Harbour & Associates

Hidden in the SABC News interview with the CIPC Commissioner Advocate Roy Voller, was an interesting and profound change relating to reinstatement. Previously, if the company was not trading when it was deregistered and did not own fixed property, it was not possible to reinstate it. That restriction has now, apparently, been removed. However, before you rush off to your service provider to get your company back from deregistration, you must be aware of another risk. SARS have been imposing a R250 administrative penalty every month for every income tax return outstanding. They have been randomly hitting numerous dormant companies…

Let’s say that a person owns a rental property and also a company. Can the company charge the rental as if it were the owner and be taxed on the net rental income rather than the owner being taxed? The answer lies in one of the anti-avoidance sections in the Income Tax Act. s7(7) is a difficult read because of the clutter, so I have simply deleted the words which are not relevant to this example, but have not changed any of the words. S7(7) If by reason of any donation, settlement or other disposition made by any person (hereinafter referred…

Simple answer – If you can find somebody stupid enough to buy the company, sell them your shares. Here’s why: If you sell your shares, then you will make a capital gain probably about equal to the increase in value of the property. You will pay a maximum of 18%. And that’s it! Why is the buyer stupid? Because he/she doesn’t know what skeletons may be in the cupboard. For example, the company could have signed surety on another debt. Now let’s look at the other option. The company sells the property. It makes a capital gain and pays CGT…

This was a tricky one. The couple had been donating R100k each, every year to the trust on loan account and now owed the trust R2m. Co-incidentally the commercial property was worth about R2m. Over the years they had built up significant favourable loan accounts totalling about R3m in the company. This was the structure: And this is what we wanted: We needed to do four things: Separate the property from the trading company and get it into the investment company. Shift the trading company into the trust as a subsidiary of the investment company. Shift the debt…

OK, so this post is not about one of my normal subjects. But it is so important, I have to write it. A family member has suffered from Grade III hemorrhoids for longer than she can remember. She’s had all the usual treatments including the rubber band treatment (twice) and a hemorrhoidectomy. Extremely painful procedures and never any significant relief. Then, last month she visited my trusted surgeon, Nico Stevenson. He had recently heard of a treatment, newly brought to South Africa by a UK company called eXroid Technology Ltd. In 2023, the company became one of the first to…

A VAT registered trust owns a commercial property. We want to use s42 to slot a VAT registered company between the trust and the property, so that the trust owns the company and the company owns the property. How is this treated from a VAT perpective? I copied the entire VAT Act and pasted it into Word, then searched for section 42. I found s8(25) had the answer and it contains some surprises. s8(25)(i) If it were the business that was being disposed of as a going concern, there is no VAT. 1st surprise – it is not a zero…

It just gets worse and worse. Trusts Here’s the latest stuff up, an email from the Master: The staff member concerned is the one tasked with submitting all our clients’ Beneficial Ownership returns. She has NO authority to disclose the contents of the return. The Master, however, is giving her that power. We have two Growth Trusts on our books and there are another two on the portal, and the email does not give the trust number. Companies Here’s the old news: When completing the submission you have to select “Company without Beneficial Owners” or “Company with Beneficial Owners”…

SARS is hitting companies (especially dormant ones) with monthly Administative Penalties of R250 for every outstanding annual tax return. The result is a debt to SARS that quickly grows to tens of thousands of Rands. This catches many people unawares because there’s a common misperception that if the company is dormant it does not have to submit tax returns. What should you do if your company got hit? First off is to ignore the threatening emails you are getting from SARS’ appointed collecting agent. They are threatening the company, not you (although they deliberately mislead you in this regard). Next,…

I’ve always wanted to see the real India and the opportunity came when my son-in-law said he was going on a 22 day trip in October. I immediately agreed to meet up with him in Delhi. Here’s what we did for a total cost of R70 000 including food, accomodation, airport transfers and travel from George in the Western Cape to Johannesburg, Dubai, Delhi and back: There were 17 of us in the group and we had a full time guide from Intrepid Travel. We had to buy our own food and used mostly public transport. Here’s a short…

The Department of Justice recently announced that the deadline for submission of Beneficial Ownership returns for trusts is 15 November 2024. The penalty for non-submission applies to all trustees and is a R10m fine or 5 years in prison or both. If you are a trustee of any trust and you have not yet complied, then you need to act fast as there is huge international pressure on SA to enforce compliance. I have had to resign as the Independent Professional Trustee of those trusts that have not complied. …

To answer this question, we have to go to the Tax Administration Act. Here’s a summary of what it says: s155 The representative taxpayer is personally liable if he/she disposes of money that came into their possession after the tax was payable and could have been used to pay the taxes. s180 Any person who controls the management of a company is liable if negligent or fraudulent in respect of the company’s tax debts. s181 The shareholders of a private company are liable if, on the winding up of the company, they received assets that could have been utilised to…

I get so many questions about “Trading As” that I again feel that I have to explain what is actually a very simple concept. Any company can “Trade as” as many different business names as it likes. There is NO control over this, no regulations and no registrations. Yes, you can do what you like, despite what the Consumer Protection Act tried to instigate*. Only two things you must bear in mind: Do not incorporate a wellknown brand, like “Woolworths” by trading as, for example, Woolworths Retailers. Their attorneys will demand that you withdraw the use of that name. Do…

I often meet with someone who registered a trust a few years ago and never used it. They now realise the benefits of building their wealth in a trust structure and wonder whether they should use the old one or create a new one. Advantages of a new one: It can be registered at the Master’s office in Johannesburg. This is the only Master’s office that we are aware of that is actually functional right now (although things may change). Also, we have a dedicated postbox in their office. So, it is much easier to deal with them than others.

A car is a fixed asset and if you sell it at a profit, would the gain will be subject to Capital Gains Tax? And if you sold it at a loss, would you record that as a capital loss and be able to offset it against capital gains? Eighth Schedule of the Income Tax Act Para 53(1) excludes personal-use assets from capital gains or losses and Para 53(2) defines a personal-use asset as an asset of a natural person or special trust that is used mainly for purposes other than carrying on of a trade. So, what if you…

A trustee cannot act until he/she has Letters of Authority from the Master. So, the trust can do nothing until it is registered. But that usually does not matter. Why? Because you should be registering a company as well. The trust will own the company and the company will do whatever business you are planning, whether it be trade or property investment. If it’s trade, then you should probably have two companies, the trading company is owned by the property investment company and that company is to be owned by the trust. Let’s say that you want to buy a…

I was interested to speak to a Muslim who said that he could not leave a legacy via a trust that continued generation after generation (see my book “16 Steps to Wealth”) because Shar’iah Law dictates how the assets of a deceased shall be distributed amongst his wife and children. My interest arose, because I have formed legacy trusts for a number of other Muslims and this question was never raised. This got me to reading the translation of Sahih Muslim, Book 13, the Book of Bequests. Three things jumped out at me. A Muslim is entitled to bequeath no…

I guessed right. CIPC are now sending out warnings and in them they state that the Beneficial Ownership return must be submitted annually. The reason that I saw this coming is that they used to insist on a CoR30.2 Financial Accountability Form before you could submit your Annual Return. Then about 18 months ago, the CoR30.2 disappeared and you could submit your Annual Return without it. What they were clearly doing was hacking their own software so that instead of forcing you to submit a CoR30.2, they could use it to force you to submit a Beneficial Ownership Return.

So many people are confused by this. So, here it is in as simple terms as the General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Act of 2022 will allow. Beneficial Ownership of Companies Every company, whether active or dormant, is required to submit a BO return to CIPC. CIPC are insisting (incorrectly) that this be done annually, before the submission of the normal Annual Return. The beneficial owners of a company that is owned by natural persons are: The shareholders Anybody else who has control over the company. The beneficial owners of a company that is owned by…

I have been puzzled by the fact that we are still selling a lot of shelf companies. After all, it only takes a few days to register a new company, and the cost is R610, compared to R4 240 and upwards for a shelf company. As the sales are online, we don’t get to ask the question. I can only assume that they want an old company so that they appear to have been in business since its registration. What really does make sense is to buy one with an import or export licence if that’s what you need, as…

You’ve built your small business (one with assets valued at no more than R10m) and now you want to sell it, use the proceeds to add to your property portfolio and retire. What are the CGT implications? We have to go to the Eighth Schedule of the Income Tax Act para 57 2(c). Provided you are 55 years or older or that you are selling because of ill-health, infirmity, superannuation (why can’t they say retirement?) or death, the first R1,8m capital gain is ignored. Isn’t that lovely? The company cost you R100 (shares). It’s now worth R10m, so you’ll only…

Blog

Reinstatement of a deregistered company

Can my company earn the rental from property that I own?

Should I sell the company or should my company sell the property?

How to shift a trading company that owns its own business premises into a trust.

Goodbye Hemorrhoids!

VAT registered trust and s42

Beneficial Ownership returns. The greatest stuff up we’ve ever dealt with.

How to deal with SARS Administrative Penalties

My trip to India

Deadline for Trust Beneficial Ownership returns

Am I personally liable for my company’s tax debts?

When can a company “Trade As”?

Should I keep my old trust or register a new one?

Should I record a capital loss when I sell my car?

Can I use my trust before it is registered?

Can a Muslim leave a legacy?

CIPC and their new Beneficial Ownership Return mess

Beneficial Ownership Explained

Why buy a shelf company?

CGT allowance on sale of small business on retirement

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