Tributum Newsletter #9

Konnichiwa,

The 2019 Rugby World Cup held in Japan has surely been a great tournament for many reasons. The Boks are preparing to play in the final, the tournament organisation was excellent and the host’s rugby team played their part in making it a great spectacle. The standout factor for me was RESPECT. From the hosts to the members of every other team, and their supporters, to one another, for one another. And respect for the game itself. Arigato!

Maybe that is what we can also learn and apply – respect. Respect yourself, respect one another and respect the game we are playing every day – the game of life.

Respect seems to be something lacking in corporate SA at the moment. Sasol is the latest in a line of SA corporate giants (remember Steinhoff and Tongaat) that is having its dirty laundry aired in public. While there are no accounting irregularities this time (lack of respect for regulators and investors) it appears that lines of communication about an expansion project was not as open as it should have been, which shows a lack of respect for each other.

Either junior and middle management was too scared to speak the truth or top management were just to busy to listen and understand the whole truth, but somewhere in the middle the message of massive cost overruns and problems never reached the people that were supposed to know. This is now costing Sasol a lot of money, and a loss of respect I would guess.

Also respect the game of tax. SARS is changing its game plan and seems to be going back to basics in respect of at least two deductions regularly claimed by corporate taxpayers. Various large corporate taxpayers have lost their recent tax cases (at appeal level) in respect of provisions for stock/inventory obsolescence as well as the so-called “section 24C allowance” of future expenditure. Neither of these provisions are new to the Act, but SARS seem to have taken an enforcement decision to request all taxpayers to substantiate these deductions if they are claimed.

Based on the court findings I think this will remain a focus area for SARS Taxpayers that are claiming stock provisions and section 24C allowances are recommended to seriously consider whether these deductions remain viable and ensure that they have sufficient evidence to prove their cases to SARS. Remember, SARS presumes you guilty until you can prove yourself innocent.

At long last SARS came to the party and squashed some of the misinformation spread via the media regarding “#Expat Tax 2020”. They published frequently asked questions on 22 October 2019, and I was happy to see that my views were vindicated by SARS. If anyone is, or knows of someone, that is grappling with Expat Tax 2020 please let them contact me.

The mid-term budget presented by Minister Mboweni confirmed that a slow economy (now projected at 0.5% growth) is resulting in tax revenue collections already falling far behind what was budgeted (R53b year to date no less), Eskom and SAA continue to drain the fiscus and the Government wage bill (R34 for every R100 tax collected) is still not being reduced.

There does not seem to be a lot that us Saffa’s can look forward to from an economic point of view, especially with the festive season around the corner and no money to spend. But before then the Bokke have one last game to play. Good luck guys and…Respect!