handling of personal information.

The Act does not only protect the way in which information is used and/or re-used by the recipients of the information, but the party gathering the information also has the responsibility to ensure it is accurate, current and not misleading.

Personal Information may only be processed if voluntary, specific and informed consent is obtained.

An Information Protection Regulator will be appointed who will have broad powers and may consider the public interest as opposed to an individual’s rights to privacy.

There are, however, cases where POPI does not apply. Section 4 Exclusions include:

  1. purely household or personal activity;
  2. sufficiently de-identified information;
  3. some state functions including criminal prosecutions, national security etc.;
  4. journalism under a code of ethics;
  5. judiciary functions etc.

Source Reference:

http://www.popi-compliance.co.za/
http://www.saaci.co.za/

This article is a general information sheet and should not be used or relied on as 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.

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Tax ombud: Recourse for aggrieved taxpayers

1BThe Tax Administration Act that came into effect on 1 October 2012 is a valiant attempt to balance the rights of the taxman with those of the taxpayer.  One of the ways of bolstering the taxpayer’s position on this not very level playing field is the creation of the office of the ombudsman or Tax Ombud.

Exactly one year after the inception of the Act, Gauteng Judge President Ngoepe was appointed as the first incumbent of this office.  The mandate of the Ombud is set out in section 16(1) of the Act:

…to review and address any complaint by a taxpayer regarding a service matter or a procedural or administrative matter arising from the application of a tax Act.

The aim is to provide taxpayers with a low-cost mechanism to address administrative difficulties that cannot be resolved by SARS.  The Ombud’s powers are however limited.  He may not review legislation or policy unless it relates to a service, procedural or administrative matter.  Although the Act is not clear on the issue, the decision as to whether a matter falls within the scope of his mandate probably lies with the Ombud himself.

What is clear is that a complainant is required to first exhaust the available complaint resolution mechanisms within SARS before approaching the office of the Ombud, unless there are compelling circumstances for not doing so.  This will, for instance, be the case where exhausting internal mechanisms will cause undue hardship to the taxpayer, or is not likely to produce a result within a reasonable period of time.

Complaints are to be made in writing on the prescribed form to the office of the Ombud.  A copy of the complaint form can be requested from the Ombud’s office by telephone, fax or email.  The form must be completed and signed by the taxpayer.  If a tax practitioner or other person completes and signs the form on behalf of the taxpayer it is advisable for the client to complete a power of attorney specifically for this purpose.  All supporting documents must be attached to the form.  A request for review of the complaint should include any correspondence received or sent relating to the complaint, call reference numbers, and the relevant contact details of the SARS officials with whom the taxpayer dealt.  It is recommended that the complainant specifically indicates which internal remedies were pursued and what SARS’s response thereto was.

If a taxpayer is unsure as to whether or not his complaint falls within the Ombud’s mandate, or if a taxpayer is unable to write his complaint, he may call the Ombud’s office where trained professional staff will attend to the call and advise him accordingly.

The Ombud may review and address a complaint in a number of ways, including by way of mediation or conciliation.  He may also facilitate a taxpayer’s access to complaint resolution mechanisms within SARS.  Ultimately he must follow informal, fair and cost-effective procedures in resolving a complaint.

The Ombud’s recommendations regarding the resolution of a matter are not binding on SARS.  In the interests of legitimacy and transparency it is however likely that SARS will follow these recommendations.

Reports by the Ombud to the Minister of Finance must be submitted on an annual basis.  In addition, he must also report to the Commissioner of SARS at quarterly intervals.  This report must contain recommendations for such administrative action as may be appropriate to resolve the problems encountered by taxpayers.

This article is a general information sheet and should not be used or relied on as 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.

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Amended BEE codes of good practice: The salient points

B2After more than 6 years of working with the BEE Codes of Good Practice (“the old Codes”), businesses and verification agencies around the country were finally getting to know what was expected of them when it came to BEE verifications. This will however change with the publishing of the Amended BEE Codes of Good Practice (“the new Codes”) and business will have to take a fresh look at their BEE strategies if they are to maintain their current BEE level or even reach any level at all.

But what are the changes introduced by the new Codes?

On 3 and 4 October 2013 the Department of Trade and Industry together with the Black Economic Empowerment Advisory Council hosted the first ever BEE Summit. The Amended BEE Codes of Good Practice were announced at this summit and were officially published in the Government Gazette on 11 October 2013.

These new Codes have introduced a number of salient points which have been listed below:

  • The new Codes have a 12 month transitional period in which businesses have a choice to report under either the old Codes or the new Codes. Once this period is over, reporting under the new Codes will become mandatory.
  • The new Codes do not, however, replace the sector charters and these will still remain in force.
  • The number of points necessary to qualify for a particular level is adjusted as set out in the table below:
B-BBEE
Status
Qualification under
the new Codes
Qualification under
the old Codes
B-BBEE
recognition level
Level 1 ≥ 100 Points ≥ 100 Points 135%
Level 2 ≥ 95 but < 100 Points ≥ 85 but < 100 Points 125%
Level 3 ≥ 90 but < 95 Points ≥ 75 but < 85 Points 110%
Level 4 ≥ 80 but < 90 Points ≥ 65 but < 75 Points 100%
Level 5 ≥ 75 but < 80 Points ≥ 55 but < 65 Points 80%
Level 6 ≥ 70 but < 75 Points ≥ 45 but < 55 Points 60%
Level 7 ≥ 55 but < 70 Points ≥ 40 but < 45 Points 50%
Level 8 ≥ 40 but < 55 Points ≥ 30 but < 40 Points 10%
Non-Compliant < 40 Points < 30 Points 0%
  • The annual turnover thresholds have been adjusted as follows:
    1. EMEs have a turnover of less than R10 million;
    2. QSEs have a turnover of between R10 million and R50 million;
    3. Generic Entities have a turnover of more than R50 million.
  • The 7 elements under the old Codes have been reduced to 5 elements with Procurement element now forming part of Enterprise and Supplier Development element and the Employment Equity element being integrated to form part of the Management element.
  • EMEs and QSEs which have 100% Black ownership will automatically qualify as level 1 contributors to BEE and EMEs and QSEs which have 51% or more Black ownership will automatically qualify as level 2 contributors to BEE. These entities will only have to provide an affidavit confirming that their turnover is under the relevant threshold and the percentage of Black ownership is above the required level.
  • EMEs with Black ownership of less than 51% will automatically qualify as level 4 contributors to BEE while QSEs with less than 51% Black ownership will have to report under all 5 of the elements.
  • 3 priority elements have been introduced, namely Ownership, Enterprise and Supplier Development and Skills Development.
  • QSEs will have to meet a subminimum of 40% of the target for Ownership and one of the other priority elements or they will lose a level, while Generic Entities will have to meet the subminimum for all three priority elements or risk losing a level.
  • The target for Skills Development has been increased to 6% of the Leviable Amount (roughly equal to the Company’s annual payroll), meaning that businesses will have to spend an amount equal to 2.4% of its Leviable Amount just to meet the subminimum requirement under Skills Development.

The changes mentioned above are only a few of the many changes which will be brought about by the new Codes. These will have a major effect on current BEE scores, with the Ownership element becoming essential for businesses that wish to achieve a BEE contributor status better than a Level 8.

There are currently a number of errors and uncertainties in the new Codes and it may take some time before these are corrected or clarified and until we reach this point it will be difficult to determine how the Codes will be implemented practically.

This article is a general information sheet and should not be used or relied on as 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.

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The obligation to provide access to certain information about your business

A1_BlogThe Promotion of Access to Information Act (PAIA), No 2 of 2000, was enacted in an effort to foster a culture of transparency and accountability in the public and private sector. It gives effect to the constitutional right of access to any information held by the State or any other person and that is required for the exercise or protection of any rights of any person.

This implies that any person whose rights may be affected may request any of the prescribed information as defined in the Act from a public or private body by following the applicable procedures. The public or private body is then legally compelled to provide such information in the prescribed manner.

Section 51 of this Act requires the head of a private body to compile, within six months after the commencement of this section of the Act or within six months after the establishment of the private body, a manual containing certain prescribed information, such as:

  • postal and street address, phone and fax numbers and email address of the private body;
  • the latest notice regarding the categories of records of the private body which are available without a person having to request access in terms of the Act;
  • a description of available records generated by the private body, indicating which records are automatically available and which records are available on request;
  • the request procedure to be followed in terms of the Act, as well as the applicable fees;
  • a statement confirming the head of the public body;
  • other information as prescribed by the Act.

This manual should be updated every time a change in the prescribed information occurs and must be:

  • submitted to the Human Rights Commission;
  • submitted to the controlling body of which the private body is a member (if applicable);
  • published on the private body’s website (if applicable).

A private body is defined as:

  1. a natural person who carries on any trade or business or profession;
  2. a  partnership that carries on any trade or business or profession;
  3. any former or existing juristic person, but excluding a public body.

When a person requests information in terms of this Act, it must be provided if:

  1. the information is requested to exercise or protect a right;
  2. the person follows the correct procedure as prescribed by the Act;
  3. access to that information cannot be denied on any of the grounds of refusal as stated in the Act.

The deadline for the submission and publication of the PAIA Manual for public and private bodies was 31 December 2011. However, for certain private bodies in certain economic sectors, this has been extended until 31 December 2015.  These exceptions are based on:

  • the economic sector in which the private body operates its business;
  • the total number of employees being less than 50;
  • the turnover of the private body being less than a certain amount per economic sector.

This extension does not otherwise impact on the enforcement of this Act, and the rest of the requirements of the Act are currently enforced.

The penalty for non-compliance is two years imprisonment or the possible option of fines.

This article is a general information sheet and should not be used or relied on as 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.

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