The Bounce Back Support Scheme, a loan guarantee mechanism of R15 billion which was first highlighted in the February 2022 budget speech, has come into effect in April 2022. The scheme aims to facilitate job creation and economic growth in the wake of shocks such as the Covid-19 lockdowns, the July 2021 civil unrest in Kwa-Zulu Natal and Gauteng, and the ongoing flood disaster.
It is normal practice for the new rates for travel allowances for the ensuing year to be tabled in the Budget speech in February. For some odd reason the last two years SARS has only made this information available post-budget.
The Minister of finance Enoch Godongwana tabled his Budget review on the 23rd February 2022. The following were the key tax issues arising.
South Africa’s Sustainable Finance Initiative, chaired by National Treasury, has launched the country’s first national Green Finance Taxonomy in April 2022. This responds to recommendations from National Treasury’s 2021 Technical Paper: Financing a Sustainable Economy, which calls for the development or adoption of “a taxonomy for green, social and sustainable finance initiatives, consistent with international developments, to build credibility, foster investment, and enable effective monitoring and disclosure of performance.”
A general “force majeure” (or “act of God”) clause is often included in lease agreements, and in most cases, its definition is termed broadly. Such a clause will only apply in circumstances which are beyond the parties’ control, which human foresight could not have anticipated, and which make performance in terms of the contract objectively impossible.
Figure 1: PPI headline index numbers and year-on-year rate of change
Nicholas Crisp, deputy director-general for the NHI, recently briefed Parliament on the NHI Bill following extensive public hearings. He tabled that government proposed to levy surcharges on personal income tax, payroll tax, and reallocating funding for medical scheme tax credits. These are some of the "chief sources of income" for the government's proposed National Health Insurance (NHI).
On the 24th March Lesetja Kganyago, Governor of the South African Reserve Bank, announced an increase in the repurchase rate by 25 basis points to 4.25% per year, with effect from the 25th of March 2022.
The 2020 Budget announced government’s intention to restructure the corporate income tax system by reducing avoidance opportunities and expanding the tax base, while lowering the headline tax rate. South Africa’s interest limitation rules also need to be better aligned with OECD/G20 recommendations on base erosion and profit shifting.
Medium‐term fiscal policy is focused on reducing the budget deficit and stabilising the debt‐to‐GDP ratio. To support this consolidation, government will use a portion of higher‐than‐anticipated tax revenue to narrow the deficit while increasing non‐interest expenditure to support economic growth, job creation and social protection.
Main budget non‐interest spending increases by a net R282.3 billion over the medium‐term expenditure framework (MTEF) period compared to the 2021 Budget. This increase is supported by higher‐than‐anticipated revenue collections and does not jeopardise the path to deficit reduction. Total consolidated government spending will amount to R6.62 trillion over the next three years. Additional allocations of R110.8 billion in 2022/23, R60 billion in 2023/24 and R56.6 billion in 2024/25 are made for several priorities that could not be funded through reprioritisation. These include the special COVID‐19 social relief of distress grant, the continuation of bursaries for students benefiting from the National Student Financial Aid Scheme, and the presidential employment initiative. Debt‐service costs will average R333.4 billion per year.
Following a weaker‐than‐expected third quarter, economic growth for 2021 has been revised down to 4.8 per cent, compared with 5.1 per cent estimated at the time of the 2021 Medium Term Budget Policy Statement (MTBPS). The medium‐term growth outlook has improved moderately. Treasury projects real economic growth of 2.1 per cent in 2022, the year in which the economy is expected to return to pre‐pandemic production levels. GDP growth is expected to average 1.8 per cent over the next three years.
The World Bank Group Board of Executive Directors has approved South Africa’s request for a $750 million development policy loan (DPL). This loan will support the Government of South Africa’s efforts to accelerate its COVID-19 response aimed at protecting the poor and vulnerable from the adverse socio-economic impacts of the pandemic and supporting a resilient and sustainable economic recovery.
Government remains committed to structural reforms designed to lower the cost of doing business and create a more competitive economy. Over the medium-term, the following reforms will be accelerated:
The finance minister presented his maiden MTBPS on the 11th of November. Below are some key extracts:
A highly disciplined fiscal policy is to be maintained if we are to enjoy economic growth and stability in the medium to long term. Below are some key points extracted from the Medium-Term Budget Policy Statement (MTBPS):
Below is a brief synopsis of the economic outlook as presented at the Medium-Term Budget Policy Statement (MTBPS).
The director’s role has without a doubt become more onerous amidst the Covid 19 pandemic. However, the Companies Act makes provision for operating in a virtual world, which includes, inter alia:
Newly appointed Minister of Finance, Mr Enoch Godongwana will table the MTBPS on the 4th of November at 14h00. The MTBPS sets out the policy framework for the Budget that is presented every February, updates National Treasury's economic forecasts, adjusts the budgets of government departments and makes emergency changes to spending.
Since the introduction of remote working due to the lockdowns across the globe, many South African employees have become accustomed to working in this “new normal” and are also indeed preferring it to more traditional, onsite workdays. So much so that a significant number have said they would rather change jobs than going back to being required to work onsite exclusively. Though there are many benefits in having a flexible work force, going back to the office might be better suited for your employees. In this article we will discuss the different benefits provided by both remote and onsite working.
Penalties for late filing of Pay As You Earn (PAYE) returns was introduced this year. SARS is in the process of enhancing their Dispute Resolution process to allow for this penalty to be disputed separately from a PAYE late payment penalty.
A crypto asset is a digital representation of value that is not issued by a central bank, but is traded, transferred and stored electronically by natural and legal persons for the purpose of payment, investment and other forms of utility, and applies cryptography techniques in the underlying technology.
Implementing a new IT system for your business can be a daunting task. Many people find it difficult to initiate and cope with change, as well as to agree with colleagues on what the best way forward can be. Yet, it is important for every modern-day business who wants to maintain a competitive advantage within their market to implement and continuously improve upon their systems and processes. This challenging task requires buy in from all employees but must be driven by managers with a wholistic view of the business. Here are a few important points to take note of when implementing new systems:
Despite the recent relaxation of the national lockdown, various businesses and employees are still negatively impacted by the COVID-19 pandemic. These negative impacts are further exacerbated by the impacts of the recent unrest in the country that destroyed businesses and infrastructure. The Government, therefore, wishes to provide additional assistance to those who continue to be adversely affected by COVID-19, as well as assisting in the process of reconstructing businesses. Moreover, this support measure is aimed at supporting employment in the most vulnerable sections of the labour market.