Every company needs a bookkeeper and a Tax Practioner (to file its tax returns). There are lots of them out there and most of them haven’t a clue what they are doing. The problem is the cost of entry into this game is practically zero. All you need is a computer and some software and away you go. You work from home between feeding the baby and doing the shopping and you’ve got no overheads. But what are you, the client, getting for your money. You may be paying as little as R200 an hour. Great price for quality, expensive…
Author: zombie
Only if it is badly drafted (or in very exceptional circumstances) The first problem is that most drafters of trust deeds (in fact every one that I have ever come across except those who copy from my trust deeds) will declare the intial donation of R100 or rarely, some other cash amount. The Trust Properties Control Act requires that as soon as a trust receives cash, it must open a bank account, so those trusts have to open a bank account just for the R100! Guess how soon the donor finds himself lending more money to the trust just to…
Estate Duty Estate Duty is charged at the rate of 20% (same as Donations Tax) on the net assets of the deceased estate (including deemed assets). Each person is exempt from Estate Duty on the first R3,5m of their estate. Any unutilised portion of this R3,5m carries over to the deceased’s surviving spouse and is added to that spouse’s R3,5m exemption. Bequests between spouses are free of Estate Duty as are bequests to Public Benefit Organisations. If two spouses die simultaneously or as a consequence of the same event, then the spouse with the smaller estate is deemed to have…
We take a lot of trouble to ensure that we get married under ANC so that there are two separate estates and if one is bankrupt the other isn’t. Likewise we set up discretionary trusts to protect assets from creditors if one of us should be bankrupt. Signing surety destroys these protections. The trust’s company is unlikely to be able to raise a bond unless you sign surety, so that one is pretty much unavoidable. What should be avoided is both of you signing surety, because that means that the marriage under ANC is also no protection. It is the…
What? You don’t even have one? Shame on you. You battle all through your life trying to build up a bit of wealth and then you don’t even exercise your right to say what will happen to it when you die. That’s a bit like not bothering to vote in our new democracy So what happens if you die without a will (known as dying intestate). Then your assets will be distributed according to a rather complicated formula which we all learned at university then promptly forgot. It’s called “per stirpes”. From what (little) I remember it works like this…
We form a lot of trusts and never cease to be amazed at how the founders let them fall asleep. It is a common misperception that once you’ve paid for something you can forget about it. We find this with trusts, wills, bookkeeping, tax returns and a whole bunch of the services that we offer. You need to understand that when you form a trust or buy a shelf company, that’s only the beginning. But we even have great difficulty just getting our clients to the point where we can actually form their trust or change the directors of their…
We often get requests for a shelf company with an import/export licence. I can understand why, the application to SARS is a nightmare. We’re doing two applications right now. Each one is 1/2cm thick! That’s even worse than a VAT application. And I doubt that the documents will be accepted, even though this is our second shot at these particular two. The trouble is, as usual, SARS keep moving the goal posts and to make things worse, not all of the consultants at SARS agree on where the goal posts are, so one will reject your documents because of one…
Some time back I posted an article on the fantastic power saving you achieve by switching your downlighters to 12v LEDs. Now I have one work of advice – DON’T I recently added eight new downlighters to my wife’s sewing room. For this I had to buy 8 electronic transformers (they’re actually drop down 220v AC to 12v DC converters) whereas when I converted the house to LEDs I simply used the old transformers (which are no longer available). I spent one and a half days fitting the new downlighters and when I finally switched on, most of them started…
You may have read books on the power of the mind. There are plenty of them out there. Why? Because the mind is so powerful. Many years ago I coined an expression for one of my consulting techniques. I called it “Dreaming dreams”. It works. Like this – Forget about where you are at, ignore how you are going to achieve your goals, simply imagine you are already there. Picture the perfect business, lifestyle, golf shot or whatever it is you would like in life. Just one dream at a time – don’t make it too complicated. Focus on the…
Here we go again! If it’s not SARS, or the IDC then it’s the Master of the High Court. They all constantly change the game apparently on the whim of someone in authority. The Master’s office in Johannesburg has a new Assistant Master and she’s a stickler for the rules (that’s probably why she got the job, because her predecessor was great at cutting corners, which suited us well). It seems that several years ago, somebody issued a set of rules that (contrary to Contract Law which governs Trust Deeds), we cannot replace one trust deed (which is a contract…
It often happens that a trust owns investment property that would be better held by a company which is, in turn, owned by the trust. This is because companies pay 28% Income Tax whilst trusts pay 45%. So, how do we give effect to this without incurring a lot of tax? Fortunately, s42(2) of the Income Tax Act comes to our rescue as far as CGT is concerned. Provided the property was held for investment and not trade (that is, not with the intention of selling it at a profit) and provided it is transferred to the company in exchange…
So you set up your trust for asset protection and estate planning. Are there any other benefits? Two that I can think of. One I love the other I dislike intensely. The one I love is that it can be the means whereby one of your companies can qualify as a Small Business Corporation for tax purposes (potential tax saving of R95 000 per annum). In order to qualify, one of the requirements is that the shareholder/member is only a shareholder/member of that particular company. This is a problem if you have other business interests, so what we do is…
Google Adwords is potentially one of the best ways to get quick, measurable results from your marketing budget. Here’s how it works But first a few general comments. Adwords works best when you are seeking on-going business (i.e. clients rather than customers). It’s no good if potential clients aren’t going to be looking for what you have to offer. So if you are launching a new product or service for which there is not an existing demand, Adwords is not the way to go. I chose Adwords originally because I wanted to be where people would be looking when they…
Whether you are just starting a business or have been at it for many years, chances are you need to learn some kick-start lessons either to get you going in the first place or to re-vitalise your company that is, perhaps, becoming stale. Here’s what I did recently – As you will know if you follow me, my partner, Tina, left the practice at the end of October 2014 and took just about all of our clients with her. Those that she didn’t take in October, she gradually managed to extract over the next few months. She was, after all,…
Let’s take a look at the money market (savings accounts, call accounts and the like) and see what terrible investments they are. There’s a very touching advertisement running on the radio right now. It’s an elderly couple saying “I wish my bank wouldn’t ignore me just because I’m getting older. I want a bank that really cares for me, a bank like …bank. They are offering me a great 7 1/4% interest on our money and our capital is guaranteed against inflation. Now we can take that world cruise that we dreamed of for so long.” It’s so soppy it…
I wrote this post in early October 2014. At end October, my partner upped and left with practically all of our clients. so instead of being the best year of my business life, 2015 turned out to be one of the worst. Now read what I wrote – This is going to be one hell of an exciting year. Why? Because I said so! I’m going to shove my foot down hard on the gas pedal and our practice is going to grow like there’s no tomorrow. Year ended September 2013, growth 31% – fact. Year ended September 2014, growth…
So, you’re investing in property in order to sell it at a profit or to earn rental income. Either way this is trade and if the trust owns the property the tax is 45%. How do you avoid this heavy tax? But firstly, why hold the property in a trust in the first place? The reason is that you want to grow your wealth and you do not want too much wealth when you die as it is subject (after allowances) to 20% Estate Duty and up to 18% CGT, a total 38% of your investment wealth (ignoring the allowances)…
There are plenty more, but here are the most obvious top ten – First, the Do’s 1. Engage an independent professional (accountant or attorney) as one of the trustees. Otherwise you risk breaking down the firewall between your creditors and the trust assets. 2. Ensure that you are one of the trustees and also one of the beneficiaries. You must be a beneficiary as you don’t know what the future holds. 3. Get the trustees to formally appoint you as the director of the company owned by the trust. Then you can run the company and you won’t have to…
When I first started consulting, I got kicked out of quite a number of offices and I quickly understood why. The reason is that a company is a reflection of the person who runs it and it takes on a character that reflects his or her personality traits. All well and good, but when things go wrong and the consultant gets called in he’s going to start pushing buttons that hurt, because what’s wrong with the company is what’s wrong with the boss. This is true of all of us in business and as none of us is perfect, our…
As Chartered Accountants, we see a lot of sets of accounts prepared by contract bookkeepers and can quickly spot most of the mistakes that they commonly make. Here are our top ten – They forget to bring the share capital to account because nobody actually puts the R100 or R120 into the company’s bank account. The correct entry is debit loan account, credit share capital. Incidentally, in terms of the Companies Act, the shares MUST be paid for, but who’s going to argue about R120? The accountants (us for instance) make year end adjustments to correct the accounts and to…