Managing your finances after a pay cut


Strategies to somehow stay afloat facing a dire financial future: Interview with John Manyike from Old Mutual.

NOMPU SIZIBA: The Covid-19 pandemic and associated lockdowns have seen economies the world over suffer great economic hardship, with businesses losing revenue and some staff losing their jobs or having to take a pay cut. This is a nightmare scenario for any household, but the advice being given in the case of having to take a pay cut is that one should not panic. It will be difficult, but it may be possible to adjust if finances are managed properly.

Well, to share some tips with us, I’m joined on the line by John Manyike, the head of financial education at Old Mutual. Thanks very much, John, for joining us. What’s not entirely clear is the sort of quantitative impact that’s been wrought by the Covid-19 lockdown here in South Africa in terms of job losses, and our main topic of discussion today [June 7, 2020] – that of pay cuts. But for breadwinners, who’ve been advised that they’re likely to have to take a 20% or 30% cut in salary, for example, your first piece of advice is that they need to keep calm and not panic. Please explain.

JOHN MANYIKE: I think it’s devastating news – a salary cut. It’s as scary as retrenchment itself. So one can appreciate the fact that we have a lot of working class people, who are literally living from hand to mouth. You can tell because, if they were not paid for one month, for many South Africans it can take months if not years to actually recover from this. So that’s why it’s important, firstly, to do the work on your mindset if something like that were happen. There are certainly a couple things that can be done. And I think there’s [some comfort] one can take from the fact that government has made some announcements about having introduced the Temporary Employer/Employee Relief Scheme.

So then, because you have the Unemployment Insurance Fund, you are encouraged to file your claim against the UIF directly with your employer. You don’t have to go straight to the Department of Labour. You actually sign a claim directly with your employer. In fact, the Department of Labour has encouraged employers to pay their workers, and then claim back against UIF to offset what they have actually paid employees. So that financial relief is the first thing.


JOHN MANYIKE: And then of course there’s the issue of having to deal with creditors. But I must say there are different banks, different credit providers, and different terms and conditions that relate to Covid life insurance. There are those that do cover their customers if there is a salary cut, to the extent that they cover that shortfall.

Then others might say well, there is a total loss, but it’s worth trying to enquire what the terms and conditions of your credit life insurance are with your credit provider. This is very, very important because, if you’ve don’t negotiate with your creditors, having enquired if you do have credit life insurance – those are two things to definitely consider, among other things.

NOMPU SIZIBA: I suppose one of the first things that one needs to do – instead of ducking and diving, like you say – is to go directly to the bank and communicate with them and see where [you] can get assistance.

JOHN MANYIKE: Absolutely. The ostrich syndrome is the worst thing that anybody can adopt – just burying your head in the sand, hoping that the trouble will just simply go away. No, you have to proactively speak to your credit provider to explain what the situation is, and possibly even show them the letter from your employer so that some arrangements can be made for you.

But, unfortunately, it will have to come with some uncomfortable decisions to be made, because you have to also appreciate that you may not be able to maintain the same lifestyle, standard of living you had before your salary cut.

And that’s why having a conversation with your family is also important, especially for those who know that they are taking care of their immediate family, as well as their extended family. We do have a lot of that in our country. So it’s important to take your family into your confidence to the extent that you manage their expectations. If there are certain things that you could do before, when you know that you are not going to be able to be going forward, it’s a great way to do that, I must also hasten to add that speaking to your financial advisor is equally important, so look at how you restructure your policies in terms of the covers that you have, including your short-term insurance. These are among other things that I believe would be very, very necessary.

One of my favourite tips that I encourage people to do, because I know people get devastated when they hear they are going lose their job or have a salary cut. But the issue is, [you could] really think long and hard about the possibility of identifying alternative streams of income. I mean, some of us have hobbies, and haven’t even thought of how we can monetise some of those hobbies. But being married to a certain income is not necessarily the solution. It might not work for everyone, but for those who are able to identify alternative streams of income it is definitely worth pursuing.

NOMPU SIZIBA: I suppose what you’re saying is it’s fair enough, but in these days of lockdown, John, it’s quite tough. But then I suppose there is the digital avenue as well.


Absolutely. Every crisis comes with its own opportunities. There are people who never used to manufacture the masks, or what we call PPE today. Now all of a sudden we have lots of people having to produce stuff around what is needed. It’s about identifying a gap, and then actually going for it.

But I don’t think we would have done justice to this topic without mentioning the need to re-prioritise your budget, because it all starts with a budget. You need to make some tough decisions around what stays and what goes. And I think that’s where the game-changer is going to come from.

NOMPU SIZIBA: Give us some ideas. Sometimes it’s difficult to think out of the box.

JOHN MANYIKE: I do believe, depending on the severity of the salary cut, in some instances it might even mean having to downscale, perhaps even the house that you live in. If you’re lucky enough, you might even make a profit out of that house because, with the low interest rates, it might be much easier to find a buyer and rather find something much cheaper – just for you to recover. You will rebuild your life to get back to your glory days. That’s definitely something to look at.

I think the same with a car, if you have to. But even having to change schools for your children. If your children are in a private school and if the conditions dictate that you make some drastic decisions to the extent that you have to move into a public school, so be it.

Those are some of the tough decisions that people have to make. I know that it’s very difficult. I cannot imagine myself living a different lifestyle. But unfortunately we have to respond to what’s happening.

NOMPU SIZIBA: We’ve discussed this before, but it’s also a mindset thing. No one can really afford in these days to be trying to keep up with the Joneses or with the Ndlovus.

JOHN MANYIKE: Absolutely. I think you just have to make peace with it.

You don’t owe anybody an expensive car or an expensive house. You make a decision that suits you and your family for the sake of your wellbeing.

NOMPU SIZIBA: Super. John, we’re going to leave it there. We’ve run out of time, but thank you so much for your insights.

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)

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The rules around returns and refunds during South Africa’s lockdown


The Consumer Goods and Services Ombudsman (CGSO) says it has received several complaints relating to returns and refunds during the level 4 lockdown.

The ombudsman said that the majority of complaints have centred around clothing, and that some clothing suppliers are not allowing fittings or returns.

“Lockdown-related returns policies must be judged against the very real health concerns regarding the spread of the virus and measures to mitigate this,” said CGSO ombudsman Magauta Mphahlele.

“The CGSO fully understands why suppliers would want to limit the fitting and return of clothing because of the potential of the virus to be spread.

“However, a balance must be struck between the very necessary measures required to minimise the spread of the virus and compliance with the Consumer Protection Act (CPA).”

Mphahlele said that in terms of the CPA, suppliers of goods and services have the right to implement their own returns and refunds policies as long as these do not breach the general right to choose and examine goods provided for in section 18 of the CPA, and the right to return goods provided for in sections 20 and 56 of the CPA.

“At the same time, the pandemic and the resulting lockdown restrictions to curb its spread presents new challenges that are not necessarily fully provided for in current laws,” she said.

“In the absence of clear legal directives, we must find a middle ground that will allow for the management of the spread of the virus and taking care of consumers’ rights.”

Returns and refunds under the lockdown

Mphahlele said that section 20 of the CPA states that if a consumer walks into a clothing store and buys clothing without fitting them, the store is under no legal obligation to accept the return of the clothing as long as the clothing or any other goods are not defective.

“In this instance, the consumer was allowed to exercise the discretion whether to fit or not so the suppliers cannot be held liable if the clothes do not fit or the consumer changes their mind for any other reason,” she said.

“However, where the supplier specifically prohibits fitting then there would be a possible contravention of the CPA as section 18 of the CPA accords the consumer the right to choose and examine goods displayed for sale to ensure that they are fit for purpose.”

Where the consumer was accorded the right to choose and examine goods and the goods are not defective, suppliers can set their own refunds and returns policies, she said,

“Currently for change of mind returns – eg clothes not fitting etc – some suppliers would require that clothing be returned within a specific number of days, with the price tag attached and a receipt. Some will have a no returns and refunds policy.

“These types of policies fall outside the ambit of the CPA and are entirely up to suppliers.”

Mphahlele noted that fitting, returns and refunds are not allowed for some items where public regulation prohibits such.

In terms of section 20(3)(a) of the CPA, the consumer has no right of return if, for reasons of public health, a public regulation prohibits the return of those goods, she said.

“While there are valid public health concerns regarding the spread of the virus, the CGSO is of the view that it may be possible to mitigate this risk by allowing fitting and returns under strict health conditions to accord the consumer the right to ensure that the clothes are fit for purpose and minimise the need for clothes to be returned.

“Without allowing consumers to fit, it is difficult to see how a no-return policy can be justified, even under lockdown.”

Online purchases

When purchasing through online platforms, Mphahlele said that it is important to note that the provisions of the CPA and the Electronic Communications and Transactions Act (ECT).

Section 44 of the ECT, as well as section 18(3) of the CPA, require goods that are bought on the basis of a sample or a description to fit the sample and description when delivered.

If not, the consumer has a right of return and refund,Mphahlele said.

“At the same time, section 44 of the ECT Act allows the right to return goods without reason within 7 days of receipt of the goods. To minimise disputes, it is important that consumers are well informed about any new lockdown return and refund policies.

“The FAQs on websites and other online platforms should be updated to cover these new policies.

“The new policies should also be prominently displayed in-store and on other platforms so that consumers can make informed decisions prior to purchasing.”

Mphahlele said that clear directives on the safe handling of goods to minimise the spread of the virus should be communicated including any measures that the suppliers will implement to disinfect returned clothing.

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)

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The implications of Covid-19 on audits and auditors


The Independent Regulatory Board for Auditors (IRBA) has issued a newsletter relating to the Implications of the Covid-19 outbreak on audits and audit risks.

“This outbreak presents an opportunity for the audit profession to reflect on the recognition of its public interest responsibility, and to demonstrate its independence and resilience to external factors. Auditors should continue to apply the fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour,” says Bernard Agulhas,(former) CEO of the IRBA.

Key areas of guidance include:

  • The Covid-19 outbreak may disrupt the business operations of entities and the financial reporting process may also be impacted. Auditors should proactively discuss these matters with clients to understand whether there is an impact on the client’s reporting timetable and the audit processes.
  • With the Covid-19 outbreak, auditors may need to reassess the risks of material misstatement of the financial statements, as the information on which the initial risk assessment was based may have changed. For audits in progress, auditors should evaluate the impact and may need to revise their risk assessments and modify further planned audit procedures in accordance with ISA 315 (Revised).
  • Due to the travel restrictions and various working arrangements, auditors may have difficulties with accessing client premises to perform audit procedures; and/or may not be able to obtain the sufficient appropriate audit evidence.
  • For group audits, component auditors in affected countries may encounter difficulties in obtaining sufficient appropriate audit evidence, which may cause significant delays in the completion of component audits. In addition, the group engagement team members may not be able to travel to affected countries to review the work papers of significant components. The group engagement team is, however, responsible for obtaining sufficient appropriate audit evidence to form the group audit opinion. The group engagement partner is responsible for the direction, supervision and performance of the group audit engagement.
  • The Covid-19 outbreak has caused, and has a potential to cause, a significant impact on some entities’ economic conditions, which may affect the assessment of the entity’s ability to continue as a going concern. Auditors are responsible for obtaining sufficient appropriate audit evidence regarding, and have to conclude on, the appropriateness of management’s use of the going concern basis of accounting in the preparation of the financial statements; and to conclude, based on the audit evidence obtained, whether a material uncertainty exists about the entity’s ability to continue as a going concern.
  • Auditors may also consider the impact of events that occur after the date of the financial statements, in terms of ISA 560. Auditors may consider the financial reporting and disclosure requirements for the material impairment of assets or businesses as a result of the Covid-19 outbreak.
  • Auditors may also consider the impact of Covd-19 on the auditor’s responsibilities relating to accounting estimates, including fair value accounting estimates and related disclosures in the audit of the financial statement, in terms of ISA 540 (Revised).

In addition to the above areas, auditors may also consider the implications for the auditor’s report.

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)

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All taxpayers beware – 10 points from SARS


On 5 May 2020, the commissioner for the South African Revenue Service (SARS) provided a detailed account of projected revenue collection in light of the Covid-19 crisis, along with insight of what we can expect from the tax collector in coming months.

Jean du Toit, head of tax technical at Tax Consulting SA, unpacked the most important aspects of Edward Kieswetter’s address below:

  • Pensive statement – the first thing many would notice is how comprehensive this statement is, and it is clear the Commissioner poured a lot of thought into it.

Arguably it was not incumbent for him to go to such lengths, but it reveals the gravity of the message he wanted to convey and also the context to what taxpayers may experience from SARS in the coming months.

  • SARS officials returning to work – following a period where SARS operated with staffing levels of between 15 and 30%, its employees will now start returning to work – to meet taxpayer demands and, most importantly, to deliver on its mandate to collect revenue, said Du Toit.
  • Grim economic outlook – with a struggling economy pre-Covid-19, the credit rating downgrade and the prevailing crisis it is anticipated that our economy will contract by between 5.4% and 16%.

“Frankly this is a staggering statistic, but a crisis of this magnitude has a devastating snowball effect where we end up with less participants in the economy on the one hand and more being reliant on government support on the other,” said Du Toit.

  • Decreased revenue collection – April yielded a significant decline in revenue collection from the previous year, totalling a drop of R9 billion (-8.8%). The slide was experienced across all tax types – PAYE (-5.2%); domestic VAT (-4.3%); overall import tax (-19.7%); specific excise duties (-54%); and CIT (-55.4).

“SARS does not expect our fortunes to change any time soon and estimates that revenue collection could be R285 billion below the amount projected in the budget in February,” said Du Toit.

  • Job losses and failing businesses – SARS looked at the tax directives finalised during April which reveals that over 20 000 employees were retrenched during April.

“According to figures sourced from STATS SA, prospects for businesses look equally dire – liquidations increased by 12.3%, 46.4% of businesses have temporarily closed their doors and 54% of businesses predict they could not survive beyond the three-month mark of the pandemic.”

  • An improved SARS – it seems we are dealing with a vastly improved SARS. The institution has shown its agility in operating effectively during these times, whilst observing the spirit of the lockdown. SARS also used this time smartly to improve the integrity and effectiveness of their systems.

“It is clear the commissioner appreciates the challenge that lies ahead and he and those around him have developed a clear 3-step plan to enforce compliance and optimise revenue collection in the coming months,” said Du Toit.

  • Third party information – the Commissioner made it clear SARS will rely more heavily on information sourced from banks, employers, financial services companies who administer retirement funds and insurance schemes to assess taxpayers.

“It will also use information available from the population register, the companies register and the Deeds Office to triangulate taxpayer information.

“This is an encouraging initiative, as these sources were vastly underutilised in the past. Items such as rental income not disclosed will be easily detected if SARS compares its records with that of the Deeds Office,” the tax expert said.

  • Aggressive enforcement – the statement does not expressly warn taxpayers of this, but with the current permutations, SARS’ hands are tied; it has no choice but to extract every penny from the tax base. With the exigence to collect taxes and enhanced capacity, we are expecting more audits and a tougher SARS in the coming months.

“Those who historically had the nerve to try their luck with SARS should think carefully before they choose to run the gauntlet again this year,” said Du Toit.

  • Individual wealth no. 1 on the list – all tax types are under-performing as a result of the pandemic, but some will be under more pressure than others. Businesses are collapsing, with more to follow, and those who manage to stay afloat may report losses for the foreseeable future, which means corporate income tax will fall sharply.

The contraction in the economy and the restriction of many activities mean less transactions which impacts heavily an VAT. The same rationale applies to imports and exports where customs revenue will see a significant drop, not to mention the loss in excise duties from the prohibition on sales of alcohol and tabacco.

“This leaves us with personal income tax where we will see a decline but perhaps not as piercing. The over-taxed minority will potentially face an even heavier burden this season, as SARS will have to extract all it can from those with the means to contribute. SARS will no longer shut its eyes to trust structures, rental properties and offshore assets,” said Du Toit.

  • Commissioner’s report card – Edward Kieswetter closed off by reflecting on his first year as Commissioner. Lest we forget, when he assumed his position, SARS faced a serious breakdown of governance and integrity, with structures and employee relationships left festering.

“From our perspective, the commissioner is dedicated to serving a higher purpose and he has a clear vision on what he wishes to achieve, which is to restore SARS as a respected institution that serves compliant taxpayers as it should, whilst being equally tough on transgressors.

“Thus far, we have seen positive initiatives being rolled out in achieving this vision and while the wheels may turn slowly, SARS appears to be on the right track,” said Du Toit.

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)

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What good leaders do in a time of crisis

B3As part of Saica’s  Leadership in a time of crisis webinar series, CA(SA) and CFO of Discovery Health, Brett Tromp, shared his thoughts on what good leaders can do in a time of crisis.  

Brett Tromp 

In good times, a leader’s role is straightforward: keep your company afloat, your staff employed, and your customers satisfied. It’s during a crisis that your role as a leader is really tested. With a successful track record as a CFO and over 15 years’ experience in handling all aspects of financial management and managerial functions, Brett Tromp is perfectly positioned to share his thoughts on what good leaders can do in a time of crisis.

1. Find your why

“Many years ago, my coach gave me a book that would ultimately change my life,” says Tromp. “That book was Man’s Search for Meaning, by Holocaust and concentration camp survivor, Viktor Frankl.”

Tromp goes on to explain that, according to Frankl, our primary motivation is our will to find meaning in life. “There’s never, in our lifetime, been a more important time than now to figure out why we are here – to figure out what is your why.”

For Tromp who loves to mentor people, it’s very important for leaders to find and hang onto their why. “Your why is deeply intrinsic to you as a person,” he explains. “Without a why, a purpose, difficult times become very confusing for people, and so your why becomes the guiding light as you move through these critical times. While the way we do things may change after this pandemic, our why is a constant, which is why it’s so imperative we not only find our own why, but also help the people we lead to find theirs. This is probably the most important message I can give you,” says Tromp.

2. Be sensitive

Now, more than ever, it is important to lead with tolerance, says Tromp. “People are scared and uncertain, and isolation leads them to behave in ways they wouldn’t necessarily behave. Now is not the time to get angry or to criticise them.”

Tromp advises putting yourself in other people’s shoes and assessing what you would have done in the same situation. “Nobody is doing a perfect job, because perfect is impossible in the best of times and especially right now. I’m also not suggesting blind, naive leadership, but rather that you ask constructive questions, support your staff and be tolerant and patient.”

Tromp advises growing a thicker skin, while simultaneously being more sensitive to what people are feeling and helping them through this uncertain time.

3. Communicate clear, reliable information

“The amount of fake news and data out there about coronavirus is terrifying, and from a healthcare perspective, it sometimes seems there is more fake news than real information,” says Tromp. “It’s your job, as a leader, to share only real facts.”
For Tromp, part of being a leader is to wave through all the noise, and arm people with relevant information to help them make the right decisions and move forward. Tromp advises leaders to not just share something by passing it on. Leaders need to double check information before sharing it.

4. Help those in need

There is so much need at the moment, and wherever we look, people are struggling. “Whether it’s in the small business space, in informal settlements, or around the issue of food, there’s never been a better time for leaders to step up and rally their people to help others,” says Tromp.

This has been a unique time in our country where we’ve seen people across all races, ages and political parties, rally together to help South Africa’s people. “It feels very liberating,” says Tromp. “I really believe helping others brings out the best in a person.”

Tromp believes we have been given a unique opportunity to make South Africa a better place. “As leaders we have this opportunity and responsibility. It is time for those with more, to share and give away. A time to lead, to give, to take responsibility and to help others.”

For Tromp, while the pandemic is a terrifying and distressing situation, it is also exciting. “We have to come up with new, innovative ways to lead and help people. This is bigger than ourselves and we shouldn’t be fearful. Continue reminding yourself of your why and helping your team members find their why – then we will navigate this time together.”

He also suggests you ask yourself how you will be judged when this is over. “Look at our President. He will be remembered for his swift, clean, smart leadership, and for saving thousands, potentially hundreds of thousands of lives,” says Tromp. “What type of person, company, leader do you want to be seen as after this pandemic is over?”

Practical changes Discovery has made

Tromp shares three changes Discovery has made that show strong and compassionate leadership: 

1. Staff come first.

The most important issue for us, is to make sure our staff are taken care of. While 80% of our staff can work from home, we have ensured the other 20% are kept safe. We maintain safe distances at work, give free lunch to everyone who comes in, and arrange taxis so they don’t need to take public transport. Take care of your staff during this time and the rest will follow.

2. Increased communication.

In the absence of physical presence, we are ensuring our communication is spot-on. Our local Executive Committee moved from weekly meetings to daily meetings. Most meaningful for me, is that every day at 2pm one of our staff does an internal webcast for the rest of the company. Adrian Gore did the first one, and we have alternated since then. The important thing for us is to be transparent, open and honest, and to keep everyone updated at all times.

3. Staying relevant.

We are focusing on areas where we can be more relevant, where our business can really impact its members and the country. 

To help address the challenges faced by many, Saica is hosting a complimentary virtual leadership series called Leadership in a time of crisis. This series focuses on various elements affecting individuals, businesses and the profession as a whole during the Covid-19 pandemic. Previous sessions in this series have been recorded and can be viewed on Saica’s events page.

About Saica

The South African Institute of Chartered Accountants (Saica), South Africa’s pre-eminent accountancy body, is widely recognised as one of the world’s leading accounting institutes. The Institute provides a wide range of support services to more than 50,000 members and associates who are chartered accountants [CAs(SA)], as well as associate general accountants (AGAs(SA)) and accounting technicians (ATs(SA)), who hold positions as CEOs, MDs, board directors, business owners, chief financial officers, auditors and leaders in every sphere of commerce and industry, and who play a significant role in the nation’s highly dynamic business sector and economic development.

Saica Media Contacts
Kulani Chauke
Communication Coordinator: Corporate
Saica Brand Division
011 479 0698 

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)

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SARS is changing the tax filing season due to the coronavirus – here’s what you need to know

B4The South African Revenue Service (SARS) has outlined changes to the coming tax filing season due to the impact of the coronavirus. 

In a presentation on Tuesday (5 May), SARS commissioner Edward Kieswetter said that the season will be comprised of three phases with a number of key changes being made. 

Below he outlined the phases and what will be expected of taxpayers and companies over each period. 

Phase  1 – Employer filing 

15 April 2020 – 31 May 2020 

Kieswetter said that compliance by employers in respect of payroll taxes (PAYE) is very important, and that there will be a renewed focus at SARS to ensure that all employers are fully compliant in terms of their filing and payment obligations. 

“We expect all employers to fully comply because this ensures a much lower burden of compliance for their employees in respect of their filing obligations. 

“Employers are legally appointed agents on behalf of SARS. We remind employers that it is a criminal offence to collect income tax from their employees, and not pay this over to SARS. 

“We also appeal to employers, along with other providers of third-party information to fulfil this requirement by the end of May 2020.” 

Kieswetter said that third-party Information allows us to use data modelling and artificial intelligence to perform the final assessment of all standard taxpayers and provide the majority of individual taxpayers with a seamless filing experience. 

Third-party providers include: 

  • Employers;
  • Banks; 
  • Financial Service Companies who administer retirement fund and pension schemes; 
  • Medical Savings and insurance schemes. 

Phase 2 – Tax file updates 

1 June – 31 August 2020 

During this period taxpayers are requested to engage with SARS to ensure that their tax files are up to date, in terms of general hygiene checks, banking details, address changes, Kieswetter said. 

He added that most of these tasks can be completed online. 

“All outstanding third party information will also be followed up during this period to ensure the highest level of data integrity. Third-party data providers, including employers, who remain wilfully non-compliant will be charged criminally during this period. 

“During this phase a significant number of taxpayers will receive auto-assessments and given an opportunity to confirm their acceptance of the assessment outcome according to SARS.” 

Kieswetter added that during phase 2, individual taxpayers who are required to file but have not been auto-assessed may file early via online facilities if their employers and other third-party data providers are fully complaints (which includes no PAYE debt without a proper and secure deferment arrangement). 

Individuals who are not required to file will be informed, he said. 

Phase 3 – Employee filing  

1 September – 31 January 2021 

Kieswetter said that during this phase, individuals who are required to file will be reminded. 

“Individuals who are non-provisional taxpayers or have not accepted the outcome of an auto-assessment are required to file as from 1 September through to 16 November 2020 and encouraged to file using our on-line channels to minimise visits to our offices. 

“Individuals who are non-provisional taxpayers, who make use of our Branch facility has until the 22 October 2020 to file. 

“Provisional Taxpayers who have not accepted the outcome of an auto-assessment are required to file when they are ready but not later than 31 January 2021.” 

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)

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COVID-19 and downgrades: Director’s duties unpacked

B2At the same time as grappling with a nationwide lockdown to curb the spread of COVID-19, South Africa’s credit rating was also downgraded to below investment grade by Moody’s. This is likely to only further depress an already weakening economy, with high unemployment levels and poor socio-economic conditions. 

These deteriorating conditions will bring the governance of companies and businesses into sharp focus and will test the decision-making process and resilience of companies on the edge.

In terms of the Companies Act 71 of 2008 , the board of directors is ultimately responsible for guiding and managing the company, and as such would be the body vested with the responsibility of ensuring that the company emerges from a crisis of the nature currently facing South Africa.

In formulating their response to crises such as COVID-19 and South Africa’s credit rating downgrade, directors will be required to adhere to their common law and codified duties set out in the Companies Act. These duties require that directors act: 

  • in good faith and for a proper purpose; and 
  • in the best interests of the company; and 
  • with the degree of care, skill and diligence that may reasonably be expected of a person carrying out the same functions in relation to the company as carried out by that director, and having the general knowledge, skill and experience of that director. 

A director will have satisfied these obligations if the director: 

  • has taken reasonably diligent steps to become informed about the matter; and 
  • has no material personal financial interest in the subject matter of the decision; and 
  • has a rational basis for believing and believed that the decision was in the best interests of the company. 

The use of the reasonableness standard requires an objective assessment of directors’, which should also take account of the current climate and circumstances in which directors are operating.

Directors must also perform their duties within the ambit of the statutory obligations set out in the lockdown regulations issued in terms of the Disaster Management Act, 2002 and all other applicable areas of law such as employment, health and safety and data protection.

In the face of these crises, directors are advised to: 

  • Remain informed of government regulations and directions concerning the lockdown and the Covid-19 pandemic. If they are not clear about the way decisions from government might impact their business continuity, they should seek advice; 
  • Prepare and manage a plan and/or strategy to enable operations of the company (to the extent possible) during the lockdown, including remote working capabilities. Consider the impact on employees who are not able to work remotely as well as data privacy and cyber security issues resulting from remote working; 
  • Convene regular meetings or check-ins with executive team members and all the directors of the board by tele/video conference to remain informed about business impact and continuity; 
  • Monitor compliance with financial covenants contained in any arrangements with lenders; 
  • Consider the impact of the crisis on their companies’ contractual obligations (particularly those that cannot be met for reasons beyond the companies’ control); 
  • Ensure frequent communication with stakeholders, including regulators, shareholders, employees, lenders and suppliers and advise them of steps being taken to ensure business continuity; 
  • Ensure that appropriate leadership succession plans are in place in case key leaders of the business are taken out of their normal working routines due to illness. 
  • Consider the impact of decisions taken by the board on the interests of employees, suppliers and creditors; and 
  • Keep proper minutes of meetings held and decisions taken. 

Directors should also continuously monitor the solvency and liquidity of their companies, by, amongst other things, considering trading and cash flow projections to take account of the impact of the lockdown and the downgrade and the potential changing trading position of their companies. Where possible and appropriate, the directors should not approve the incurrence of any new liabilities, unless it is clear how any such liabilities are going to be met. In terms of the Companies Act any director may be held liable for loss, damages or costs sustained by the company as a direct or indirect consequence of the director: 

  • having acquiesced in the carrying on of the company’s business despite knowing that it was being conducted recklessly, with gross negligence, with intent to defraud any person or for any fraudulent purpose; and 
  • being party to an act or omission by the company despite knowing that the act or omission was calculated to defraud a creditor, employee or shareholder of the company or had another fraudulent purpose. 

In light of the lockdown regulations, the Companies and Intellectual Property Commission (CIPC) issued Practice 1 of 2020, which provides that the CIPC will not invoke its powers under the Act, to issue a notice to a company that is temporarily insolvent and still carrying on business or trading, provided that the insolvency is due to business conditions caused by the COVID-19 pandemic. This leniency lapses within 60 days after the declaration of a national disaster is lifted. This practice note does not (and is not able to) suspend, amend or override the provisions of the Companies Act, that a company must not carry on its business recklessly, with gross negligence, with intent to defraud any person or for any fraudulent purpose. The fact that CIPC will not exercise its powers under section 22 of the Companies Act does not absolve companies and boards from the requirements of the Companies 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)

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Further tax measures to provide support

B1Finance Minister Tito Mboweni has provided more details on the second set of measures that are aimed at assisting individuals and businesses through the COVID-19 pandemic. 

“There is a critical need for government interventions to assist with job retention and support businesses that may be experiencing significant distress,” the National Treasury said in a statement on Thursday.

Last month, Mboweni announced the initial measures to assist tax compliant businesses with cash flow assistance and provide an incentive for businesses to retain their lower-income employees.

“Since the announcement, economic conditions have worsened and National Treasury and the South African Revenue Service (SARS) have received a large number of requests for assistance, including requests from large businesses that are also experiencing substantial cash flow difficulty.

“National Treasury recognises that the short-term interventions announced in the first fiscal package do not go far enough in assisting businesses or households through the crisis – especially as the lockdown has since been extended,” National Treasury said.

These measures are in line with the recent President’s address to the nation on further economic and social measures in response to the COVID-19 pandemic. The measures will help businesses focus on staying afloat and paying their employees and suppliers.

“Assisting businesses now will ensure that our economy is in a better position to recover once the health crisis starts to subside. If businesses survive this testing time, the economy will be better placed to strive collectively towards economic growth that is inclusive (providing more opportunities for employment) and revenue generating (so that we are able to work towards improving the state of our fiscus),” National Treasury said.

The measures are expected to provide around R70 billion in support, either through reductions in taxes otherwise payable or through deferrals of tax payments for tax compliant businesses. 

The interventions include: 

  • Skills development levy holiday: From 1 May 2020, there will be a four-month holiday for skills development levy contributions (1 per cent of total salaries) to assist all businesses with cash flow. This provides relief of around R6 billion. 
  • Fast-tracking of value-added tax (VAT) refunds: Smaller VAT vendors that are in a net refund position will be temporarily permitted to file monthly instead of once every two months, thereby unlocking the input tax refund faster and immediately helping with cash-flow. Sars is working towards having its systems in place to allow this in May 2020 for Category A vendors that would otherwise only file in June 2020. 
  • Three-month deferral for filing and first payment of carbon tax liabilities: The filing requirement and the first carbon tax payment are due by 31 July 2020. To provide additional time to complete the first return, as well as cash flow relief in the short term, and to allow for the utilisation of carbon offsets as administered by the Department of Mineral Resources and Energy, the filing and payment date will be delayed to 31 October 2020, providing cash flow relief of close to R2 billion. 
  • A deferral for the payment of excise taxes on alcoholic beverages and tobacco products: Due to the restrictions on the sale of alcoholic beverages and tobacco products, payments due in May 2020 and June 2020 will be deferred by 90 days for excise compliant businesses to more closely align tax payments through the duty-at-source system (excise duties are imposed at the point of production) with retail sales. This is expected to provide short term assistance of around R6 billion. 
  • Postponing the implementation of some Budget 2020 measures: The 2020 Budget announced measures to broaden the corporate income tax base by (i) restricting net interest expense deductions to 30 percent of earnings; and (ii) limiting the use of assessed losses carried forward to 80 percent of taxable income. Both measures were to be effective for years of assessment commencing on or after 1 January 2021. These measures will be postponed to at least 1 January 2022. 
  • An increase in the expanded employment tax incentive amount: The first set of tax measures provided for a wage subsidy of up to R500 per month for each employee that earns less than R6 500 per month. This amount will be increased to R750 per month at a total cost of around R15 billion. 
  • An increase in the proportion of tax to be deferred and in the gross income threshold for automatic tax deferrals: The first set of tax measures also allowed tax compliant businesses to defer 20 percent of their employees’ tax liabilities over the next four months (ending 31 July 2020) and a portion of their provisional corporate income tax payments (without penalties or interest). The proportion of employees’ tax that can be deferred will be increased to 35 percent and the gross income threshold for both deferrals will be increased from R50 million to R100 million, providing total cash flow relief of around R31 billion with an expected revenue loss of R5 billion. 
  • Case-by-case application to Sars for waiving of penalties: Larger businesses (with gross income of more than R100 million) that can show they are incapable of making payment due to the COVID-19 disaster, may apply directly to SARS to defer tax payments without incurring penalties. Similarly, businesses with gross income of less than R100 million can apply for an additional deferral of payments without incurring penalties. 

The following tax measures aim to assist individual taxpayers and to provide financial backing from the fiscus to donate to the Solidarity Fund: 

  • Increasing the deduction available for donations to the Solidarity Fund: The tax-deductible limit for donations (currently 10 percent of taxable income) will be increased by an additional 10 percent for donations to the Solidarity Fund during the 2020/21 tax year. 
  • Adjusting pay-as-you-earn for donations made through the employer: Employers can factor in donations of up to 5 percent of an employee’s monthly salary when calculating the monthly employees’ tax to be withheld. An additional percentage that can be factored in of up to 33.3 percent, depending on the employee’s circumstances, will be provided for a limited period for donations to the Solidarity Fund. This will lessen cash flow constraints for employees who donate to the Solidarity Fund. 
  • Expanding access to living annuity funds: Individuals who receive funds from a living annuity will temporarily be allowed to immediately either increase (up to a maximum of 20% from 17.5%) or decrease (down to a minimum of 0.5% from 2.5%) the proportion they receive as annuity income, instead of waiting up to one year until their next contract “anniversary date”. This will assist individuals who either need cash flow immediately or who do not want to be forced to sell after their investments have underperformed. 

The above measures will be given legal effect in terms of changes to the two bills mentioned in the Media Statement issued on 29 March 2020 – the Draft Disaster Management Tax Relief Bill and the Draft Disaster Management Tax Relief Administration Bill.

The draft bills alongside their draft explanatory memoranda, will be published for public comment on the National Treasury ( and Sars ( websites by 30 April 2020. 

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)

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Cars, pets and summer holidays


The missing piece in many personal budgets.

Having a budget is one of the most useful ways to stay in control of your finances. It not only helps to keep your spending below your income, but also allows you to appreciate whether you are spending on the right kinds of things.

In its simplest form, a budget requires you to take your income, and spread it between your expenses. That should also include setting some aside for your long term investments.

However, the problem with most budgets is that while they do a good job of tracking ongoing expenses like your bond repayments, petrol and groceries, they don’t consider your future expenses. These are easily overlooked, but shouldn’t be ignored.

Be prepared

Consider, for example, your car, which needs to be serviced every year. That cost is not an expense that occurs every month, but when it arrives can run to a few thousand rand.

On a more significant scale, you may need to buy a new car at some point. You could, of course, use credit for that, but that would mean spending a lot more on something that, with time, will become worth less and less.

Think of it like a business that knows that certain large expenses are inevitable.

A lodge, for example, is aware that it has to replace its beds every few years. A well-run operation will ensure that money for those beds is accumulated over time so that when the point is reached that they actually need to be bought, the funds are already available.

Just because this is an expense that is only going to occur some time in the future doesn’t make it any less significant. In fact, it may be more so, because having to find a few thousand rand for a once-off cost can throw off the rest of your budget entirely.

Don’t call 911

Catering for these sorts of things is not the same as having an emergency savings fund. While that is a crucial safety net, it should be used for large, unexpected expenses, such as having to replace your car’s gearbox or an unexpected medical procedure not covered by medical aid. In a worst-case scenario, it should protect you if you lose your job by covering all of your expenses for a few months.

Future expenses, on the other hand, are things that you know are coming.

In some instances, budgets do plan for them. Putting aside something every month into a fund for a child’s education, for instance, is a priority for a lot of people.

Holidays are also something that many people are keen to save towards. Saving for a trip over a whole year not only allows you to have a more accurate idea of what you can actually afford, but takes away a lot of the angst of having to use credit.

There are, however, many other things that could be planned for financially. These include your pets’ annual check-ups and vaccinations, repainting your house, attending training courses for professional development, having a baby, and Christmas spending.

Help yourself

The list will differ from individual to individual, and household to household, but if there is something that you know is going to require an outlay of cash at some point, it is a good idea to prepare for it.

The way to do this is to identify the major expenses that you anticipate in the future, and create a ‘sinking fund’ for each of them.

This is a savings vehicle that you add to every month, with the goal of reaching the required amount to cover the cost at the time at which it arrives.

For instance, if you know that taking your pets to the vet for their annual visit costs you R1 800, then you should budget to put away R150 every month. Then, when the date arrives, the money is already available and you don’t need to upset your budget or use credit to handle it.

On a larger scale, if you know that you will need to buy a new car in three years’ time, identify what you are likely to want and project how much it will cost at that point. This could be, for example, R300 000. If you are able to trade in your current vehicle for R120 000, that means that you need to have saved R180 000, or R5 000 a month for 36 months.

Doing this will not only ensure that you are actually considering all of your expenses, but also save you a lot of money by avoiding unnecessary debt. And for that, it is certainly worth the effort.

Patrick Cairns  /  27 January 2020 00:04

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)

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Government increases tax-free cap on foreign income


The concept of emigration is to be replaced by a verification process.

South Africans who are working and living abroad have been given some relief with a slight increase in the tax-free cap on their foreign earnings.

National Treasury introduced a R1 million limit on the tax-free amount that South African tax residents can earn abroad. This limit has now been lifted to R1.25 million. The change is effective from next month.

South Africans who have been living abroad for many years have increasingly opted to emigrate or to break their ties with the country in an effort to avoid paying more tax in SA.

Finance Minister Tito Mboweni said in his budget speech that government wants to encourage South Africans abroad to keep their ties with the country.

He also announced that it will be phasing out the “administratively burdensome” process of emigration through the South Africa Reserve Bank.

The concept of emigration is to be replaced by a verification process. Tax residency for individuals will continue to be determined by the ordinarily resident and physically present tests as set out in the Income Tax Act.

SA is one of several countries who committed to sharing taxpayer information with regards to their bank accounts and investments. In this way the South African Revenue Service (Sars) will be able to get access to information relating to South African tax residents’ income outside of the country to ensure that they pay “the appropriate level of tax”.

In the 2020 Budget Review government proposes to remove the exchange control treatment for individuals, while strengthening the tax treatment.

“The intention is to allow individuals who work abroad more flexibility, provided funds are legitimately sourced and the individual is in good standing with the South African Revenue Service.”

Individuals who transfer more than R10 million offshore will be subjected to a more stringent verification process. The focus will be on the source of the fund and the transfers will trigger a risk management test that will include certification of the individual’s tax status.

There must also be the assurance that the individual complies with anti-money laundering and countering terror financing requirements. This will be phased in by March 1, 2021.

Restrictions on emigrants – such as the restrictions on them being allowed to invest, and the requirement to only operate blocked accounts, to have bank accounts and borrow in South Africa – have been repealed

Amanda Visser  /  26 February 2020 14:04

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)

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