ECONOMIC GROWTH UNDER PRESSURE
Policy makers are in a quandary as to what economic policy to follow. The sluggish economy needs stimulus to move forward, yet inflation is starting to rise. The South African Reserve Bank (SARB) has kept rates fairly consistent but will soon be forced to make a decision. A number of economists have called on the SARB to be bold and even cut rates to stimulate the economy before the inevitable rate increases.
Growth has been pitched at 2.1% year on year for the 1st quarter compared to 1.9% in the first quarter of last year. This is way down on where South Africa needs to be and issues such as ongoing strikes and load shedding will only make the scenario worse. So what can we do to keep our heads above water in a time of economic decline? There is a classic story about an emigrant to America who ran a hot dog stand. He worked hard and was able to educate his son who became a well-known economist.
He heard over the news that America was going through an economic decline so he asked his educated son what he should do in his hot dog business. His son advised him to start reducing inputs like butter, size of sausage etc. Sure enough his son was smart and sales were soon declining and so it went on until he was out of business. Essentially his son’s advice was poor advice. It was more of a case of cutting costs as opposed to following something more enterprising.
He would have been better off considering some of the following options:
- Be innovative and look at new ways to grow your business
- Take stock of where you are at and “sweat” your existing assets
- Build on relationships with existing customers
- Consider expanding your business by taking it “online”
If you are in a position where you need to develop a strategy to see you through the next three years we would gladly assist you in developing an innovative strategy.
B-BBEE BACKLASH FORCES WITHDRAWAL OF CHANGES
In what must be regarded as a big win for business, Minister Rob Davies scrapped a plan that was announced on the 5th May which had the potential to scupper new investment deals. In essence it had been proposed that companies would get fewer black economic empowerments points if their non-white shareholders were legal entities other than individuals or black-owned businesses.
The official notice issued on 5th May had created a lot of uncertainty amongst investors and companies as regards timing. Public pressure forced Minister Davies to reconsider.
We will keep you advised of any further developments in this regard.
IMPORTANT DATES AND UPDATES
- 5 June 2015 – Submission and Payment of EMP201
- 25 June 2015 – Submission and Payment of VAT201 (Manual Registered Vendors)
- 30 June 2015 – Submission and Payment of VAT201 (Registered VAT eFilers)
- 1 July 2015 – Start of Tax Season for Individuals and
Update on UIF threshold proposal- The Treasury Department has announced that the proposed reduction in the remuneration threshold against which contributions to the UIF are calculated (to R1,000) has been scrapped for this tax year, as it could “lead to unintended consequences”. The media release issued by the Department stated that the Minister of Finance will continue to conduct consultations with the National Economic Development and Labour Council (NEDLAC) and other interested stakeholders, so as to determine:
- Implementation of the agreed UIF Amendments Bill to extend benefits to workers who contribute to the Fund
- Review of earmarked taxes (UIF, RAF, Skills Levy) to address the fiscal imbalances that have emerged, whether in the form of surpluses and/or deficits
- The process for social security reform, and the need to initiate broader consultations on the road ahead, and the challenges facing such reforms
CIPC – Appointment of Acting Commissioner – The Companies and Intellectual Property Commission released a notice to customers on the 12th May 2015, confirming that Advocate Rory Voller had been appointed as Acting Commissioner in place of Astrid Ludin, due to her resignation as Commissioner. Labour Relations Amendment Act – in effect from 1 April 2015 The Labour Relations Amendment Act, which came into effect on the 1 April 2015, brings about some changes to labour relations. For example, fixed term employees may now be deemed permanent employees after three months, and employees from labour brokers will also be deemed to be permanent employees after three months, unless certain specific criteria are met.
For more detailed information on these changes, and how they may impact you, please contact our offices.
A FEW INTERESTING FACTS ABOUT CC’S
Although no new Close Corporations (CC’s) have been able to be formed since May 2011, there are still hundreds of thousands of CC’s currently active and operating in South Africa. In terms of the 2008 Companies Act, these CC’s are able to continue operating as such, with the option to convert to a private company. Where the number of members of the CC is 10 or more, however, the CC must be converted to a company.
It is interesting to note that a minor child (under the age of 18) can be a member of a CC if his or her parent or guardian consents to it. The guardian would just need to sign the CK2 form on the minors’ behalf, and the details of the minor will be recorded on the form. However, in the case of a company, a minor can only be a director if he or she has been emancipated, (i.e. been given express or implied consent by a parent or guardian to participate in commercial contracts independently).
In addition, all members of a CC can be foreigners, as long as the registered office of the CC is in South Africa and the accounting officer is also in South Africa. CC’s may have to be subject to an audit, depending on a number of factors. Schedule 3 Item 5(4)(b) of the Companies Act states that CC’s must be audited if the Public Interest score is 350 or more, or is between 100 and 349 and its financial statements are internally compiled. Where the CC’s primary activity is to hold fiduciary assets in excess of R5 million at any stage during the financial year, it will also be subject to the audit, or where the CC’s association agreement (if there is one) requires it.