Large fiscal deficits incurred over the years, although providing short-term support to the economy, have not resulted in commensurate long-term economic growth. This has led to sharp increases in the government’s debt-to-GDP ratio, which currently stands at 60.8 per cent, and is expected to rise to 71.3 per cent in 2022/23. The growing proportion of limited public resources spent on interest payments are crowding out spending on social and economic investment.
In February 2019, the president announced the separation of Eskom into three distinct entities: generation, transmission and distribution. The primary objective being to allow each entity to focus on enhancing efficiency, reducing costs and optimising investment on a specific function, rather than trading off efforts amongst all three. In addition, the capital structure will ultimately be amended to end all reliance of Eskom on government support. Functional separation to wholly owned subsidiaries with independent Boards is scheduled to be complete by March 2020, with legal separation of the distribution and generation functions by December 2021.
Policy certainty and a conducive business environment are critical to support the confidence of businesses and households. A robust monetary policy framework has provided certainty but needs to be complemented with a range of reforms that are within government’s control and do not require significant funding. These would help to raise long-term growth.
The 2019 MTBPS has been presented by Minister Tito Mboweni. His opening statement was a reference to the Aloe Ferox plant he brought to Parliament when presenting the February 2019 budget.
South Africa has limited growth potential in the short term. While government gets its house in order, we need to make sure that, as business owners, we have the correct strategy in place to meet the challenges that face us. Real value lies in the process of putting the plan together. The act of planning helps you think things through thoroughly, and to critically re-assess your assumptions and ideas. A good strategy needs to be short, sharp and coherent, with a strong opening paragraph illustrating where you are going and how you aim to get there.
The latest social media phenomenon in South Africa is a Facebook page started just over a month ago which now has 750 000 followers! It’s a collective of positive sentiments about South Africa from people of all walks of life. Now it looks set to play a role in job creation and stimulating the economy. A positive step in any one’s books!
In a very recent public spat, the board of Old Mutual and its CEO have had an acrimonious relationship, with the CEO wanting to declare the entire board of Directors delinquent after having been fired for conflict of interest. Being declared a delinquent director is not a common occurrence and we thought it may well be of interest to list the ground for Delinquency.
The Minister of Finance, Tito Mboweni, will deliver the MTPBS on the 29th October 2019 at 14h00. This speech is seen by most as a watershed moment. If dramatic action is not taken to address all the current economic ills of South Africa, the ramifications could be dire with ratings agencies and international investors effectively turning their back on South Africa.
The Minister of Finance, Mr Tito Mboweni, called on members of the public to make comments on a paper titled: “Economic transformation, inclusive growth, and competitiveness: Towards an Economic Strategy for South Africa”.
Unlike conventional trusts, which are taxed at a flat rate of tax, a special trust is taxed on the same sliding scale applicable to natural persons. For tax purposes the following types of special trusts are recognised:
Many may think that they are not old enough or wealthy enough to warrant doing any estate planning. However, if a person is over the age of eighteen, no matter how small their estate is, it is advisable to begin the process. Where an estate planner is “at” in life, will determine your strategic plan for your estate, and which techniques to use in order to implement in the plan. An estate planner may be single, married, divorced, or separated. You may have minor children or adult children. You may be married for a second or third time, with children from previous marriages. You may own assets with a strong growth potential.
Much has been publicised about the potential implementation of prescribed investments and resultant impact on investment returns. This policy was previously followed by the Nationalist Party but abolished in the late 1980’s.
The NHI Bill was recently promulgated amid a mixed reaction sentiment, positive and negative. While one can identify strongly with the rationale, affordability is paramount as is the management of such a fund.
Since the 1980’s there has been a global movement towards sustainability and sustainable development – as countries and governments have realised that economic development at the cost of destroying the planet’s natural resources and social equity does not lead to long-lasting prosperity.
News channels throughout South Africa are bombarding us daily with negative news on the South African economy. While it is pretty much a global issue, our situation is compounded by the ravages of state capture and the abuse of taxpayer’s money. From a global perspective, South Africa is the 67th most competitive nation in the world out of 140 countries ranked in the 2018 edition of the Global Competitiveness Report published by the World Economic Forum. Competitiveness Rank in South Africa averaged 51 from 2007 until 2018, reaching an all-time high of 67 in 2018 and a record low of 35 in 2007.
There are a number of important submission deadlines over the next few months. Make a note of the following and should you require assistance please do not hesitate to contact us for professional advice.
Setting up an Online Store
Did you receive an SMS from SARS showing your tax calculation?
The cabinet has finally approved the National Health Insurance (NHI) bill for tabling in Parliament, as announced by Minister in the Presidency for Planning, Monitoring and Evaluation: Jackson Mthembu.
In the current economic climate, more and more companies are becoming financially distressed. Directors are duty bound to constantly monitor the company’s financial position, to determine whether voluntary business rescue proceedings need to be initiated. Failure to implement business rescue proceedings could result in the director being charged with reckless trading and be exposed to personal liability. It is incumbent upon directors to ensure that they place their companies into either business rescue or liquidation, or to cease trading, when the warning signs become evident. Directors should be aware of the practicalities of business rescue, and the duties and powers of the business rescue practitioner.
In 2018 the Department of Trade and Industry published a Companies Amendment Bill for public comment. There are a number of proposed amendments that affect small and medium enterprises (SME’s) and we will briefly outline a few of the potential implications below:
This year taxpayers who meet ALL the following criteria need NOT submit a tax return:
South Africa's gross domestic product (GDP) growth rate decreased by 3,2% in the first quarter of 2019
Our economy continues to stagnate, and one can only hope that President Ramaphosa’s “new dawn” bears fruit sooner rather than later. Below are some key findings as released by Stats SA.
Take urgent action to combat climate change and its impact.