FRINGE BENEFITS ON RESIDENTIAL ACCOMMODATION

A3bEmployees’ remuneration packages are often comprised of more than only a monthly cash salary component. Many employees also receive various other benefits from their employers, be it in the form of an interest free loan, use of an employer-owned vehicle, vouchers or gifts, or the provision of residential accommodation. These fringe benefits are all required to be quantified by the Seventh Schedule to the Income Tax Act, 58 of 1962, and which benefits are required to be included in such recipient employees’ taxable income and subject to income tax (and PAYE).

The provision of residential accommodation to employees is at times controversial and complicated. This article seeks to focus on the calculation of this specific form of fringe benefit popularly provided to employees, and is especially relevant in certain specific industries such as mining and farming, although by no means limited thereto.

The standard approach prescribed by paragraph 9 of the Seventh Schedule to the Income Tax Act is to calculate the fringe benefit by applying the below formula and to arrive at the appropriate “rental value” to be placed on the accommodation supplied to the employee:

(A – B) x C/100 x D/12

A:  the “remuneration proxy” (typically, the remuneration paid to the employee by that employer during the previous tax year);

B:  an abatement of R75,000 (for 2017 specifically, which amount is linked to the annual primary rebate enjoyed by taxpayers who are individuals);

C:  an amount of 17 (increased to 18 if the accommodation consists of at least 4 rooms and either the accommodation is furnished or power is supplied by the employer, and increased further to 19 if the accommodation is both furnished and power is supplied at the cost of the employer); and

D:  the number of months that the employee was entitled to use the accommodation.

The value of the fringe benefit must be declared on the employee’s IRP5 under code 3805.

Where the employer has obtained the accommodation from an unconnected person to supply to its employee, the fringe benefit value adopted may be such actual cost to the employer if less than the fringe benefit value determined in terms of the above calculation. Any fringe benefit value should further be decreased by any amount contributed thereto at the employee’s own expense. Finally, it is worth noting that no fringe benefit arises if the employer is providing accommodation to an employee where necessary for the employee to spend time away from his usual place of residence to perform his/her duties.

It should be noted that the above is intended to serve as general guidance only. Several nuances and specific provisions exist where international considerations come into play, where the employee has a fixed or contingent interest in the property concerned or where the property is made available for holiday purposes only.

This article is a general information sheet and should not be used or relied upon 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. Errors and omissions excepted (E&OE)

INTEREST FREE LOANS WITH COMPANIES

A4bThe latest annual nation budget presented in Parliament proposed the dividends tax rate to be increased with almost immediate effect from 15% to 20%. The increased rate brings into renewed focus what anti-avoidance measures exist in the Income Tax Act[1] that seeks to ensure that the dividends tax is not avoided.

Most commonly, the dividends tax is levied on dividends paid by a company to individuals or trusts that are shareholders of that company. To the extent that the shareholder is a South African tax resident company, no dividends tax is levied on payments to such shareholders.[2] In other words, non-corporate shareholders (such as trusts or individuals) may want to structure their affairs in such a manner so as to avoid the dividends tax being levied, yet still have access to the cash and profit reserves contained in the company for their own use.

Getting access to these funds by way of a dividend declaration will give rise to such dividends being taxed (now) at 20%. An alternative scenario would be for the shareholder to rather borrow the cash from the company on interest free loan account. In this manner factually no dividend would be declared (and which would suffer dividends tax), no interest accrues to the company on the loan account created (and which would have been taxable in the company) and most importantly, the shareholder is able to access the cash of the company commercially. Moreover, since the shareholder is in a controlling position in relation to the company, it can ensure that the company will in future never call upon the loan to be repaid.

Treasury has for long been aware of the use of interest free loans to shareholders (or “connected persons”)[3] as a means first to avoid the erstwhile STC, and now the dividends tax. There exists anti-avoidance legislation; in place exactly to ensure that shareholders do not extract a company’s resources in the guise of something else (such as an interest free loan account) without incurring some tax cost as a result.

Section 64E(4) of the Income Tax Act provides that any loan provided by a company to a non-company tax resident that is:

  1. a connected person in relation to that company; or
  2. a connected person of the above person

“… will be deemed to have paid a dividend if that debt arises by virtue of any share held in that company by a person contemplated in subparagraph (i).” (own emphasis)

The amount of such a deemed dividend (that will be subject to dividends tax) is considered to be effectively equal to the amount of interest that would have been charged at prime less 2.5%, less so much of interest that has been actually charged on the loan account.

It is important to also appreciate that the interest free loan capital is not subject to tax, but which would also have amounted to a once-off tax only. By taxing the interest component not charged, the very real possibility exists for the deemed dividend to arise annually, and for as long as the loan remains in place on an interest free basis.

[1] 58 of 1962

[2] Section 64F(1)(a)

[3] Defined in section 1 of the Income Tax Act

This article is a general information sheet and should not be used or relied upon 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. Errors and omissions excepted (E&OE)

INTEREST FREE LOANS TO DIRECTORS

A3bIt is very often the case that a company extends an interest free or low interest loan to a director. This manifests either as a true incentive or benefit to that director (mostly the case in larger corporate environments) or in a small business environment in lieu of salaries paid. The latter is especially the case for example where a spouse or family trust would hold the shares in the company running the family business, but which business is conducted through the efforts of the individual to whom a loan is granted from time to time.

In terms of the Seventh Schedule to the Income Tax Act[1] a director of a company is also considered an “employee”.[2] This is significant, since directors can therefore also be bound by the fringe benefit tax regime applicable to employees generally.

Paragraph (i) of the definition of “gross income” in the Income Tax Act[3] specifically includes as an amount subject to income tax “the cash equivalent, as determined under the provisions of the Seventh Schedule, of the value during the year of assessment of any benefit… granted in respect of employment or to the holder of any office…”

Clearly, benefits received by a director of a company would therefore rank for taxation in terms of this provision. The question remains therefore whether loans provided to such directors by the companies where they serve in this capacity would amount to such a taxable benefit, and further how such benefit should be quantified.

Paragraph 2(f) of the Seventh Schedule is unequivocal in its approach that a taxable fringe benefit exists where “… a debt … has been incurred by the employee [read director], whether in favour of the employer or in favour of any other person by arrangement with the employer or any associated institution in relation to the employer, and either-

(i) no interest is payable by the employee in respect of such debt; or

(ii) interest is payable by the employee in respect thereof at a rate of lower than the official rate of interest…”

Paragraph 11 in turn seeks to quantify the amount of the taxable fringe benefit to be included in the gross income of the director. Essentially, the taxable fringe benefit would be equal to so much of interest that would have been payable on the loan at the prime interest rate less 2.5%, less any interest actually paid on the loan. The benefit therefore does not only arise on interest-free loans, but also on loans carrying interest at less than the prescribed interest rate.

It is necessary to note that a fringe benefit otherwise arising will not be a taxable benefit if the loan amount is less than R3,000, or if it is provided to the director to further his/her studies.

[1] 58 of 1962

[2] Paragraph 1 of the Seventh Schedule, paragraph (g) of the definition of “employee”

[3] See section 1

This article is a general information sheet and should not be used or relied upon 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. Errors and omissions excepted (E&OE)

OFFSHORE COMPANIES AND DOING BUSINESS IN SOUTH AFRICA: A COMPANIES ACT PERSPECTIVE

a2bAccording to the most recent statistics released by the South African Revenue Service, South Africa remains a net importer of goods and services. Put differently, one could say that South Africans are more often clients in cross-border transactions than they would be the service provider. Many of our clients operate in this space, including foreign incorporated companies which are doing business in South Africa. This article is aimed at those specific clients of ours: those clients doing business in South Africa through companies incorporated outside of South Africa.

Section 23 of the Companies Act, 71 of 2008, regulates when foreign companies are required to register as “external companies” in South Africa. In terms of that section an external company must register with CIPC within 20 business days after it first begins to conduct business, or non-profit activities, in South Africa. The question is then when will the company in question be considered to be conducting business here?

A foreign company is, by virtue of the provisions of the Companies Act, regarded as conducting business in South Africa if either it is a party to at least one employment contract in South Africa, or if it is conducting such activities for a 6-month period “as would lead a person to reasonably conclude that the company intended to continually engage in business or non-profit activities within the Republic.” (section 23(2)(b)) Therefore, having even one employee in South Africa requires a company to register.

Certain exclusions may apply and where the Act is explicit that certain activities should not be considered to establish sufficient enough a presence in South Africa to deem the company to be one conducting business here (and therefore required to register with the relevant authorities). However, these exclusions are illuminating in the sense that it presents a rather low bar of activity (such as having shareholders’ meetings here or maintaining a bank account), therefore potentially hinting that the bar for being considered to conduct business in South Africa and therefore required to register as an external company may not be very high.

In terms of section 23, any foreign company required to register as an external company in South Africa must maintain an office in this country. Moreover, failure to adhere to the requisite registration requirements may ultimately lead to a company being notified that it is no longer allowed to carry on business operations in South Africa. Although this article does not consider the implications of registering as external company, we also wish to alert affected clients thereto that this legislative registration requirement may have certain tax and exchange control related implications inherent to them, and on which advice should be taken to manage these requirements in a sensible and responsible manner.

This article is a general information sheet and should not be used or relied upon 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. Errors and omissions excepted (E&OE)

REMOVING DIRECTORS OF A COMPANY

a4bThe Companies Act, 71 of 2008, requires that the business and affairs of any company be managed by or under the direction of its board, which has the authority to exercise all of the powers and perform any of the functions of the company, except to the extent that the Companies Act or the company’s Memorandum of Incorporation provides otherwise (section 66(1)). The Companies Act further requires that a company must have at least one director (section 66(2)), and further that only natural persons may serve in that capacity (section 69(7)(a)).

Those individuals occupying the position of directors of a company are therefore responsible for managing the affairs of the company and they do so as custodians on the shareholders behalf. It should be remembered that the directors do not own the company: the company rather is owned by the shareholders and the directors serve therefore to promote the interests of the company, and indirectly therefore the economic interests of the shareholders.

Quite often, in the case of private companies, the directors and shareholders may be the same individuals. However, where the directors have no or limited shareholding interest in the company itself, it may happen that the shareholders may wish to move to have certain directors removed and replaced on the company’s board if e.g. the company’s financial performance or operations otherwise are not satisfactorily conducted according to the shareholders’ liking.

Naturally, a director may be requested to resign under amicable circumstances. However, where a director refuses to resign (and may perhaps have the backing of other shareholders), the question becomes what remedies the aggrieved shareholders still have? It is possible to have these matters regulated in terms of the company’s Memorandum of Incorporation specifically to dictate under which circumstances a director may be removed from the board of a company. It could also be agreed with the director initially by way of a clause in the appointment contract.

Irrespective of whether the Memorandum of Incorporation or an appointment contract addresses the matter specifically, a director may always be removed by way of a majority vote at an ordinary shareholders’ meeting (section 77(1)). Before the shareholders of a company may consider such a resolution though, the director concerned must be given notice of the meeting and the resolution, and be afforded a reasonable opportunity to make a presentation, in person or through a representative, to the meeting, before the resolution is put to a vote (section 77(2)). In terms of procedures not entirely different from that as applied to shareholders, the directors may among themselves too resolve to remove a director from the board of a company (sections 77(3) & (4)).

It is important for directors to realise that they serve at the pleasure of shareholders. It is likewise necessary for shareholders to know that they have remedies against directors who do not deliver on their mandate, and that keeping directors in check amounts to good corporate governance.

This article is a general information sheet and should not be used or relied upon 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. Errors and omissions excepted (E&OE)

HOME OFFICE EXPENDITURE

a4_bWith current day realities manifesting in ever increasing distances required to be travelled to get to an office, traffic congestion, etc. more and more employers are opting to give their employees the option of working from home. The proliferation of “home offices” has surfaced in dramatic fashion in recent times. It is therefore only natural that we have been experiencing an increased number of queries related to whether expenditure linked to home offices are tax deductible. With home office expenditure, we refer here specifically to those costs linked to occupying a specific space in a home for purposes of earning an income. This includes typically rent, interest paid on a bond, repairs, maintenance and other related costs.

Limitations to deductions for tax purposes in relation to home office expenditure is specifically dealt with by section 23(b) of the Income Tax Act, 58 of 1962. In essence it determines that home office expenditure is not deductible save in very strict circumstances, being:

  • where the part of the home used is used exclusively and regularly used for purposes of the taxpayer’s trade; and
  • on condition that the space so used must also have been specifically equipped for this purpose.

Home office expenditure will moreover not be deductible where the trade exercised involves employment or the holding of an office (such as a director for example), unless either:

  • the income earned is in the form of commission or any similar type of variable payment, and on condition that the duties of employment or office held are performed primarily outside of an office environment provided by an employer; or
  • the employment/office duties viewed holistically are mainly performed in the designated part of the home.

If either of the above two exceptions are met, home office expenditure will be deductible irrespective thereof that the taxpayer is an employee or the holder of a specific office. It is noted that section 23(m)(iv) in this regard also does not operate to limit deductions of home office expenditure more than is already the case in terms of section 23(b). (Section 23(m) ordinarily operates as the onerous provision severely limiting the tax deductions available to salaried individuals.)

As a final comment it should be pointed out that the above tests linked to whether home office expenditure is deductible or not all involves objective tests. SARS is also known to be extremely strict in its application of section 23(b). The Tax Administration Act, 28 of 2011, by virtue of section 102 provides that the burden of proof for showing that a deduction should be allowed rests on the taxpayer. SARS is therefore under no obligation to disprove any of the requirements necessary to qualify for home office expenditure. Rather, the taxpayer should be able to show that the space in question is exclusively and regularly used for business purposes and that it has been specifically equipped therefor. It should further illustrate that income earned comprises mainly a variable form of compensation and that no other space is available to the taxpayer, or that the services are performed mainly from the designated space at home.

This article is a general information sheet and should not be used or relied upon 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. Errors and omissions excepted (E&OE)

IFRS FOR SME’S: RECOGNITION OF REVENUE FROM THE RENDERING OF SERVICES

A2_BBefore revenue from the rendering of services can be recognized in the books of the seller there are two issues that must be solved: when must the revenue be recognized and at which amount?

Money received for the rendering of services can be recognized as revenue in the books of the seller once the outcome of the transaction can be measured reliably which means the following two requirements must be met:

  1. It must be probable that the future economic benefits associated with the transaction will flow to the seller.

Table 1

If doubts arise about any of the items in the first column, the recognition of amounts regarding the service transaction will be done as set out in the second column:

If uncertainty exists about: Recognition will be as follows:
Collectability of revenue already recognised Recognise expenses incurred (No adjustment made to revenue already recognised)
The amount that might be uncollectable Recognise amount of expenses incurred
  1. The following four criteria must be reliably measurable:
  • Revenue amount (Please Note: Where services are exchanged for services of a similar nature and value, the exchange does not generate revenue. Where services are exchanged for services of a dissimilar nature, the exchange will generate revenue.)
  • Amount of costs already incurred
  • Amount of costs still to be incurred to complete the transaction
  • Stage of completion at the end of the relevant reporting period

Table 2

Once the four criteria have been measured reliably, the recognition of revenue will take place as set out in the second column below. Note that the stage of completion can be measured by a percentage as well as three other methods which appear as the last three bullets.

Criteria that must be met: Recognition will be as follows:
Amount of revenue Recognise revenue according to stage of completion (%)
Costs already incurred
Costs to be incurred in order to complete service transaction
Stage (%) of completion at the end of the reporting period
• If one act is more significant than any other act Recognise revenue when significant act has been completed
• If there is an unknown number of acts to be performed Recognise revenue according to the straightline method
• If another method will provide a better estimate of the stage of completion Recognise revenue according to such other method

The four criteria can usually be measured reliably once the buyer and seller to the service transaction agreed upon the following:

  • The rights of both parties;
  • Consideration to be paid; and
  • Manner and terms of settlement.

If the outcome of a service transaction cannot be measured reliably, revenue will still be recognised in the books of the seller but only up to the amount of expenses incurred which were recognised and are recoverable.

Circumstances where the outcome of a service transaction cannot be estimated or measured reliably can be any of the following:

  • There is doubt about the probability that future economic benefits associated with the transaction will flow to the seller because:
  • It is uncertain whether the revenue already recognised will be collectable.
  • Uncertainty exists about the amount that might be uncollectable.

Any of the following items related to the service transaction cannot be measured reliably:

  • Revenue amount.
  • Amount of costs already incurred.
  • Amount of costs still to be incurred to complete the transaction.
  • Stage of completion at the end of the reporting period.

These are in short the basic principles for the recognition of revenue from the rendering of services. The more specialized topic of the recognition of revenue from construction contracts falls outside the scope of this article. However, if you would like more information on either one of these topics please contact your financial advisor.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or ommissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

Reference List:

  • IFRS for SMEs: A summary by W Consulting and SAICA
  • PWC Training Material for IFRS for SMEs
  • IFRS Foundation: Training material for IFRS for SMEs

ARE RETIREMENT ANNUITIES STILL USEFUL?

A1_bRetirement annuities are often misunderstood and many people, or their parents, have had bad experiences with them in the past. This sentiment often relates to the investment performance and possibly also the charges related with these products. Some facts need to be considered before you discard this very useful investment vehicle for yourself.

When talking about financial planning and investments it is not uncommon that people say and hold opinions such as “I don’t like retirement annuities, they are terrible investments!” Usually it has to do with the performance and people can’t understand how after 10 years of contributing to a retirement annuity (RA), it is worth less than the amount they have put in.

This sentiment leads to a variety of discussion points, ranging from the fact that an RA is an investment vehicle or product wrapper, not an investment strategy or fund itself, to the fact that returns achieved are as a result of the underlying asset classes invested into, and will thus vary from one RA to the next.

What is meant by an investment vehicle or product wrapper?

Simply put often an investment vehicle, or product wrapper, has been created by legislation and usually tax legislation. Well at least that is the case for RA’s.

The government has for a long time been concerned that people do not save enough money for retirement, and ultimately people that are unable to work due to old age become a burden on the state. The state therefore has to address this and has therefore created specific tax treatments for RA’s in order to encourage people to use them to save for retirement specifically.

The idea is not to get too technical here, as the purpose of this information is not to go deeply into the tax benefits of RA’s save to say that the product wrapper known as an RA is merely one that carries these tax benefits. Briefly however, the contributions that are paid towards an RA are deductible from your gross income, the growth within the product is tax free, and on retirement there are certain tax free portions and thereafter different (more beneficial) tax rates for the lump sum benefits which do get paid out. You should get more information on this from your financial advisor.

What is meant by a fund?

If one understands that the RA is merely the product wrapper used and that this has nothing to do with the investment funds chosen for the actual money that is invested in this wrapper then we can start talking about investment performance. It should now be clear that the two are separate matters. Although it did not necessarily work this way in the past, but most modern RA’s now have a choice of funds the same, or at least very similar, to the funds used to make any other investment. One can even get an RA with a managed stock portfolio as an underlying investment.

The choice of funds is now up to you, with guidance from your financial advisor. The underlying assets of the fund must be matched to the objectives you are trying to achieve and your risk profile as an investor. As the objective of RA’s – retirement, is something that will usually only happen many years down the line you have the time available to use a lot of equity in your portfolio. Equity will give you the best returns over a longer period of time.

So by choosing the write underlying investment portfolio for your product wrapper, in this instance the RA, you would find that the investment performance of your RA should be no different had you invested in the fund directly and not used an RA, except that you have added tax benefits, which can actually boost your returns. You now have the tax benefits of the RA product wrapper and the performance of the fund you chose to invest in. Now your only hurdle is choosing the right underlying investment.

This article is a general information sheet and should not be used or relied upon 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. Errors and omissions excepted (E&OE)

FINANCIAL RISK MANAGEMENT FOR YOUR SMALL BUSINESS: DO YOU KNOW HOW TO DO IT?

A3_BIs it really necessary to be able to manage financial risk? The answer is a definite “Yes!” It can make the difference between having a successful business or being forced to close down the business. Make sure you give your business the best chance to survive and thrive by understanding and implementing financial risk management.

Financial risk management can be broken down into the following steps:

  1. Understand what financial risk is

A financial risk is any event or circumstance that can have a potentially negative impact on the finances of a business.

  1. Identify financial risks applicable to the business

Identify all the financial risks that you can think of which can have an impact on the business. Consider using brainstorming with employees and/or a SWOT analysis to help you identify as many potential risks as possible.

An example of a financial risk is that customers who buy on credit from your business will not be able to pay their outstanding accounts.

  1. Assess each financial risk separately

Estimate as well as you can with the available information how probable it is that each risk can affect the business and what the possible amounts of the damage (negative impact) could be if the risk should realise.

Taking the example of customers who will not be able to pay their outstanding accounts, the following matrix is handy to assess the probability and extent of the damage should the risk realise. Assume that the probability and potential damage of clients not being able to pay their outstanding accounts are high as indicated on the matrix with “X”.

Probability of damage occurring (clients not able to pay accounts)
High Medium Low
Estimated extent of damage Major damage e.g. R100 000 X
Medium damage e.g. R30 000
Minor damage e.g. R5 000

 

  1. Treat risks to limit negative impact on business

Select and treat those risks you have the most control over to focus your financial risk management efforts on. Control in this context will be the ability to minimise the chances and potential damage caused if the risk should realise.

Create and implement an action plan to reduce each of the selected risks to acceptable levels.

Consider using insurance to protect the business against external risks which the business does not have much control over e.g. natural disasters.

To continue with the example: the matrix shows that it is highly probable that clients won’t be able to pay their accounts, and the amount of the resulting bad debts can be major. There are measures that the business can implement to prevent, or at least decrease, the likelihood and the amount of damage due to bad debts. These are the measures that the business should focus on implementing to reduce the risk of bad debts occurring to acceptable levels. Preventive measures could include checking the credit record of customers before selling on credit to them and implementing a pre-approved credit limit per customer.

  1. Monitor the financial risk management plan

Review the financial risk management plan regularly to ensure that it stays up to date with the changing circumstances of the business and remains effective to decrease current financial risks.

Using the above example of potential bad debts, the regular inspection of the debtors’ age analysis might show an increase in long outstanding amounts which can indicate that the credit policy for clients needs to be reviewed and updated.

Proper financial risk management can greatly increase a business’ chances of being successful and profitable. If you would like to implement a financial risk management plan or suspect that the financial risk management plan currently in use might be outdated, do contact your accountant for professional assistance.

This article is a general information sheet and should not be used or relied upon 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. Errors and omissions excepted (E&OE) 

Reference list:

THE PAIA MANUAL: HAVE YOU DONE YOURS?

A2_2_BIf your business is in the private sector and has not drawn up its PAIA manual yet, now is the time to start doing so as PAIA manuals for private bodies must be submitted to the South African Human Rights Commission (SAHRC) by 31 December 2015. Do you know who will be the Information Officer (it could be you!) and what information should be included in a PAIA manual? If not, read on to be enlightened.

Which person in an organisation is responsible for the PAIA manual?

The head of a private body is responsible for compiling and submitting the body’s PAIA manual to the SAHRC. In the case of a private company the CEO is the head of the company and normally the Information Officer responsible for the PAIA manual. An Information Officer can also be the person who performs the function equivalent to that of a CEO of a juristic person. The CEO or the person who performs the function equivalent to that of a CEO can also authorise any other person as the Information Officer.

What information should be included in a PAIA manual?

The information required to be included in a PAIA manual includes, but is not limited to, the following:

  •  The name and contact details of the head of the private body:
  •  Telephone number
  •  Fax number
  •  E-mail address
  •  Postal address
  •  Street address
  • A list of other legislation applicable to the organisation e.g. the Employment Equity Act 55 of 1998, the Income Tax Act 58 of 1962, etc;
  • Lists of records generated by the business in terms of other legislation applicable to the organisation, categorised per Act, for example, list the documents required to be kept by the organisation in terms of the Companies Act 61 of 1973 under a heading titled “Companies Act Records”. Some examples of documents to be listed in terms of the Companies Act are share registers, minutes of meetings of the Board of Directors, and the Memorandum and Articles of Association;
  • Which of the generated records is available automatically without being requested;
  • Which of the generated records is only available upon request;
  • Procedures to be followed and fees payable by a person requesting information; and
  • The procedures available to a person whose request for information has been refused.

The above information is merely a guideline and should not be seen as an exhaustive list.

It is important to keep in mind that different businesses will generate different types of records according to each business’ unique trading environment and information systems. There is no generic list of records applicable to all businesses. Care should thus be taken to include all of the relevant records in the PAIA manual.

How to submit a PAIA manual

No fees are payable when submitting a PAIA manual to the SAHRC.

After completion of the PAIA manual, the head of the organisation must initial each page of the manual and sign in full on the last page.

An original signed hard copy of the PAIA manual must be posted to the SAHRC’s PAIA unit. Signed PAIA manuals may be submitted via email, but an original signed hard copy must still be posted to the PAIA unit.

A note on requests for access to information in terms of the PAIA Act

Anyone and everyone cannot just request information from an organisation in terms of PAIA. A requestor must provide, amongst others, details like their identity, a postal address/fax number in South Africa, and the right which the requestor wants to exercise/protect with an explanation of how the requested information will assist in exercising/protecting that right. A private body has the right to refuse a request for information.

The drawing up of a PAIA manual can be of benefit to a business in more ways than one. While collecting the information to be included in the manual, shortcomings in certain systems or omitted reports which are required by law, for example, can be discovered. If not for the PAIA manual, the business would not have had the opportunity to discover and correct the shortcomings or omissions.

This article is a general information sheet and should not be used or relied upon 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. Errors and omissions excepted (E&OE) 

Reference List:

Documents published by the SAHRC on www.sahrc.org.za and accessed on 23 August 2015:

  •  Example of a manual for a private body
  •  Guidance notes: PAIA manuals
  •  Generic version of Section 51 manual for private bodies