Tributum Newsletter #11

I cannot believe it is already two months since the last newsletter at the end of November 2019 – the previous decade. I also cannot believe that the first month of the new decade is done. Time flies when you are having fun or sitting in the darkness…It was sad that we had to welcome our old friend Loadshedding just as the holidays began.

While Eskom has managed to keep the electricity on for the last couple of weeks the system remains under pressure and as this is published stage 2 is being planned. New CEO Andre de Ruyter has his work cut out for him, while also having to battle justification of his appointment to the EFF and trade unions. Like Solly Moeng wrote in his opinion piece published on News24 “When you have a problem with mice the colour of the cat does not matter”. Whether he will receive the political backing to do what needs to be done remains to be seen. With so many green initiatives and large businesses planning to go off grid Eskom risks having no major paying customers left if and when it gets its house in in order.

The land debate is trending again. It is an emotional matter and I understand that but property ownership rights should be secured to have any chance of securing foreign investment. Talking about land, the Capital Gains Tax (“CGT”) around the sale of fixed property seems to confuse many people.

The date of registration at the property deeds office is not the date of sale for CGT. The date of sale for CGT is when all suspensive conditions of the contract have been met and if there are no suspensive conditions it is the date of signature of the agreement. A suspensive condition is for example the buyer still having to obtain a bond or the property zoning must be altered before the transaction can proceed.

Once that is satisfied CGT is triggered. If a sale agreement for fixed property is therefore signed in January 2020 and there are no suspensive conditions, or the suspensive conditions are met by 28 February 2020, the tax is payable by 28 February 2020, regardless of when transfer takes place.

I am sure the land and State Owned Enterprise issues will receive attention during SONA on 13 February and will surely also get a mention in the National Budget Speech on 26 February. Business needs policy certainty, otherwise, they will not invest.  

In our next newsletter we will hopefully be able to discuss some of the SONA and Budget points. Will that include another 1% VAT hike? Who knows? What is very clear is that the SA taxpayer is getting tired of funding poor performance and wasteful expenditure and many of them are starting to vote with their feet, as their vote at the ballot seemingly makes no difference.