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Dividend Withholding Tax

by Nicci - Posted 17 January 2012

Secondary Tax on Companies (STC) will be replaced by a Dividend Withholding Tax (DWT) as from 01 April 2012.    A company declaring and paying a dividend will be liable to withhold a dividend tax of 10% of the amount paid to a shareholder.   The amount must then be paid to SARS by the last day of the month following the month in which the dividend was paid.

A company does not need to withhold dividends tax if it receives a written declaration that the shareholder is entitled to an exemption from the tax.  

The new tax has extended the personal liability of directors of private companies though - directors are personally liable where the dividends tax is not withheld and paid by the company.

Dividends paid to the following entities are exempt from dividends tax::

1.    A company that is resident in South Africa.

2.    The Government or a Municipality.

3.    A Public Benefits Organisation.

4.    A rehabilitation trust.

5.    A Pension or Provident Fund or a registered Medical Scheme.

6.    A shareholder in a registered micro business.

7.    A shareholder that is a natural person and the dividend is a transfer of an interest in a residence (available until 31 December      2012).

 

 

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time is ticking...

by Ashley - Posted 02 December 2011

 

 
The deadline is fast approaching for businesses to submit their Promotion of Access to Information Act manuals. Should a business fail to submit their manuals on or before 31 December 2011 they may face the risk of a fine and/or imprisonment.
Which business must submit a manual?
In terms of the Promotion of Access to Information Act(“the Act”) all former and existing  sole proprietorships, partnerships, companies and close corporations are obliged to prepare and publish manuals which explain to the public what records that business holds and how to access those records.
The manual is a roadmap of the business and is commonly referred to as a Section 51 manual.
Who is responsible for ensuring that a business complies with its obligations in terms of the Act?
The Act refers to the head of a business which means it is either the natural person in the case of a sole proprietorship, a partner in the case of a partnership, the CEO of a company or the member of a close corporation, who is solely responsible for ensuring compliance.
What information should the manual contain?
Generally, the manual should include:
1.    The business postal, street and email address as well as a telephone and fax number;
2.    The description of available records generated by the business stating those which are automatically available and those that are available on request;
3.    Details outlining the request procedure;
4.    Details of the head of the business i.e. CEO, partner, managing member;
5.    Remedies available if a person’s request for information from the business is not met;
6.    Details facilitating a request for access to a record.
How and where are the Section 51 manuals submitted?
The Section 51 manual must be submitted to the Human Rights Commission head office. A copy of the manual may be submitted electronically but must be followed by a hard copy of the original.  

Should you require any assistance and/or simply a guide to preparing a Section 51 manual please do not hesitate to contact us on (021) 465-9175.  

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Public Officers

by Nicci - Posted 13 October 2011


THE ROLE OF A PUBLIC OFFICER

Every company carrying on business or having an office in South Africa must at all times be represented by an individual, the public officer,  who must be resident in South Africa.  If you are a director of a private company, or a member of a close corporation,  you may also serve as the entity's public officer.

The public officer, an appointment which is required in terms of Section 101 of the Income Tax Act 58 of 1962, is essentially responsible for representing the company in its dealings with SARS.   The individual must be appointed within one month after the company commences carrying on business or acquires an office in South Africa.  

It is a requirement of the Income Tax Act that the position of public officer must be kept filled at all times.  Such vacancies as may arise have  to be addressed by a company  as a matter of priority, by appointing a new public officer and notifying SARS of the change.  This must be done within fourteen days of the change occurring.   Section 101(4) of the Act provides that if there is no such appointment, the public officer of the company shall be the managing director, director, secretary or other officer of the company as the Commissioner for Inland Revenue determines.

The duties and responsibilities of the public officer include the following:

  • Managing the income tax affairs of the company, including the submission of tax returns, answering any questions or providing explanations which may be required to determine the tax liability of the company and  the payment of tax on behalf of the company.
  • The registration of the company as an employer.
  • The registration as a VAT vendor.

Individuals who serve as public officers should ensure that there is full compliance by the company with the requirements of SARS. 

The public officer is exposed to significant risk in carrying out his duties.  By signing returns, he is declaring that all the information provided therein is true.  Should it subsequently be found that this is not the case, the public officer may have action taken against him in his personal capacity.   If a company fails to comply with the requirements of the Income Tax Act,  the public  officer will be held responsible by SARS. 

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CIPC experiences teething problems

by Ashley - Posted 12 July 2011

The Companies and Intellectual Property Commission (CIPC), formerly known as CIPRO, was established pursuant to the New Companies Act which came into effect on 1 May 2011.

Since the get go the CIPC has been confronted with various problems ranging from its computer systems to its inability to deal with increased activity. These problems have caused havoc for companies and close corporations who wish to file their annual returns, some of which have already been deregistered for failing to meet the deadlines.

In light of these problems the acting commissioner of the CIPC has advised that the CIPC will waive the late filing fees and penalties for annual returns. The waiver is applicable to annual returns which become due during the period 1 April 2011 up to and including 31 March 2012.

In addition any company or close corporation which was and/or still is required to file their annual return during the period 1 April 2011 and 31 July 2011 will be given an additional 60 days to file their annual returns. This means that the CIPC will only be able to refer a company or close corporation for deregistration due to non-compliance after a period of 90 days and not 30 days.

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1 May for New Companies Act

by Nicci - Posted 21 April 2011

Its official...the DTI have announced that the new Companies Act will come into effect on 01 May 2011.   The Regulations, recently published on 20 April 2011,  can be found here.

 

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Extended tax relief for residential owning entities

by Nicci - Posted 09 October 2010

From 2002, the transfer of a residential property entity was treated by SARS as being equivalent to the transfer of a residential property, i.e.:

-transfer duty was payable by a purchaser buying a property owning CC or Company; and

-the Company was subject to tax on the transfer (Capital Gains Tax and Secondary Tax on Companies).

In 2009, SARS gave taxpayers relief from transfer duty in terms of which residential properties bought by the entity, including Trusts, could be transferred out free of CGT, STC and transfer duty.  An example is a Company which bought a property and its sole shareholder lives in it as his primary residence.  The purpose of the amendment was to eliminate unnecessary CC's, Companies and Trusts, when the sole asset owned by these entities is the residential property.

SARS has now extended the relief (Paragraph 51A to the 8th Schedule) with effect from 01 October 2010 and the extension applies to disposals of property made on or after that date and before 01 January 2013.

The requirements are:

a)the disposal must take place before 31 December 2012;

b)the residence is mainly used for domestic purposes by a family member who has ordinarily resided in the residence from 11 February 2009 to the date of disposal;

c)within six months of the disposal, the CC, Company or Trust must be liquidated, wound up or deregistered.

What happens if new shareholders buy the entity after it has bought the residential property?

Shareholder no. 2 will be allowed to transfer the property in terms of the new provision, provided:

a)that the property is the biggest asset in the entity; and

b)that 90% of the value of the shares is attributable to the value of the property.

 

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New Companies Act and Consumer Protection Act update...

by Nicci - Posted 03 October 2010

This week the implementation of both the 2008 Companies Act and the Consumer Protection Act were postponed to April 2011. This allows time for the various commissions provided for in the Acts to be created (the Companies Commission and the National Consumer Commission) and for the Regulations to be finalised, which will give businesses more certainty around what to prepare for in the months coming up.

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New Companies Act

by Nicci - Posted 25 March 2010

The new Companies Act, which comes into effect mid-2010, will have a significant impact on company law in South Africa.    Over the next few weeks, we will be highlighting areas of the Act which we believe could affect you and ways in which you can anticipate and prepare for these changes.

Topics we will be covering include:

a)      The importance of the Memorandum of Incorporation and the flexibility it gives shareholders and directors in structuring the way in which the company operates.

b)      Directors’ rights and duties.

c)       Shareholding:   different classes of shares, what rights do shareholders have?, what protection does a minority shareholder have against decisions made by the majority?, what happens to your shares on death/insolvency?,  to whom may you sell your shares?   What happens to the value of your shares if the company issues new shares?

d)      How does the Act affect Close Corporations?   Is it necessary to convert your CC into a Company?

e)      Administrative obligations and accountability.

f)       Business rescue.

Follow this link to the Act as well as the draft regulations published in January 2010.

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Annual Returns for CIPRO

by Nicci - Posted 15 January 2010

All Companies and Close Corporations have to complete and lodge annual returns to CIPRO on the anniversary month of its Incorporation.    If you don't lodge in time, a penalty charge of R150.00 is payable and failing to comply within 6 months may lead to the Registrar concluding that the entity is no longer in business and refer it to be deregistered.  

Registrar's fees payable (based on turnover):

Private Companies:            less than R10m                                     R  450.00

                                                above R10 less than R50m                   2500.00

                                                above R50m                                              4000.00

Close Corporations:           less than R50m                                          100.00

                                                above R50m                                              4000.00

 

                                             

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Proposed tax breaks for primary residences

by Nicci - Posted 06 October 2009

Individuals who own their primary residence in a Company, CC or Trust, can transfer their property into their own name/s without having to pay Capital Gains Tax, Transfer Duty or Secondary Tax on Companies from 11 February 2009 to 31 December 2012.   

The Taxation Laws Amendment Bill has now been extended to include Trusts as well.  The amended section includes the transfer from a Trust to a beneficiary of that Trust if the beneficiary is resident in the home and had contributed to the cost of acquisition and maintenance of the home.

The requirement for an individual to qualify is that they must personally have resided in the home from 11 February 2009 to the date of transfer.  Tenanted properties or holiday homes would therefore not qualify.

For more information, contact Nicci on (021) 465 9175

 

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