Nwanda internal (October)

1. Annual Golf Day @ Germiston Golf Club:

We would like to thank all the golfers for attending our Annual Golf Day, albeit a bit windy but at least no rain (2012).  A special thank you to Mauritz, Jessica and staff for behind the scenes hard work.

2. Wedding Bells:

Congratulations to Tanya de Beer and Theo de Bruyn, who got married on 13 September 2014.

de Bruyns

3. New faces:

We are delighted to announce the appointment of Samantha Goodrich – Secretarial Manager.

Samantha Goodrich

4. Examinations:

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4.1 CTA:
We welcome our CTA students back after writing exams.  We await their results with anticipation.

 

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4.2 UNDER GRADUATES:
To all our Trainees writing their second semester exams, you will be missed during October & November. As always, make us proud.

 

5. Awesome Reward:

Teboho & Hennie, well done!  You are each receiving R550 as you have been nominated by your peers for being AWESOME under pressure!

6. Employees on the move:

Zanele Mathabela and Marusha Moothan have moved on, we wish them the best in their future endeavors.

Employment Equity

ee
The Department of Labour does random inspections to check on EE compliance.  They turn up at your gate requesting proof of EE compliance within a 21 day period – you have to provide evidence in a file and even deliver at their offices.  Their letter is standard – they want you to provide proof of:

  1. appointment of an Employment Equity Manager.
  2. an employment equity committee, with minutes, agenda and signed attendance registers covering twelve months;
  3. an analysis of any barriers to employment equity;
  4. a copy of your employment equity plan;
  5. a copy of your past three employment equity reports;
  6. reasonable accommodation for people with disabilities in the workplace;
  7. HIV and AIDs policy.

Your employment equity plan can be for a period not less than 1 year and not greater than 5 years.  EE reports must be submitted annually – manually by 1st working day of October or electronically by mid-January of the following year.   The Employment Equity Amendment Act effective from 1 August 2014 has defined designated groups as black people, women and people with disability who are citizens by birth or descent or who became citizens by naturalisation before 27 April 1994 or after 26 April 1994 but were precluded by apartheid policies.  The fines for non-compliance have been increased hugely.

See the Department of Labour website for more details – www.labour.gov.za.

Allowances and fringe benefits: Part II

In the previous newsletter we discussed the difference between a travel allowance and the right of use of a motor vehicle and attempted to illustrate the pros and cons of each.  We then found that each case should be evaluated separately since there are various factors that need to be considered to obtain the best possible tax benefit. In this newsletter we will look at subsistence and other allowances that an employee may receive and also consider the tax benefits and drawbacks applicable to each.

Subsistence allowance

A subsistence allowance is normally paid to an employee when the employee undertakes a business trip and has to incur certain expenses, e.g. for accommodation, transport, meals or other incidentals, and the employer wishes to reimburse the employee.

The question arises whether the employee is taxed on the amounts paid/reimbursed to him/her, even if the expenses were incurred solely in the execution of the employee’s duties.

The short answer, in most cases, is yes. However, the South African Revenue Service (SARS) permits certain deductions and exemptions, which provide relief to the employee.  Therefore it is important that every employee is aware of the deductions and exemptions available to him/her.

Section 8(1)(a)(i) of the Income Tax Act No 58, 1962 determines that all allowances or advances must be included in the taxable income of the receiver, excluding amounts actually spent on accommodation and/or meals and other incidentals when, in the course of executing his/her duties,  the employee is obliged to spend at least one night away from his/her normal place of residence.

Accommodation

Section 8(1)(a)(i) of the Act touches on two scenarios.

Firstly, in a case where the employer provides an allowance per night to the employee, the allowance is taxed on the amount actually paid/granted to the employee minus the actual expense incurred by him/her. For example, if Julius receives an allowance of R4 500 for three nights’ accommodation and spends only R3 000 on the accommodation, only R1 500 (R4 500 – R3 000) is included in his taxable income.

Secondly, it sometimes occurs that an employer pays an advance to an employee and requests the employee to hand in, on return from the trip, proof of expenditure together with the remainder of the advance. The taxable portion of the advance is then the amount of the advance minus the amount actually spent on accommodation minus the amount returned to the employer.

In both instances it is important to provide proof of the expenses incurred. It is also important to note that the allowance should not create losses. Should the costs incurred exceed the allowance, no deduction will be allowed for the amount by which the allowance is exceeded.

Meals and other incidental expenditure

Where the employer pays the employee an allowance or advance in respect of meals and other incidental expenses, the allowance or advance is also included in the employee’s income but the employee is entitled to claim one of the following deductions:

The amount actually spent on meals and/or other incidentals; or

The amount determined by the Commissioner of SARS for each day or part of a day the employee spends away from his/her normal place of residence.[1] (Note that the employee should spend at least one night away from home in order to qualify.)

The employee may choose the most beneficial option, provided the expenses do not exceed the allowance/advance.

In practice SARS permits the subsistence allowance to be included as a non-taxable allowance on the employee’s IRP5. Thus the deduction is allowed in most instances. It should be noted, however, that especially when an allowance is paid for accommodation, the provisions of Section 8(1)(a)(i) as set out above must be complied with.

Other allowances

Where a salaried person receives another allowance (e.g. an entertainment or cell phone allowance) the allowance is included in his/her taxable income and the expenses incurred (even the expenses incurred for business purposes) may not be deducted for tax purposes.

This, of course, creates a problem for some salaried persons who, by nature of their daily duties, have to incur business expenses that are not deductible against the relevant allowance received.

However, a “deduction” for these expenses may well be accomplished since, although SARS does not permit expenses incurred as other allowances to be deducted, the refunding of business expenses incurred by an employee is not included in the definition of other allowances.

Certain conditions apply, though. The expenses must be incurred on instruction of the employer for the purposes of the employer’s business, and proof of such expenditure must be submitted to the employer.

This means that an employee who is required by his/her employer to entertain clients from time to time, can incur this expense and claim it from the employer without any amount being included in the employee’s taxable income.

It is clear, therefore, that there are cases where the expenses incurred by an employee for business purposes, are indeed tax deductible, although it would be taxable if it were in the form of an allowance. Employers should therefore take into account the tax implications before deciding to include the provision of allowances in employee contracts.

[1] For the 2013 tax year the deduction for meals and incidental expenses for travel in the RSA amounted to R303 per day, and for incidental expenses only, R93 per day. Daily expenses for foreign travel are determined per country and are published by SARS in the Government Gazette.

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.

Ten business etiquette tips

No-one wants to work in an environment which is unpleasant, unproductive and ripe for litigation, which is exactly what you will get where employees are rude, careless and dismissive. Such behaviour will spill over to customers and will eventually lead to legal proceedings and loss of business. Proper business etiquette practices must start from the top, but every employee should contribute towards promoting these values.

1. Everyone Has a Role

Remember that all the employees in your company and their jobs are interconnected, and that what happens to one, affects the other. Don’t treat any employee in such a way that, when you need him tomorrow, he has become disloyal because of your treatment of him.

2. Make Meetings Useful

When you call a meeting, keep other employees’ schedules in mind, and come to the meeting prepared and organised, so as not to waste people’s time. Thank everyone for their contributions and attendance, and be sure to send out minutes of the meeting with action items. If these are not necessary, it means that the meeting was not supposed to be held in the first place.

3. Prompt Communication

If you receive a call or email from a client or employee, tend to the matter as soon as possible. Even if you cannot make work of it right away, let the person know that it might take some time, but that you are looking into the matter.

4. Use of email

The speed of sending emails can lead to careless, sloppy writing and unprofessional appearance. Use correct spelling, grammar and punctuation, as you would with any other written communication. Avoid unclear information or one-word answers, so that you can wrap the exchange up without too many emails being sent.

5. Respect Others’ Time

When you have to interrupt someone, try to do it at a time that suits them. Be polite and quick, so that he can get back to his work. Don’t interrupt meetings unless it is extremely urgent.

6. Dress for Success

It is always safer to be overdressed rather than underdressed. Take care with your appearance – it sends out a message of respect to your employer, co-workers and customers.

7. Keep Your Boss Informed

Don’t inundate your boss with compliments or always agree with him. Treat everyone with respect, but remember that your employer is your superior. Keep him informed of any setbacks, problems or developments you might experience, so that he is aware of your situation at all times.

8. Respect Other Cultures

If your company works across language, cultural and geographical borders, remember to treat others with respect. Try to learn at least the basic how-do-you-do’s in all the languages you do business in to demonstrate your desire for cooperation. Study different customs of greeting, eating and public holidays, for example, so that you display the correct behaviour.

9. Timelines

There are often timelines and deadlines in business which you have to keep. This means that you will sometimes have to forfeit teatime or shorten your lunch hour because you have more pressing matters to attend to.

10. Remember the Basics

The most important rule is to remember your basic manners, such as “please,” “thank you” and “you’re welcome”. Don’t raise your voice and never use offensive language.

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.

The team behind your success

A business team that runs smoothly and is well-coordinated can be instrumental in promoting your business’s long-term growth and success. Consider this when putting a dream team together.

Success is brought about by a solid business team. Once you have built your business team and it runs smoothly, you can focus on working on your business instead of in it. You now have the freedom to step back from running the day-to-day operations and focus on strategic planning, improving your products and services and increasing your market share. These are the activities that will improve business growth and success in the long term.

The installation of a well-coordinated team, including dedicated staff, outsourced vendors, suppliers and lawyers is instrumental in attaining success. Shari Gould wrote an article in which she discussed the steps to building a successful small business team.

You have to start by thoroughly understanding your business process in order to figure out which people you will need on your team. It is obvious which employees you will need right from the start, but don’t forget the all-important service providers, suppliers and maintenance staff who keeps everything running smoothly. The delivery of quality goods and services is imperative for a successful business, so make sure your vendors share that goal with you. Select vendors according to their dedication to your budget and to delivering on time every time. Entice better co-operation by offering them something extra to get faster or better service.

It is important that everyone in your company understands the timeline – from receiving the goods to delivery to clients. Prioritise the steps and make posters of them, which you put up at strategic sites in your business.

A good contract lawyer is essential to any successful business team. Create and review contracts between your company and your vendors, so that money can be saved by your lawyer in the case of any future contractual legal disputes.

Learn from your competition. Acquire some of their products and use their services to find out what they are up to and where their strengths and weaknesses are. Learn from that to improve your own enterprise.

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.