across the bar

Going...going...gone

by Ashley - Posted 29 February 2012

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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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CCMA Guidelines for Misconduct Arbitrations

by Nicci - Posted 16 October 2011

The CCMA have issued guidelines, in terms of the Labour Relations Act, which must be taken into account by Commissioners conducting arbitrations for dismissal for misconduct cases.   

The Guidelines deal with how an Arbitrator should:

-conduct arbitration proceedings

-evaluate evidence for the purpose of making an award

-assess the procedural fairness of a dismissal

-determine the remedy for an unfair dismissal

The rationale behind issuing these guidelines is to promote consistent decisions coming through from arbitrations dealing with misconduct dismissals.  The guidelines also reinforce the principle that the onus lies with the employer to prove the fairness of the dismissal.

A link to the Guidelines can be found here

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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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Unfair dismissals

by Nicci - Posted 09 October 2011

2 interesting unfair dismissal cases out of the Johannesburg Labour Court and CCMA were heard recently. 

Automatic termination clause:   can you contract out of the right not to be unfairly dismissed?

The first case (Mahlamu v CCMA & Others (2011) 4 BLLR 381 (LC) dealt with the validity of a contract of employment containing a clause which allowed the employer to automatically terminate the contract if he no longer needed the employee “for whatsoever reason”. The company could at any time, for any reason, simply state that his services were no longer needed.

Mr Mahlamu was employed as a guard by a security company.  When a client cancelled the contract with the company, Mahlamu was told that his services were no longer needed because there wasn’t another position for him.   The Court had to decide if contracts of the type between Mahlamu and the company were allowed by the Labour Relations Act.  It said no - this kind of clause in a contract had no legal effect because it tried to contract out of the dismissal provisions in the Labour Relations Act.  

Contracts between temporary employment services (labour brokers) and their employees often include “automatic termination” clauses which typically provide that the contract terminates automatically if the broker’s client no longer needs the services of the employee – a clause that allows a broker’s client to undermine the right not to be unfairly dismissed is against public policy.

This kind of clause must also be distinguished from “fixed term” contracts, which provides for its termination on the happening of a future specified event, eg. on completion of a project – this is not a dismissal in terms of the Labour Relations Act.

Incompatibility:

Ms Sondio was employed by the University of Fort Hare as the PA to the Dean of Law.  A number of complaints were received about her conduct, eg. fighting with a colleague and circulating derogatory emails about her head of department.  The University decided that the only way to resolve the conflict was to transfer her to another job, but no other departments would accept her.   She was given a notice to consult about retrenching her and when this failed, the University dismissed her for incompatibility.    Ms Sondio then filed a claim with the CCMA for unfair dismissal.

Incompatibility is recognized as a form of incapacity or misconduct, depending on the circumstances.  In either case though, the employer must first determine whether the employee was at fault.   The commissioner found that the University should have charged Ms Sondio with serious misconduct.  Instead, it simply accepted that the relationship between her and the Dean had broken down and decided to transfer her without properly investigating the allegations.   If the case had been treated as incapacity, then Ms Sondio should have been offered counselling.    

The University’s decision to retrench Ms Sondio showed that it did not regard her as being at fault.  The dismissal was therefore substantively and procedurally unfair and Ms Sondio was reinstated. 

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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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New Companies Act

by Nicci - Posted 03 April 2011

The implementation of the new Companies Act has been delayed yet again...01 May 2011 has been suggested by the DTI for its implementation, but at this stage it is anyone's guess. We'll keep you posted.
 

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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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can we sue iceland?

by Steve - Posted 23 April 2010

There you are, a little Eskimo sitting chilling at your fishing hole - the next thing you know you are being showered in molten lava and ash. Who would have thought that Iceland was such a dangerous place beyond Bjork and the odd hungry polar bear!

The recent eruption of Eyjafjallajokull (hat tip for proper pronunciation) left millions of airline passengers grumpier than a hungry polar bear. Now that the dust has settled, passengers want to be paid compensation for losses suffered through cancelled direct and connecting flights, other transport costs, hotel reservations and unpaid salaries.   

With the sheer magnitude of the losses already suffered by the airlines (which is said to be more than the loss suffered in the aftermath of September 11), it comes as no surprise that the airlines are arguing that they are not liable because a volcanic eruption is an Act of God which made it impossible for them to perform under their contracts with passengers.

In SA law, an Act of God (or force majeure in fancy legal latin), is regarded as an event that directly and exclusively results from the occurrence of natural causes that could not have been prevented by the exercise of foresight or caution. If a contract becomes impossible to perform as a result of an Act of God, neither party may be held liable for any loss suffered by the other.

However, if the impossibility is temporary, the parties may not be entitled to cancel and may have to accept delayed or alternative performance (in this case, a new flight). What is regarded as temporary will be a question of fact in each case.

In World Leisure Travel v Georges (2002 WLD), Mr Georges cancelled a family package tour to Mauritius he bought from WLT when his flight to the island was cancelled due to a cyclone that hit the night before he was due to depart. A clause in the fine print of his contract stated that cancellation of the tour within 2 weeks of the date of departure would lead to the entire tour price being forfeited.

After the flight was cancelled, Mr Georges sent a fax to WLT also cancelling his tour and claiming a full refund of the tour price. The legal basis for the cancellation was that the contract had become impossible to perform. Unfortunately the court disagreed and held that, because SAA had laid on a special flight 2 days later, the impossibility was only temporary. Mr Georges was therefore not entitled to cancel the contract and forfeited the full tour price.             

If you are one of the unfortunates that have just spent the last 6 days on a cold airport floor, this may not come as good news. But hey, spare a thought for the Eskimos or quit your job and open a travel insurance agency.
 

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