Harbour & Associates

Oh dear! What is SARS thinking? In the good old days, we had to appoint a Public Officer for each company. That was the person who was to be responsible for submitting the tax returns and responding to SARS’ correspondence. Then suddenly, in about March 2021, we found that we were unable to submit certain returns or get a Tax Clearance for our newer companies, because there was no “Representative” appointed. So what happened to the Public Officer? If you check out SARS’ document “Enhancements for Tax Practitioners and representatives” you will see that they refer to “the Public…

Interestingly, there is no provision for the de-registration of a trust in the Trust Property Control Act. But the Master has given guidance on the matter. All that must be submitted are – The original Letters of Authority Bank statements reflecting a nil balance on the final statement Proof that the beneficiaries have received their (sic) benefits. The first of the above is straight forward. The second will be problematic if, as is usually the case when we form a trust, there never was a bank account. Presumably a Sworn Affidavit to that effect by the Trustees will suffice.

My vision changed dramatically from when I had new lenses in March to when I went to the optometrist again in November. He told me that it was either diabetes or the start of cataracts. I checked clear for diabetes, so he sent me to an ophthalmic surgeon, who confirmed that I was, indeed, developing cataracts. In the early stages, this can cause your lenses to change shape, hence my change in vision. He booked me in for the operation a week later and I got scared. I knew that I would be conscious, and could imagine seeing this guy…

Many years ago, I searched long and hard for a production control package that could replace the progressively more complicated Excel workbook that we were using in the practice. I could find nothing that fit the bill. Then I hit on CRM (Customer Relationship Manager). CRM is designed to help you manage your relationship with each of your customers. It keeps track of customer details, leads, sales, tasks, service dates and also sends automatic emails to keep the customer informed of upcoming events, such as scheduled services. Could I, perhaps, bend one of these packages into what I needed? What…

So, you are the sole shareholder and director of a company. The company’s creditors issue summons against the company with you as a co-respondent. What is your position? Quite simply, as the shareholder you cannot be held liable for the debts of the company. That’s what the word Limited means in (Pty) Ltd. Your risk is limited to the possibility of losing your investment in the company, the share capital. There’s a proviso. If you received a dividend when the company’s liabilities exceeded its assets (in other words, the retained income was negative on the balance sheet), then that dividend…

We have formed hundreds of trusts over the years and I pride myself on the care that goes into the drafting of a trust deed. Why, then, is my own family trust non-discretionary, when all of those that we have prepared for clients are discretionary? To answer that we need to first ask “Why should a trust be discretionary during the founder’s lifetime?”. As I explained in my recent article “Discretionary and non-discretionary trusts“, it is commonly believed that only a discretionary trust protects the trust assets from the founder’s creditors. I take a slightly modified view,…

It was, I think, about two years ago that SARS started hitting random dormant companies with administrative penalties of R200 each month for each annual tax return that was overdue. I still get well over 100 SMSs and emails from SARS advising me that another penalty has been imposed. In the early days, we sent emails to each of the companies to advise them of the penalties, but they generally did not respond, so now I just delete all those messages from SARS. However, last month, they announced that they are going to start hitting individuals and I have just…

It is a very common misunderstanding that a dormant company does not have to submit returns. Quite simply, all companies must submit tax returns and CIPC returns, albeit Nils. So what happens if they don’t? Tax returns Your company will not be able to obtain a Tax Clearance if there are any provisional or annual tax returns outstanding. But if it’s dormant, then this is not likely to bother you. SARS is hitting dormant companies with a penalty of R250 per return, each month that the return is outstanding. This will not bother you until you start…

(Pty) Ltd companies must have at least one director, and he/she has to be appointed when the company is formed. Interestingly, however, a (Pty) Ltd company does not have to have any shareholders. It is formed with an authorised capital, usually of 1000 shares. That is capital (shares) that the director(s) are authorised, but not obliged, to issue. This is an advantage for us when we form a new trust and a new company that is to be owned by the trust. We can form the company, usually within about 1 week. The director…

I’ve recently followed my wife into the world of art, and have become fascinated with the challenge of portraiture. To create a face on a piece of paper that makes you feel as if that particular person is there looking at you is remarkably difficult, especially if it is someone that you know really well. But it’s not really art, more of a craft, because you work from a photograph and, because the addition or subtraction of even a millimetre makes a huge difference, it becomes kind of technical. Then I moved on to colour and that’s when I went…

I am of the opinion that your trust being non-discretionary after your death is central to the concept of a legacy. That is, a source of income for many generations to come. Only the trust deed can make or allow this to happen. It will need to give you specific authority to make that conversion in your Will. Then, in your Will, you can dictate to all future Trustees that they may not diminish the trust assets and they may only use the trust income in certain ways that you specify. Is this the best route? Firstly, we need to…

I was interested enough to give it another try. I wanted to see whether the company that I formed ended up with a name like K2021/123456/07, which is what happens if you take advantage of FNB’s offer. I spent a frustrating half hour registering a new account at CIPC and setting up a password, then, when I tried to log in, I go an error message. Grrrr! I decided to give it another bash and clicked on the reset password button. I received an email allowing me to change the password, which I did. Then, when I tried again to…

It is very common practice for a husband and wife to both be trustees of the family trust. Regrettably it is also very common for married couples to get divorced. So, how does the divorce affect the trust? And what happens when one or both of them re-marry and have more kids? These are sticky questions and the answers lie in the trust deed and the Trust Property Control Act. Firstly, trustees have a fiduciary obligation to act only for the benefit of the beneficiaries. So, the independent professional trustee must make sure that they keep their disputes away from…

Instead of declaring your drawings as salary, rather fix a monthly salary of, say R40 000, above what your start-up company can afford to pay you right now. Pay the PAYE on that fixed amount and credit the balance to your loan account. Then deduct any drawings from the loan account. When the company can pay you a good salary of, say, R70 000 per month, declare only R40 000 for PAYE purposes and take out the rest as repayments of the loan account. It works like this – How does it work? By paying a consistent amount of…

We discovered Honest Chocolate. It is truly the best and has caused an uptick in our consumption of Cointreau, which, as I’m sure you will agree, is the ultimate companion to a quality craft chocolate. We were amused to find that on the segments of each slab are the letters D O N T B E A F R A I D O F T H E D A R K. This is a constant reminder of something that we struggle with when we are sketching. Beginners, like us, painstakingly draw their subject, shade it in, feel…

There are numerous articles on what can go wrong with a trust but, because they are mostly written by copy and paste “experts” they tend to be over theoretical and mostly miss the most obvious mistakes. In fact, I have not read one article that deals with the fundamental errors that are so common. Here’s what I see in practically every trust deed that I am asked to read – The initial donation is R100. That means that the trustees must open a bank account (which they usually don’t do) and deposit the R100 (which they almost…

CIPC have a website called BizPortal which is intended for people who wish to register their own company. It is not intended for the likes of us who register companies for other people. They’ve tried to make it simple and we know of a few people who have navigated their way through the process, but most people give up and take the easy way out by contacting us. Those who succeed in registering their own company often end up paying more for the finished article because they have no idea what a share register is all about, nor what…

Everywhere you look, even on SARS’ website, you will see that you can make a third (voluntary) provisional tax payment by 30 September for February year end entities and six months after the tax year end for other entities. Why would you want to do this? The tax for the previous year ending February falls due on 30 September even though the tax return does not have to be submitted until after that (end February the following year for companies). Any tax not paid by 30 September is subject to interest charges, currently at 7%, until paid. This…

Whenever we form or amend a trust for a client, we write a Will for the client and their spouse at no charge. This is essential because the trust and the Wills are closely linked and refer to each other. I am usually appointed as the executor and should, therefore, be holding the originally signed Will. Yet I estimated that 80% of the Wills that I prepare and send for signature are never returned. Let’s look at the consequences – The client will die intestate. That means that his or her assets will be distributed according to the rather complicated…

With the change in company tax rate from 28% to 27%, the question again arises whether to pay yourself in salary or in dividends. Salary is straightforward, but you need to bear in mind the additional cost of monthly payroll services. This totals about R14 000 per year, or R10 500 net of tax. The total annual cost in tax and payroll services for a sole director/shareholder who earns R2m gross is R760 191 and the net salary is R1 250 321 If no salary is drawn, but the R1 250 321 is lent to the director in…

Blog

SARS now requires a representative for each taxpayer.

How do I de-register a trust?

Is a Cataract Operation Scary?

What is the best software for job control?

Can my company’s creditors sue me?

Why my trust is non-discretionary

SARS now hitting individuals with administrative penalties

Must my dormant company submit returns?

How many directors and shareholders?

Decimal and Hexadecimal

Discretionary and non-discretionary trusts

When CIPC tries to make it easy to register a company

What happens when married trustees get divorced?

How a new company can save PAYE

Don’t be afraid of the dark!

What can go wrong with a trust?

How to register a company

How to submit a third provisional tax return

You simply must sign your Will

Dividends or Salary?

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