So many people who come to see me fail to understand the extent of their risk as shareholders and directors. Few of them ask about their being the Public Officer, but that’s because they have probably no knowledge of their appointment.
Most of their fears are the result of SARS’ low level staff believing that they have powers far beyond the law. So let’s deal with each of them in turn.
Author: zombie
The simple answer to this question, is “Yes”. The actual flow of a payment, say directly from A to C on behalf of B is not a problem. The money does not need to first go into B’s bank account, then on to C.
There’s some pretty stupid tax legislation out there that leads to taxes that SARS hasn’t a hope of collecting. Here are some of them – 1. Transfer Duty on sale of shares in a company owning residential property. If the shares in a company owning mostly residential property (a so-called residential property company) are sold, then this is deemed to be the sale of the property itself. The sale then attracts Transfer Duty. The problem that SARS has is that the only place where the sale of shares is recorded is in the Share Register, which sits on the server…
With times as tough as they are right now, several clients have had to approach SARS to see if they can get their tax liability reduced.
Whether it is Income Tax, VAT or PAYE that is owing, SARS will look at the taxpayer’s ability (or not) to pay, and will come to whatever arrangement gives SARS the best achievable result. In other words, they would rather have half a loaf than no bread at all.
In common law, a trust is neither a legal entity nor a juristic person. The trust is actually the Trustees acting in their capacity as such. However, there are exceptions to this basic legal concept, and these are brought about by specific Acts.
I know of two such Acts –
There are two excellent sources for some of your property calculations. They are www.Property24.com and www.privateproperty.co.za . They enable you to determine your bond repayments and your affordability. However…
The vast majority of South Africans should not form a family trust. They fall into five categories. So, if you fall into group 1 or 2 below or all of groups 3, 4 and 5, don’t waste your time, energy and money. Don’t form a family trust if – You are not expecting to be reasonably wealthy (having income producing investments of R12m upwards) by the age of 65 or You cannot afford the fees to pay for a professionally designed Trust Deed or You don’t care if SARS takes between 32% and 60% of your wealth when you die…
It is critical that, before buying an investment property, you do the numbers in order to determine what price you are prepared to pay. If you do them properly, you will realise that finding a good buy is harder than you expected, but that simply forces you to buy with your head and not your heart. Here’s how I did it when I was in the buying mode of my property investment career. You need a modicum of Excel skills because you must build a model into which you can plug the numbers, and see what happens to the monthly…
If you think that the value of your investment properties is relevant, then your thinking could well be skewed. The only number that really matters is the net rental income that each of the properties produces. And it is the net rental income from which you would calculate the value. Having said that, it is possible that you could sell the property for more than its real worth (based on rental), and that implies that it is a bad investment that should be disposed of, and replaced by one that gives a better return. This typically applies at the top…
When your trust is to own your trading and investment companies, you need to carefully consider how they should all be interconnected. Most advisors will tell you that the trust should own a holding company that in turn should own the trading and investment companies like this – But that is not ideal, because, although the trading company can declare its excess after tax profits to the holding company as dividends, the holding company then has to lend the money to the investment company so that it can buy more investment assets. Here’s a much better way –…
In order to protect its assets from your creditors, your trust needs to be discretionary during your lifetime, but when you die, this is no longer necessary, and other considerations kick in. Because you built the wealth in a trust, not only did you protect it from your creditors, but you also protected it from the huge bite that SARS would have taken on your death, and from the subsequent bites that SARS would take on the death of each of the following generations. So this won’t happen – What you want is for the trust income to be…
There are two types of special trust defined in the Income Tax Act
A special trust type A is a trust set up solely for the maintenance of a person, or persons, who must be related to each other, and with disabilities that prevent them from earning sufficient income to support themselves. A subset of this type of trust is a curatorship trust, which is administered by a curator, who is usually a legal practitioner appointed by the courts.
We have eleven official languages in South Africa, but the lingua franca is clearly English. Not surprising, then, that those of us for whom English is our home language, tend to be critical of the pronunciation, or choice of words, of those whose home language is one of the other ten. But stop for a moment and think it through. Can you speak that person’s language? Fluently? Correctly? I doubt it. So what right do you have to scoff at them? Rather learn to listen to what is being said. The person is endeavouring to communicate with you, and communication…
Shareholders and directors commonly draw money from their company without paying PAYE. Their bookkeeper will debit their loan account and these loans typically grow over time to quite significant amounts. When you owe money to your company, you should be charged interest at least at the official rate (which is 1% above the Repo Rate). This interest needs only to be a book entry – Debit Loan Account, Credit Interest Received, and the entry should ideally be done monthly. However, to simplify things, the bookkeeper could be instructed to charge interest on the year end balance at the year end…
Why would you want to buy an old shelf trust with an equally old shelf company? Well, every natural person is allowed to make donations totaling R100 000 per tax year free of Donations Tax. These donations should be to a company which is owned by a trust, because that’s the way the trust’s affairs should be structured. Clearly, you could not have donated to a company that didn’t exist at the time, which is why you need an old company, and then, you don’t want the company to be worth anything when you sold it (or donated it) to…
Many people worry about what will happen to their family trust when they die, but interestingly, it is on death that the trust proves its greatest benefits. It is, after all, a device in which to build (and protect) wealth so that when you die, there are no taxes to pay and the wealth that you built during your lifetime is there as a legacy for your family and for future generations. So let’s look first at what doesn’t happen when you die – the trust pays no tax as a consquence of your passing. Compare this to the 35%…
I always figured that Search Engine Optimisation (SEO) was a waste of the R60 000 to R100 000 that the specialists wanted to charge. Surely not everyone can be on the front page of a Google search? Take a typical search. It comes up with 6 adverts and 10 articles. If you want to be one of the ads, learn how to use Google Ads. Google offers excellent free training. Alternatively, pay someone to do the job for you. If you want yours to be one of the 10 articles, then you need a brilliant SEO campaign, and no amount…
Once your company is in de-registration process at CIPC, the bank won’t help you with any facilities, your tenders won’t be accepted and life ain’t gonna be fun!
How did that happen? Quite simply, you didn’t submit your annual returns to CIPC, either because you didn’t respond to our email reminding you that the return was due, or, we are not your service provider.
There are two principal taxes that kick in when you die. The first derives from the fact that you are deemed to have sold your assets to your deceased estate at the moment of death at market value. That means that the gain in value of growth assets, such as shares in any companies, fixed property, investment cars, works of art etc, will be subject to Capital Gains Tax, usually at 18%. The first R300 000 is not taxed and your primary residence only gets taxed if the gain exceeds R2m, but these allowances don’t count for much if, for…
Most South Africans are married either under an anti-nuptial contract (ANC) with accrual or a traditional marriage. The latter is marriage in community of property which means that there is only one estate and this is owned equally by the spouses. Under an ANC with accrual, what each spouse brings into the marriage remains theirs. There are then two separate estates which increase in value equally after marriage. However, there are certain increases which do not get shared – 1) Distributions from trusts or deceased estates, donations from third parties. 2) Damage awards from slander or defamation type of…
