Tributum Newsletter #48

Hello

It is said that there are two sides to any story, maybe three in this case. Eskom’s story, the Government’s story and Andre’s story. Somewhere in there is the absolute truth, but I am hesitant to say its anywhere close to the middle…

SONA ended up being a declaration of a State of Disaster and the creation of an employment opportunity as Minister of Electricity. May whoever is appointed at least know how to change a lightbulb. While declaring a disaster smacks of unexpected honesty in realising the size of the problem, appointing yourself to then fix the disaster that you created smacks of expected delusion.

Many people are excited about the tax breaks that will now be offered to households that instal solar power. Firstly, its only on cost of the panels. Secondly, it’s not a tax break if the capital spent is something that could have been avoided altogether. Having to pay for alternative electricity generating capacity is in itself the tax. It’s the additional cost incurred to now pay for services that the Government cannot provide. Like private security, medical care etc. While welcome relief can be provided by the “tax breaks” we should not kid ourselves – it’s more a rebate on the “taxes” paid than a tax break.

Of more interest to me was the mention of proposed changes to section 25B to deal with trust distributions of income to non-resident beneficiaries. With so many children now living abroad this may well put a spanner in the works for SA trusts that make use of distributions to these beneficiaries to reduce the overall family tax burden. Coupled with the introduction of more onerous compliance requirements on trusts and Trustees from 2023 onward it will put severe pressure on trusts as an entity going forward. Trustees be warned, your capacity will be severely tested if you look after various trusts and I hope that you are/will be well compensated for that capacity. Gone are the days of free lunches for trusts…

One of the political parties slammed the national budget as useless and said the only solution for SA is its planned national shut down on 20 March. The saying “cutting of your nose to spite your face” came to mind but then I remembered that during a shutdown its normally someone else’s nose that is cut off…The whole idea of stopping economic activity to grow economic activity is like fighting for peace or screwing for virginity. I just cannot see how any of these are good ideas.  

On 1 March your new tax year starts. Here’s hoping it’s a better one than 2023. Until next time, keep breathing.