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I have deliberately used the exact headline that appeared under Businesstech on my Google news feed.

This kind of sensationalist rubbish is shameful and has to be exposed as just that – sensationalist (and, I suspect, advertorial) rubbish.

Although written by a staff reporter, the (mis)information is attributed to Mohamed Kamdar a “tax specialist” at the South African Institute of Professional Accountants. Now that, in itself, is a falsehood, because the SAIPA do not employ tax specialists. The reality is that he only belongs to SAIPA. Given that SAIPA is a poor man’s substitute for SAICA, the South African Institute of Chartered Accountants, one wonders how he can be a tax specialist who was evidently not clever enough to become a Chartered Accountant (SA)? Then when you read on, you find the answer.

Here’s what he is reported to have said –

“An example of how technology is (notice “is”, not even “will be”) helping SARS clamp down on tax dodgers, Kamdar noted that to qualify as a Small Business Corporation and obtain tax relief from SARS, a company’s shareholders must hold no shares in any other company, locally or internationally (this is not quite true, I am the shareholder of about 120 shelf companies, and still, one of my companies, Harbour and Associates Management Services (Pty) Ltd, qualifies as an SBC). If they do – but apply for relief anyway without disclosing this fact – this information can easily be discovered electronically.”

Really? Where, on earth are SARS digging for that information? The shareholding of a (Pty) Ltd company is only evident on two documents, the share register, which sits on someone’s computer (typically ours) and the share certificate, which probably sits in the shareholder’s office drawer.

He goes on to say that the same is true if the shares are owned by a discretionary trust (he means any trust, whether or not discretionary) and then he says “SARS’ IT systems can easily uncover it through high-speed cross-referencing.” What absolute twaddle! Cross-referencing what to what?

Where has our “tax expert” gone wrong? It’s elementary – he doesn’t understand the difference between a company Director (who’s details are registered at CIPC) and a company Shareholder (who’s details are not registered anywhere outside the share register).

The main reason that I am sounding off so strongly is to warn you not to believe what you hear or read, even from an expert – including me!

Always question it and, where possible, go to source. The Companies Act in this case, or any other relevant statute, such as the Income Tax Act, the Consumer Protection Act, The Trust Property Control Act, or whichever Act deals with the issue.

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