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The Informant

VIEWS: 50 PAGES: 16

									                             The Informant
                             Volume 5, Issue 3                              December 2010
Special points of
interest:

  Office closure:            Season’s Greetings
         24 December 2010    A couple of weeks to go and 2010 will be drawing to a close. For the IAC, 2010 was a
                             remarkable & interesting year.
  Office opening:

            3 January 2011   With all the changes that we as Accountants are faced with, 2011 is going to put extra
                             challenges and pressures on the Institute and you as Professionals.

                             The best part of the season is remembering those who make the holidays meaningful.
                             I wish you and your families all the love, happiness and peace the festive season brings.
                             May it follow you into and throughout the coming year.

                             AW Bezuidenhout
                             President


Inside this issue:



Key man policies 2



Voluntary disclo- 2
sure programme
                                                    IAC Board of Directors 2011
Islamic Finance      8
Tax invoices
                                                                   President
                                                             Andrew Bezuidenhout
Tax clearance        10
Agent v Principal
                                                                Vice President
                                                                Derek Johnstone
Ethics               12

                                                                   Free State
From the IAC         14                                          Joey Badenhorst
office


New members          15
                                                                    Gauteng
                                                                Michael Biermann
Page 2                                                                                          The Informant



                  Deductibility of Key man policies
                  Employers have often used         only qualify for a deduction               amount recoverable
                  insurance policies to protect     where the employer                         is intended to be
                  themselves against the poten-                                                paid to the employee
                  tial losses which could arise        Paid the premiums and the               or director‟s estate
                  when they loose employee or          employee included the
                                                                                               or beneficiaries.
                  director. Employers were             premiums in his/her taxable
                  allowed a deduction where            income, or
                  the policy was taken out on                                         Consequently, premiums for
                                                       Is insured against any loss
                  the life of the relevant key                                        existing deferred compensa-
                                                       by reason of death, disabil-
                  person. The employer would                                          tion policies will no longer be
                                                       ity or severe illness of an
                  however be taxed on the                                             deductible unless the premi-
                  proceeds when it was paid            employee or director and
                                                                                      ums paid by the employer are
                  out.                                       the policy is a risk     included in the taxable income
                                                             policy with no cash/     of the employee/director.
                                                             surrender value
                  Substantial changes were
                  made to section 11(w) which                which is the sole        Employers should therefore
                  will affect all policy payments            property of the em-      decide whether salaries will be
                  made on or after 1 January                 ployer and               “grossed up” to compensate
                  2011. Going forward, employ-                                        for the additional tax payable
                  ers (as policy holders of long             there is no scheme in
                                                             place whereby the        on the premiums.
 Character is     term insurance policies) will

like a tree and
reputation like   Voluntary Disclosure—Contact details
its shadow. The
shadow is what
we think of it;
the tree is the
  real thing.
   Abraham
   Lincoln
Volume 5, Issue 3                                                                                               Page 3



Voluntary Disclosure Programme (“VDP”) - Tax default
A tax default means
          the submission of inaccurate or incomplete information to the Commissioner;
          the failure to submit information; or
          assumptions presented to SARS about one‟s tax liability,

where the submission, non-submission, or assumptions resulted in
         (a) the applicant not being assessed for the correct amount of tax;
         (b) the correct amount of tax not being paid by the taxpayer; or
         (c) an incorrect refund being made by the Commissioner

All types of tax administered by SARS are covered by the VDP. Some of these are:
Income tax, PAYE (employee‟s tax), value-added tax (VAT), diesel refunds, customs duties, excise
duties and levies, donations tax, estate duty, mineral and petroleum resource royalties, royalties,
secondary tax on companies (STC), stamp duty, securities transfer tax (STT), transfer duty, turn-
over tax and uncertified securities tax (UST).

Any person may apply for the VDP, whether in a personal, representative, withholding or other
capacity, for defaults occurring prior to 17 February 2010. The VDP is effective from November
2010 until October 2011.



VDP relief
                                                                                                        Personality can
If SARS accepts that the appli-           Interest relief                Additional tax relief
cation is a disclosure which
                                     50 per cent interest relief     SARS will impose no addi-          open doors, but
meets the requirements set
                                     for applicants who required     tional tax.
out below, the following relief
                                     permission from the Com-
                                                                                                        only character
could be provided:
                                     missioner to apply (i.e. in-
        Penalty relief               stances where the taxpayer       Criminal prosecution re-
                                                                                                        can keep them
                                     is already under investiga-                lief
Penalties will not be charged,                                                                              open.
(fixed amount or a percentage        tion or audit)                  SARS will not initiate criminal
-based penalty), with respect        100 per cent interest relief    prosecution for any Tax Act           Elmer G
to the disclosure.                   for all other applicants.       offence, or related common
Penalties for late submission                                        law offences.                        Leterman
of returns and late payments
may, however, be charged.



VDP requirements
The requirements for a valid        f) be made in the prescribed     that person is aware of—
voluntary disclosure are that          form and manner;                a) a pending audit or inves-
the disclosure must—                g) be made within the period          tigation into the person‟s
 a) be voluntary;                      prescribed by the Com-             affairs; or
                                       missioner by notice in the
 b) involve a default;                 Gazette (i.e. between No-       b) an audit or investigation
                                       vember 2010 and October            that has commenced, but
 c) be full and complete in all                                           has not yet been con-
    material respects;                 2011); and
                                                                          cluded.
 d) involve the potential appli-    h) be in respect of a default
                                       which occurred prior to       SARS may allow persons un-
    cation of a penalty or addi-                                     der investigation/audit to apply
    tional tax in respect of the       17 February 2010.             for VDP if the default would
    default;                                                         not otherwise be detected or
 e) not result in a refund due                                       the application is in the inter-
                                   Any person may apply, unless
    by the Commissioner;                                             est of efficiency.
Page 4                                                                                            The Informant



                 Applying for Tax VDP
                 Prospective applicants can          issue a non-binding opinion        have been verified.
                 request application forms           indicating whether or not the
                 from the SARS Contact Cen-          applicant would qualify for any
                 tre (0800 007277) or com-           relief and, if so, to what ex-     The anonymous applicant may
                 plete an application form at        tent. This non-binding opinion     decide not to proceed with
                 any SARS branch office.             will however be conditional        the application for relief.
                                                     upon the factual disclosure
                 Application forms are also          made, and can only be used as
                 available on eFiling.               a guideline.                       These persons will remain at
                  Anonymous Applications                                                risk as SARS might identify
                 An applicant, who wishes to                                            the defaults at a later stage
                                                     SARS will only commit to           which could result in penalties,
                 first obtain an indication of the   relief after the identity of the
                 possible relief that may be                                            additional taxes and interest
                                                     applicant has been disclosed,      being levied and potential
                 granted, may submit an appli-
                 cation that does not reveal         i.e. after all the facts of the    criminal charges.
                 any identifying information.        disclosure (including the es-
                                                     tablishing whether there was a
                 Based on this, SARS may then        pending audit or investigation)




                 VDP supporting documentation
                 Applicants must complete an application form for relief under the Tax VDP.
The character    In order to support the application, the following information must be submitted:
  of a man is            The name, address (including email), telephone number, identity number, company or
                         trust registration number, and any identification tax number assigned by SARS to the appli-
known from his           cant (if applicable)

conversations.           The address of the applicant‟s authorised representative, including telephone and fax num-
                         bers (if applicable)
                         The tax year(s), reporting period(s) or tax period(s) involved in the disclosure
  Menander               Amount of the disclosure (if applicable)

                         Tax type(s)

                         Type of return(s) involved (IT type return, VAT, etc.)
                         Type of omission or default (understatement of tax; overstatement of refund or any other
                         non-compliance resulting in outstanding tax)
                         Reason for the omission or other non-compliance resulting in outstanding tax

                         Primary business activity

                         An explanation of how the applicant considers that the requirements have been met.


                 If the application is successful, SARS will communicate this to the applicant and enter into an
                 agreement to cover the following:
                         The relief granted by SARS under the Tax VDP;

                         Payment terms in respect of the outstanding tax;

                         The fact that the agreement will be regarded as null and void if SARS subsequently

                         determines that the disclosure did not constitute a valid disclosure under the Tax VDP;

                         The confidentiality of the agreement.
Volume 5, Issue 3                                                                                              Page 5



Exchange control VDP
Persons may apply for Excon           South African residents         tions are assured that where
VDP:                                  who took funds offshore         a full disclosure is made in the
                                      illegally and/or who benefi-    prescribed manner and admin-
   Individuals,                       cially own any unauthorised
                                      foreign assets and/or struc-    istrative relief is granted by
   sole proprietors,
                                      tures (of whatever nature,      FinSurv (VDP Division), no
   partnerships,                      excluding bearer instru-        further action against the
                                      ments).                         South African resident in-
   deceased & insolvent es-                                           volved in such contraventions
   tates,                                                             will be taken or initiated by
                                   Under the Excon VDP suc-           FinSurv.
   South African trust(s),
                                   cessful applicants will be re-
   former South African resi-      garded as having regularized
   dents,                          their exchange control affairs     [FinSurv: Financial Surveillance
                                   in respect of the declared         Department of the South African
   companies and                   value of all unauthorised for-     Reserve Bank, previously known
                                   eign assets disclosed in their     as the “Exchange Control De-
   close corporations
                                   application.                       partment”]
That have contravened the
Regulations, prior to 28 Feb-
ruary 2010; and                    South African residents who
                                   have contravened the Regula-



                                                                                                         Good habits
Excon relief levies
                                                                                                         result from
Applicants who are granted administrative relief in respect of unauthorised foreign assets and/or
structures (of whatever nature, excluding bearer instruments) may have to pay a levy on the mar-          resisting
ket value thereof.
                                                                                                         temptation
        A levy of 10 per cent calculated on the market value of the unauthorised foreign asset dis-
        closed as at 28 February 2010. This levy must be paid from foreign-sourced funds.                  Ancient
        A levy of 12 per cent calculated on the market value of the unauthorised foreign asset dis-        proverb
        closed as at 28 February 2010, where no foreign funds are available.
The amount levied in the case of an individual is reduced by R4 million of the foreign capital allow-
ance or any remaining portion thereof, and may not be reduced by any fees or commissions.


The levy must be paid within three months of the date of application approval, through
an Authorised Dealer, into the following account:
Account holder: Corporation for Public Deposits
Account name: Voluntary Disclosure Programme
Account number: 95241280
Reference number: Applicant‟s name and VDP number.


Documentary proof of such payment must be submitted to FinSurv (VDP Division) by the Author-
ised Dealer concerned. An authorized dealer is a person authorised by the National Treasury to
deal in foreign exchange, e.g. ABSA, Nedbank and Investec.
Page 6                                                                                            The Informant



                Excon VDP applications
                An applicant must lodge the original signed
                application and supporting documentation on             Deceased estate(s)/Insolvent estate(s)/South
                or before 31 October 2011 via the following             African trust(s)/Former South African resi-
                entry points:                                           dents (VDP-IT).
                   Authorised Dealer                                    Companies/Close corporations (VDP-CE).

                   Authorised representative
                                                                    Once the application form has been completed,
                   By post
                                                                    the original signed form, together with any
                   Hand delivered directly to the FinSurv           supporting documents, must be lodged with an
                   (VDP Division).                                  Authorised Dealer in the case of foreign
                                                                    assets and/or structures (of whatever nature,
                The application form can be downloaded at:          excluding bearer instruments) being regularised,
                www.reservebank.co.za>SARB activities>Voluntary     while all other applications (that will normally
                Disclosure Programme (VDP)                          attract a levy) may be submitted to the
                                                                    FinSurv (VDP Division) via one of the listed entry
                                                                    points.
                Two types of application forms exist:
                    Individual/Sole proprietor/Partnership/



 Truth is the
                Circumstances where relief will not be granted
   only safe
                The following categories of             ventions committed after          investigation by FinSurv
  ground to     assets do not qualify for ad-           28 February 2010
                                                                                          Foreign assets (of whatever
                ministrative relief:
   stand on                                             Where FinSurv is conduct-         nature, excluding bearer
                    Bearer instruments                  ing an investigation into         instruments) that form part
  Elizabeth         Assets derived from
                                                        contraventions of the             of, or where the applicant
                                                        Regulations, unless dis-          benefited from, any crimi-
   Stanton          unlawful activities                 closed in the application         nal actions and/or omis-
                                                        form                              sions (e.g., drug trafficking,
                                                                                          money laundering).
                The following circumstances             Where the Head: FinSurv
                will not be considered under            declined an application
                the Excon VDP:                          lodged by the applicant to
                                                        consider administrative
                   Exchange control contra-             relief for matters under




                FICA Obligations arising from VDP
                A professional adviser who is      In cases where a professional       have to retain the information
                approached by a client for         adviser does not have an ex-        concerning the client‟s identity
                assistance in using the VDP        isting business relationship,       as well as other FICA informa-
                                                   (e.g. new clients) the adviser      tion, e.g. proof of address.
                in the course of an existing       will have to take the necessary
                business relationship will not     steps to establish and verify       For further information, refer
                be required to repeat the          the prospective client‟s iden-      to: Public Compliance Communi-
                                                                                       cation No. 04 (PCC04) – Obliga-
                establishment and verification     tity.                               tions arising from the Financial
                of the client‟s identity if that   Once the verification of the        Intelligence Centre Act Pertaining
                was done at the outset of          client‟s identity is completed,     to the Voluntary Disclosure Pro-
                the relationship.                  the professional adviser will       gramme (as published by the
                                                                                       Financial Intelligence Centre)
Volume 5, Issue 3                                                                                             Page 7



Excon VDP—Supporting documentation
The following supporting documentation must              Fixed property: A valuation certificate
accompany the applicant‟s original signed appli-         issued by a valuator, or by a sphere of
cation form:                                             government of the country where that
                                                         foreign asset is located, on 28 February
       Cash: Declaration giving a description
       and the value of the money, on 28 Feb-            2010;
       ruary 2010;                                       Foreign insurance policies: A valuation
                                                         certificate from your insurer, as at 28
       Bank accounts, call deposits or
       time (term) deposits, or any other                February 2010;
       short-term foreign asset: Original                An investment in a collective scheme,
       or a certified copy of a statement of             such as a unit trust: A statement by the
       account from the foreign institution              management company of the scheme, as
       concerned, on 28 February 2010;                   at 28 February 2010;
       Financial instruments listed on a                 Intangible assets, such as a patent or
       recognised exchange, such as shares,              copyright: A valuation certificate by a
       stock, bonds or debentures: Original or           valuator of the country where that foreign
       a certified copy of a statement of ac-            asset is located or registered, as at 28
       count and price as quoted on the ex-              February 2010;
       change, on 28 February 2010;
                                                         Other foreign assets: A written decla-
       Other financial instruments not                   ration
       listed on a recognised exchange or
       unlisted shares: Valuation certificate                                                         The truth that
       from a foreign valuator, on28 February
       2010;                                                                                           makes men
                                                                                                      free is for the

Withdrawal of Excon VDP relief                                                                        most part the
                                                                                                       truth which
The following events could               misleading information     The objection must be submit-
nullify or cause the voluntary           or supporting documen-     ted by post to
                                                                                                      men prefer not
disclosure to be declined,               tation; and/or
withdrawn or declared void                                                                               to hear
                                         fails to pay the agreed    South African Reserve
where the applicant,
                                         VDP levy within the                                          Herbert Agar
      committed an exchange                                         Bank
                                         stipulated time period.
      control contravention                                         Head: Financial Surveillance
      after 28 February 2010;                                       Department
      has foreign assets (of                Objection               VDP Division
      whatever nature, ex-         An applicant may object
      cluding bearer instru-       where his/her If your applica-   P O Box 3125
      ments) that form part of     tion was unsuccessful (i.e.,     Pretoria
      criminal actions             declined, approval was subse-
                                   quently withdrawn or de-         0001.
      ,or where the applicant      clared void).
      benefited from any
      criminal actions and/or      The aggrieved applicant should
      omissions (e.g., drug        lodge an objection within 30
      trafficking, money laun-     days of date of final notice.
      dering);
      misrepresents and/or
      omits to furnish any
      material facts relevant
      to the disclosure;
      furnishes false and/or
Page 8                                                                                               The Informant



                   Sharia compliant financing
                   Sharia law precludes persons                                            the bank‟s interest over an
                   from paying earning interest.                                           agreed upon period.
                   A new section was introduced        For VAT purposes, the client
                   to the VAT Act which makes          is deemed to acquire the
                   provision for the following         goods directly, (i.e. the bank is
                                                       deemed not to have acquired         For VAT purposes, the client
                   two Sharia compliant financing                                          is deemed to buy the bank‟s
                                                       the goods) for the price the
                   products :                                                              interest in the goods for a
                                                       bank paid to the third party.       consideration equal to the
                        Murabaha                       Any premium paid to the bank        amount paid/payable by the
                        Diminishing Musharaka          is regarded as a financial ser-     bank. The interest in the as-
                                                       vice which will be exempt           sets is deemed to be supplied
                                                       from VAT. Any commission            at the time the seller is di-
                                                       earned by the bank will how-        vested from his interest in the
                              Murabaha
                                                       ever remain taxable.                goods.
                   This is an agreement between
                                                                                           If the bank acquires interest in
                   a bank and its client whereby
                                                                                           one of its clients existing as-
                   the bank will acquire an asset        Diminishing Musharaka             sets, the transaction is disre-
                   from a third party for the
                                                       It is an agreement between a        garded from a VAT perspec-
                   benefit of the client, The client
                                                       bank and its client to jointly      tive. Any return on the inter-
                   will then buy the asset from
                                                       buy an asset from a third party     est in the asset is deemed to
                   the bank within 30 days and
                                                       or where the bank acquire an        be an exempt financial service
   The best        agree upfront to pay the bank
                                                       interest in the client‟s asset.     whereas any commission or
                   a fixed amount that exceeds
                                                       The client will then acquire        fees will be subject to VAT.
 measure of a      the bank‟s purchase price.

man’s honesty
  isn’t his tax
                   Tax invoices—validity
return. It’s the
                                  Full Tax invoice                                 Abridged Tax invoice
zero adjust on                   (value > R 3 000)                                   (value < R 3 000)
 his bathroom
     scale         The words “Tax invoice” in a prominent place         The words “Tax invoice” in a prominent place
   Arthur C        Name, address and VAT registration number of         Name, address and VAT registration number of
                   the supplier                                         the supplier
    Clarke
                   Name, address and VAT registration number of
                   the recipient

                   Serial number and date of issue                      Serial number and date of issue

                   Description of goods/services                        Description of goods/services
                   Quantity/volume of goods/services supplied

                   Either:                                              Either:
                             The value of the supply, amount of tax               The value of the supply, amount of tax
                             charged and the consideration for the                charged and the consideration for the
                             supply, or                                           supply, or
                             Where VAT is included in the price, the              Where the VAT is included in the price,
                             price including the VAT and a statement              the VAT inclusive price and a statement
                             that VAT is included in the price at the             that VAT is included at the applicable
                             applicable rate or a statement of the                rate or a statement of the amount of
                             amount of VAT included in the price.                 VAT included in the price.
Volume 5, Issue 3                                                                                               Page 9



Recipient created tax invoices—IN 56
Generally, a supplier of goods     The recipient must first obtain   to be issued.
or services is required to issue   written authorisation from the
a tax invoice for taxable sup-     Commissioner before being           General Binding Ruling
plies made to a recipient          allowed to issue recipient-       The Commissioner granted
within 21 days of the supply       created tax invoices.             approval where the recipient
being made.
                                                                             determines the consid-
SARS does however acknowl-                                                   eration for the supply
edge that circumstances exist        Credit and debit notes
                                                                             of the goods or ser-
where a supplier may be un-        Subject to SARS‟ approval, the            vices; and
able to issue a tax invoice due    recipient may also issue debit
to circumstances beyond its        and credit notes in respect of            is in control of deter-
control e.g. where the recipi-     previous supplies. Approval               mining the quantity or
ent of the supply is in control    will only be granted where the            quality of the supply,
of determining the quantity or     recipient has received ap-                or is responsible for
quality of the supply, or is       proval to issue recipient cre-            measuring or testing
responsible for measuring or       ated tax invoices. Further-               the goods sold by the
testing the goods sold by the      more, the recipient must have             supplier.
supplier. Provision is therefore   issued a recipient-created tax
made to allow the recipient to     invoice in respect of the sup-
issue a tax invoice in these       ply for which a recipient-
circumstances.                     created credit or debit note is



Conditions for approval to issue recipient-created tax invoices
                                                                                                        If you tell the
The approval to issue recipi-           not issue a tax invoice,           the supplier and retaining
ent created tax invoices, debit         credit or debit note in                                         truth you don’t
                                                                           a copy thereof;
and credit noted is conditional         respect of any taxable
                                        supply to which the ap-            issuing the recipient-          have to
upon the recipient:
                                                                           created tax invoice
                                        proval applies;                                                   remember
     being a vendor,                                                       within 21 days from the
                                        issuing a recipient-               date of the supply being
     acquiring and retaining            created tax invoice, debit         made; and                       anything
     proof of the supplier‟s            or credit note that com-
     VAT registration num-              plies with the VAT Act             retaining a copy of the       Mark Twain
     ber;                                                                  recipient-created tax
                                        requirements;
                                                                           invoice, credit or debit
     entering into an agree-            providing the recipient-           note.
     ment with the supplier             created tax invoice,
     that the supplier shall            credit or debit note to




Tax invoices—Sale of going concern

Generally, the sale of a busi-     Sections 20(5A) and 21(8)         be, will not be applicable for a
ness results in the change of a    make provision for a transi-      maximum period of six
vendor„s registered details.       tional arrangement for ven-       months from the date of the
This change in the vendor„s        dors who have acquired an         supply of the enterprise.
details is not communicated        enterprise from another ven-
or takes time to be communi-       dor that has subsequently
cated to suppliers of that busi-   deregistered as a vendor.         As a result, the tax invoice,
ness to update their records.                                        debit or credit note may re-
Accordingly, these suppliers       In this regard, the require-
                                   ment that a tax invoice, debit    flect the name, address and
issue tax invoices bearing the                                       VAT registration number of
incorrect details of the vendor    or credit note be issued re-
                                   flecting the name, address and    the vendor that sold the en-
(e.g. name or VAT number).         VAT number of the supplier        terprise.
                                   or recipient, as the case may
Page 10                                                                                           The Informant



                  Tax clearance certificates
                  Government requires a tax         application for a TCC.             A business can apply for a
                  clearance certificate (“TCC”)                                        TCC even when its turnover
                  as part of the tender process.                                       is less than R 1 million and
                  Persons can apply for a TCC       SARS might not issue a TCC         therefore not registered for
                  at their local SARS branch        where:                             VAT.
                  office. The application must be
                  submitted in person by either          Tax, penalties or interest
                  the applicant or its represen-         are outstanding;              TCC‟s are only valid for a
                  tative. If a representative is                                       certain period, after which a
                  acting on behalf of the recipi-        Any income tax, VAT or
                                                                                       person has to apply for a new
                  ent, he will be required to            PAYE returns are out-
                                                         standing past their due       TCC.
                  submit a certified copy of his
                  and the applicants ID as well          date;
                  as written proof that he has           PAYE reconciliations
                  been authorized to submit the
                                                         were not submitted.
                  application,
                  SARS generally required 21
                  business days to process an




                  Agent v Principal
 Great ability
                  For VAT purposes it is crucial to distinguish between the principal and agent as only the principal
 develops and     is liable for output tax on supplied made and entitled to an input tax deduction in respect of costs
                  incurred in the course or furtherance of its enterprise. The agent will generally only be liable for
 reveals itself   VAT on its commission or fees for services rendered to the customer. The table below provide
                  general guidelines to distinguish between an agent and principal.
 increasingly
                                           Agent                                         Principal
with every new
  assignment
   Baltasar
                  1      The agent will not be the owner of any         The principal is the owner or the goods or
   Gracian               goods or services acquired on behalf of the    services acquired on his behalf by the agent.
                         principal.



                  2      The agent will not alter the nature or value   The principal may alter the nature or value
                         of the supplies made between the principal     of goods.
                         and third parties.



                  3      Transactions on behalf of the principal will   The total sales represent the principal‟s
                         not affect the agent‟s turnover, except to     turnover, whereas the mark-up is the prin-
                         the extent of commission or fee earned on      cipal‟s profit %. The commission charged by
                         such transactions.                             the agent forms part of the principal‟s ex-
                                                                        penses.

                  4      An agent only declares the commission/fee      The principal declares gross sales as income
                         for Income Tax and VAT purposes.               for income tax purposes and as taxable
                                                                        supplies for VAT purposes.
Volume 5, Issue 3                                                                                              Page 11



New Tax SCA Judgments
   Sprig Investment 117 CC t/a Global Investments—Adequacy of the reasons for a tax assess-
   ment furnished by the Commissioner, composition of tax court.
   NWK Limited—Simulated transaction, tests for simulation, taxpayer not entitled to claim inter-
   est paid on amount not actually borrowed.
   Saira Essa Productions CC—Small business tax amnesty—whether amnesty was also granted
   iro criminal prosecution.
   The Abraham Krok Trust—Donations tax—whether donations were authorized by a trust
   deed and exempt from donations tax
   Ackermans Limited—whether seller can claim „unrealized; liabilities on sale of its business

   Plasmaview Technologies (Pty) Ltd—Tarriff determination of complete TV sets

   Distell Ltd—Tarriff classification : Wine coolers, other fermented beverages, water




Registering a trust—additional documents required
The Master of the Free State         Additional documents            Persons are therefore re-
High Court recently issued a                                         quested to submit two sets of
                                                                                                        In the business
notice in respect of additional   SARS has requested that, go-       the following documents when
documents to be lodged for        ing forward, certified copies of                                        world, the
                                  the trustees‟ identification       registering a trust:
submission to SARS.               documents also needs to be                                            rearview mirror
                                                                          Trust deed
                                  submitted.
                                                                          Letters of authority             is always
Previously the practice was
that the Master submitted a                                               Certified copy of each         clearer than
copy of the trust deed and                                                trustee‟s identity docu-
letters of authority to SARS in                                           ment.                         the windshield.
order to expedite the tax
registration.                                                                                           Warren Buffet




Companies Act—Reviewer accreditation
The Companies Act requires        counting officer in terms the          the day today management
that companies‟ annual finan-     Closed Corporation Act.                of the company‟s business
cial statements be either                                                or be involved at any time
audited or independently re-      CIPRO has confirmed that the           during the previous 3
viewed. The Draft Companies       IAC is a recognized account-
                                  ing professional body in terms         years;
Regulations requires that an
independent accounting pro-       of the Close Corporations              Must not be not a pre-
fessional reviews the financial   Act.                                   scribed officer or full-time
statements where an audit is                                             executive employee of the
not required.                                                            company;
                                  An independent reviewer:
                                                                         Should not be related to
                                      Should not have a financial        any of the above persons.
An independent accounting
                                      interest in the company;
professional is defined to in-
clude a person who is qualified       Must not be involved in
to be appointed as an ac-
Page 12                                                                                    The Informant



                  Principles of ethical conduct



                        It is expected of all our members to subscribe to the following over-arching
                        principles of ethical conduct.

                        As such all members shall:
                              At all times act in the public interest;
                             At all times discharge allotted and accepted responsibilities with in-
                             tegrity;
                             Not allow bias, conflict of interest or undue influence of others to
                             override professional or business judgments;
                             Maintain professional knowledge and skill at the level required to
                             ensure competent professional services to clients or employers;
                             Respect the confidentiality of information required as a result of pro-
                             fessional or business relationships, and not disclose any such informa-
                             tion to third parties without proper and specific authority, unless so
                             required by law;
                             Not misuse authority or office for personal gain;
                             Conduct themselves in a manner consistent with the high standards
                             and good reputation of members and the Institute of Accounting and
Real success is              Commerce;
                             Act with fairness and integrity towards all persons with whom their
 finding your                work is connected, towards other members and in compliance with
                             the letter and the spirit of current statutory and other legal require-
lifework in the              ments of the country in which they reside;
                             So order their personal conduct as to uphold and not recklessly or
work that you                maliciously injure the professional reputation of the Institute of Ac-
                             counting and Commerce, or another person or company; and
     love.                   Comply in all respects with the Professional Accounting and Manage-
                             ment Practice Guidelines incorporated with this Code.
    David
                            Membership could be terminated should a member be found
 MacCullough                guilty by a disciplinary committee of the Institute of Accounting
                            and Commerce Board of conduct in breach of this Code of behav-
                            iours such as dishonesty, breaches of confidentiality, corruption
                            and criminal behaviour.
Volume 5, Issue 3                                                                                                         Page 13



Duties and responsibilities of members towards clients
Members of the Institute of             cial benefit for their em-          course of their profes-
Accounting and Commerce,                ployer,      associates    or       sional duties;
as professionals, have spe-             themselves;                         Not make exaggerated
cific responsibilities to-              Act diligently in accor-            claims for the services
wards their clients, and                dance with applicable tech-         they are able to offer, the
shall:                                  nical and professional stan-        qualifications they possess,
                                        dards when providing                or experience they have
    Strive to the best of their         professionals services;             gained;
    ability to serve the needs          Only accept that number             Have proper regard for
    of their clients efficiently        of clients as they can effec-       the professional standards
    and professionally;                 tively and professionally           expected of them and shall
    In regard to the affairs of         service;                            not continue work for
    the client, act and perform         When requested or by law            which they are not compe-
    their professional func-            required to do so, advise           tent without first obtaining      Success usually
    tions in good faith, hon-           clients on the financial            such or assistance as is
    estly and diligently;               management of their busi-           necessary to enable the           comes to those
    Always maintain objective,          ness;                               work to be carried out
    professional standards and          Not disclose any aspect of          competently;                        who are too
    ensure that the legitimate          the business affairs of a           Maintain professional inde-
    interest of the client being        client to a third party,            pendence at all times with-          busy to be
    advised is paramount in             which      includes     family      out control of influence
    any recommendations and             members and social ac-              from others and, in event          looking for it
    advice given;                       quaintances, except as              of any potential or current
    Always ensure that the              required by law, under              conflict of interest arising,       Henry David
    clients‟ interest rank ahead        written authority granted           inform all interested par-
    of any other business pres-         by the client, or under             ties and offer to withdraw;            Thoreau
    sure on or business com-            professional duty or right          and
    mitment they may have;              to disclose;                        Only charge a client for
    Not attempt to sway the             Report to the client any            professional services ren-
    client‟s judgments to ob-           dishonest or criminal ac-           dered.
    tain commercial or finan-           tivity discovered in the



Duties and responsibilities of members as individuals

Members of the Institute of Ac-                   not;                                         responsibilities;
counting and Commerce as indi-                    Not use any information gained               When called upon to give an
viduals, have personal responsibili-              during the provision of profes-              opinion, to do so objectively and
ties, and shall:                                  sional services to a client, for per-        to the best of their ability;
    Demonstrate integrity and human-              sonal gain either for themselves or          Not accept gifts or hospitality
    ity, and avoid all unfair discrimina-         for any other person whatsoever;             from a client if it poses a risk to
    tory practices including those re-            Properly balance the interests of            a member‟s objectivity and
    lating to race, colour, language,             their employer with their personal               professionalism;
    nationality, ethnic origin, gender,           responsibilities and commitments;           Not allow any person to use
    age, handicap, religion, social and           Engage in continued learning to             their practice number, even if
    political background;                         improve their professional compe-           they are in partnership with such
    Have high regard for the interests            tence and pursue new ideas,                 a person;
    of society in carrying out the poli-          methods, practices and advances             Act honestly and fairly in their
    cies of the organisation in which             in technology                               dealings with others; and
    they are employed;                            Accept only such work as they               Be courteous to others at all
    Not injure or attempt to injure,              believe they are qualified or com-
    maliciously or recklessly the pro-                                                        times.
                                                  petent to perform, and where
    fessional reputation, prospects,              necessary, obtain expert advice,
    interests or business of other                assistance or supervision;
    individuals, irrespective of whether          Be fully conversant with the codes
    they are members of the Institute             of other professional associations
    of Accounting and Commerce or                 which are relevant to their work
Page 14                                                                                            The Informant



                  From the CEO’s desk
                  It is almost the end of 2010 and the euphoria of the world cup soccer event is almost erased from
                  our memory.

                  During 2010 we experienced a high but we must now face the realities and the challenges that the
                  economic world thrust upon us.

                  The second draft regulations has just been released and without doing an in-depth study thereof, I
                  am glad to announce that the Minister of DTI (Mr.Rob Davies), has seen it fit to drop the IFAC
                  membership requirement for persons to act as reviewers and has replaced this with persons who
                  are currently registered as Accounting Officers. Eventhough this was the IAC‟s proposal in the
                  objections to the first draft regulations, I must warn that the challenges for the Institute has just
                  begun. Having said that, the Board of Directors and Management welcomes this challenge.

                  On behalf of the Board of Directors , I express my sincere thanks to all members for their loyal
                  support of the Institute and for the payment of their annual membership subscription fees.

                  From 2011, our only source of income will be from subscription fees and without this the Institute
                  will not be able to operate. As indicated in our various communiqué to members during the year, if
                  subscription fees are not paid by 31 March 2011, there will be an automatic termination of mem-
                  bership. Please ensure that there is no need for us to resort to such drastic measures.

                  The annual membership subscription fees for 2011 are as follows:

                      Membership category            Subscrip-         Insurance
                                                     tion              (R2m             Vat          Total
                                                     Fee               cover)
   Drive thy            Financial Accountant
                              in Practice            R2500.00          R402.63          R406.37      R3309.00
 business or it
                         CC as Accounting
will drive thee                 Officers             R 650.00                           R 91.00      R 741.00
                        Financial Accountant
  Benjamin                  in Commerce              R1000.00                           R140.00      R1140.00
                              Accounting
   Franklin                  Technicians             R 600.00                           R 84.00      R 684.00

                              Students               R 600.00                           R 84.00      R 684.00

                               ATC‟s                 R 750.00                           R 105.00     R 855.00


                  The following penalties for late payment of subscriptions will apply:-
                  Subscriptions unpaid by:-
                                31 January 2011                               Fees plus 15% penalty
                               28 February 2011                               Fees plus 25% penalty
                                31 March 2011                                 Fees plus 40% penalty


                  Any subscriptions unpaid after 31 March 2011 (without arrangements being made),
                  membership will automatically be terminated.

                  The IAC Offices will close for the Christmas holidays on the 24 th December 2010 and will re-open
                  on the 03rd January 2011.

                  Your Board of Directors is constantly looking at ways to improve our service to you, the Member.
                  I therefore invite all members to forward me with positive suggestions of how we can improve our
                  services. Should you wish to make some constructive criticism, this would also be welcome.

                  On behalf of the Board of Directors, Management and staff of the Institute, we wish you and your
                  families a Merry Christmas and a blessed New Year.
Volume 5, Issue 3                                                          Page 15



Congratulations to our new members!!

Financial Accountant in Practice ( Accounting Officer)
Practice Number             Name
AO 653234                   S.A. Green
AO 655072                   R. van Heerden
AO 632450                   P. Jibson
AO 655079                   S. Field
AO 655082                   W. Engelbrecht
AO 655043                   O.S. Mahlabe
AO 655061                   C.N. Njeje
AO 655080                   M.M. Zikalala
AO 654943                   I. Kajee
AO 655068                   E. Ntuli
AO 655074                   W.A. Bezuidenhout

AO 655087                   C. Jaich
                                                                     Good design
                                                                       can’t fix
Close Corporations as an Accounting Officers
                                                                    broken business
AO 655084                   CNBS Accounting and Tax Practitioners
                                                                        models
AO 655097                   Business Soul Accounting CC
                                                                     Jeffrey Veen

Financial Accountants in Commerce

IAC-FAC 655099              J.L. Wildschut



Accounting Technicians
IAC-AT 655076               B. Mpukwana
IAC-AT 655078               J.L. Symons
IAC-AT 655086               P.L. Lekgau
IAC-AT 655085               P. Mtombeni
IAC-AT 651280               N.B. Persadh
IAC-AT 655077               D. Visser
IAC-AT 655083               V.A. Salie
IAC-AT 655098               N.N.H. Malek

IAC-AT 655091               M. Kanyinji
                                 A dynamic world-class professional accounting and management institute


                                 The Institute of Accounting and Commerce (IAC) is a professional
     INSTITUTE OF
                                 accounting institute. Established in 1927, it is registered in South Af-
 ACCOUNTING AND
       COMMERCE
                                 rica as a section 21 company. It is fully self-funded and conducts its
                                 business from its Head Office in Cape Town.
                                                                      MISSION STATEMENT
                                 It is the aim of the Institute of Accounting and Commerce to promote
                                 actively the effective utilisation and development of qualified man-
                                 power through the achievement of the highest standards of profes-
   Institute of Accounting and   sional competence and ethical conduct amongst its members
                   Commerce
        252 Rossmead Avenue
                     Wynberg
                         7780

   Phone:     (021) 761 6211
   Fax:       (021) 761 5089


                    QUERIES
                                                                                                             IAC Helpdesk
                    General:
             info@iacsa.co.za
                                                                                                               Ehsaan Nagia
                                                                                                                   021-761 6211
              Membership
                   Soraya                                                                                      Gordon Webb
       members@iacsa.co.za                                                                                        021-851 7400
                     Finance
                     Duncan
          finance@iacsa.co.za

                   Technical
               Ehsaan Nagia:
             ceo@iacsa.co.za

             Gordon Webb
      gordon@webbacc.co.za

                 Newsletter
          lawiid@mweb.co.za                                           From the IAC office


                                                                      Dear Members & Friends
                                  Thank you for your continued support.
                                 We are grateful to you wonderful people, someone who changes your world just by being part of it.
                                 People like you are hard to find, hard to keep and impossible to forget. We say a big thank you and appreciate
                                 your contributions to our success. There are institutions and communities who have come to rely on the support you
                                 have given us over the years.
www.iacsa.co.za                  Thank you once again for your loyal support.


                                 May the years ahead be filled with good health, lots of wealth and prosperity.


                                                                            Best wishes from
                                                                         The Board of Directors,
                                                                        Management & Staff of
                                                                The Institute of Accounting & Commerce

								
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