Harbour & Associates

The answer used to be “Yes”, then it was “No”, and now it is again “Yes”. I guess it all depends on which side of the bed the Master got out of this morning! The problem arises when there’s a need to change the beneficiaries, or when the trust deed was so badly drafted that it is hardly worth the paper that it was written on. A change of beneficiaries should be a rare occurrence if the trust deed was well written in the first place. Usually, it will only be necessary if you’ve bought a shelf trust. However, the…

I get so many people asking me why we have not registered them as shareholders at CIPC, it’s time to explain. Members of CCs are registered at CIPC (because they are, amongst other things, “directors” of the CC). Directors of companies are registered at CIPC. Shareholders are not registered anywhere, except in the share register. The share register is usually an Excel sheet filed on the server at the registered office of the company. That’s it! There’s the only place you will find the shareholders. A share certificate is issued by the company secretaries to the shareholder and…

Transactions, such as the sale of shares or fixed property between related parties are deemed for tax purposes to have been at market value, regardless of the documented transaction value. It often happens that you will want to sell assets into your trust structure and you are a connected person in relation to the trust. So, how are the assets valued? The value of listed shares are published daily, so that one is easy, but what about shares in a private company, or in an investment property? All tax acts are silent on who may perform the valuation, so you…

When a company or CC has failed to submit Annual returns, CIPC marks them “In de-registration process”. To return to “In Business”, we simply have to submit the outstanding returns. Then, periodially, CIPC will Finally de-register those companies and it is usually impossible to restore them. CIPC has just given notice of its intention to finally de-register all companies that are in de-registration process. If yours is one of them and you don’t want to lose it, get hold of us at 011 805 0030 urgently.

What is it about attorneys? Are they taught to write shockingly bad English or do they just pick it up as they go along? I have a standard lease agreement that’s been floating around for years. We found a lovely house to rent here in Knysna and I offered to draft the lease. I set out to eliminate all the legal waffle that the document contained. I think this one sentence with 241 words is a classic – The Lessor shall not be responsible for any damage to or the loss of any stock, furniture, equipment…

We recently formed a company for someone. He wanted the name Bidvest S…….. (Pty) Ltd. I can’t say what the S…….. was but it described the kind of business that he was in. The computer at CIPC would not see a conflict because there are so many Bidvests (52 at the last count) that it would interpret that as meaning that no-one had exclusive title to the word. The name was approved by CIPC and we went ahead and completed the company registration. Shortly after that he was complaining to us that the name Bidvest was a Trademark and they…

I was chatting to a client on Zoom and trying to do some quick arithmetic at the same time. I didn’t do too well! She had R35m which she wanted to lend to an investment company that would be owned by a new trust. The question was. How much tax would she pay as a result of s7C of the Income Tax Act. s7C says that she would have to charge the company interest on the loan at least at the official rate which is currently 5,25%. Because the company deducts the interest from its taxable income, that’s a negative…

Last week I talked about a client who is building his company on bad business instead of good business and I briefly mentioned some performance ratios that he needed to achieve in order to get things on the right path. So, if I know nothing about his particular industry, how can I tell him what he should and should not be doing? The answer is in the ratios. There are very few different types of business. Let’s take a look. Service companies. Their costs are almost entirely salaries and rental. Manufacturers. Their material costs are the highest of their costs,…

We recently completed a year’s accounts for one of our bookkeeping clients. This time around, I noticed that his turnover had shot up from R1m to R4m. Seemed like things were going well. Until I looked closer. His net profit dropped from R53K to R47K, so he was doing four times the amount of work for less profit. On R4m turnover, he should be making at least 8% profit which is R320K, but he was making about 1%. His Gross Profit (the difference between sales and purchases) was 20% of turnover for both years, which is about a half of…

When you form a trust, you actually become four different people. You as a person whose financial affairs are entirely separate from those of the trust. You as the founder, the person who forms the trust and who has to agree to any changes to the trust deed. You as one of the trustees who will manage the trust for the benefit of the beneficiaries. You as one of the beneficiaries who may benefit from distributions by the trustees. What is important is that you cannot be two or more of these people at the same time. If you are…

Helen hit a bad pothole and it damaged the wing of her Z4 as well as the aluminium rim. The insurers arranged the repairs and we took it in to the panel beaters. I asked them to quote on all other imperfections that they could find so that the exterior of the car would be perfect. There was a bit of this and a bit of that and the quote came to something over R15 000. I got to thinking. “I wonder if this would be covered by the insurance”. I phoned our insurers, MUA, and yes, they would cover…

If you manage your debtors, you are already a long way to a successful business. Here are a few examples of what people do right and wrong. Right. Don’t do a thing until you’ve been paid. That’s the way our practice operates, so we have zero debtors. Almost right. Insist on a 50% deposit and the balance immediately prior to installation. Almost right. “This is a cash practice. Please pay on the way out.” Note – “In” rather than “Out” would be perfect. Hardly right. Insist on a 50% deposit and the balance immediately upon installation. Wrong. “I’ll send you…

I was chatting in one of my Zoom meetings to a guy who had just finally settled his divorce. He said that when they first agreed to get divorced, it was amicable and there was not problem with the settlement. Then along came the lawyers and suddenly they had a fight on their hands. Two years and ridiculous attorney fees later, they have now agreed on the settlement. Then he came up with an interesting proposition. He said that if ever he were to get married again, he and his future wife would draw up and sign a divorce settlement…

I’m what is politely called a senior citizen. Do I remember my dad? Why, yes, I know his full name and what he looked like. How he talked and a lot of what he said. Do I remember my granddad? Well, yes, sort of. His name was granddad and he had white hair. He liked gardening and he tickled his onions to make them grow. I don’t remember much more. Do I remember my great-granddad? Um. Well, actually no, not at all. That’s interesting, Derek. So, you’re telling me that your Great-granddad left no footprint! Tell me, Derek, have you…

The trite answer is “Yes”. But ask me the question and I would say “Why are you thinking of that?” Firstly, is there any benefit to being a founder? The founder has no power once a trust has been formed. The only time their existence is relevant is if the trustees wish to change the trust deed. This cannot happen during the founder’s lifetime without his/her approval. Secondly, is there any disadvantage in having two founders? Just clutter, in that again, the trust deed cannot be changed during the lifetime of the founders without their consent. So, my view is…

Don’t hold your breath! The drop was first announced in the 2021 National budget and again in that of 2022. But, guess what, it only comes into effect for companies whose financial year commences on or after 1 April 2022. And since most companies have a 28 February year end, that meant that from the first announcement in February 2021, the benefit will only be felt in September 2024, when the Feb 2024 taxes are due for payment. That’s three and a half years later. And we’re supposed to get excited?…

Every one of hundreds of trust deeds that I have read fails to ensure the founder’s legacy. To understand this, we need to first understand what is a legacy. This is best done by example. Alfred Bernhard Nobel died 126 years ago and yet we all know of a man named Nobel. Why? Because, after making a fortune from his invention of dynamite, he did not simply bequeath it to his kids (he didn’t have any), but rather set up what I call a legacy trust. The terms of the trust are that the trustees may not diminish the trust…

In January, we decided that we would no longer charge our services to register new companies. All that would be required was payment of the R175 CIPC fee. I was fascinated to find that practically nobody took up our offer! When it came to the on-line credit card payment for the R175, perhaps they thought it was a scam and terminated the transaction. We phoned them all and their reasons were vague. I was tempted to do the job for absolutely nothing, but decided to approach it differently first. I figured that if we make it look like a…

Way back in 1972, Terry Harbour sat in the office of David Emanuel, CEO of Adendorff Auctioneers (Pty) Ltd and made a life changing decision. He would form his own auditing practice called Terry Harbour & Co and David undertook to be his first client. Shortly after that, he was joined by recently qualified Pete Grenville, and they changed the name to Harbour Grenville & Co. At that time, I was the Managing Director of Contronics SA (Pty) Ltd and we became their second client. A year later, when I quit Contronics to start MI Thermocouples (Pty) Ltd, it was…

Three years ago, I wrote an article titled In search of the quickest way to solve Sudoku puzzles. Oh my! How embarrassing. At that stage, I was doing “Expert” Sudokus and thought that was the end of the road. All I could do from there on out was to get quicker and quicker. Then my App ( Sudoku – Classic by Beetles Studio) dropped a bombshell. It gave me an option to level up to “Extreme”. I suspect that it only does this if you have paid for the App. I clicked on it and tried my first Extreme…

Blog

Can I replace my trust deed with a new one?

Where does company shareholding get registered?

How is an asset valued for tax purposes?

CIPC finally de-registering companies

Legal gobbledygook

Don’t try to steal a big name

Tax on s7C interest

Why are ratios so important when building a business?

How to turn a bad business into a good business

Can I be a trustee and beneficiary of my own trust?

Get the most out of your vehicle insurance

Manage your debtors!

Write a divorce settlement before you get married

How can I make sure that I am remembered?

Can a trust have more than one founder?

When are company taxes going to drop to 27%?

What is a legacy trust?

Free new company registrations

It’s our 50th Anniversary!

Solving Sudoku at Extreme levels

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