Nwanda internal news

1. Annual Tax and Legislation Update Seminar

Thank you to all those who attended our Annual Tax and Legislation Seminar.

2. Nwanda Incorporated’s Facebook Page. Go and have a look!

To all readers, like our Facebook page and once we’ve reached the 100th person, YOU might be the lucky winner of R250 in a random draw!

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3. Staff Breakfast at the Belgravia Bowling Club

The staff breakfast took place on the 09 April 2014 at the Belgravia Bowling Club. (Bedfordview).

4. Office Clean up
A BIG THANK YOU to everyone in the office who took time to assist with cleaning the office… GO TEAM NWANDA!

5. Study Leave
We wish the best of luck to all our trainee accountants going on study leave in May 2014. Study hard and make us proud!

6. Resigned Employees:
Melvin Gregory and Anneriska van Loggerenberg have resigned, we wish them the best in their future endeavors.

7. We are 20 years old!
To all those who have been with us through this journey, thank you very much for your support we would not be here if it was not for you!

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.

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.

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.