Fraudsters are Everywhere: Cybercrime up 667% since Lockdown  

It didn’t take the online fraudsters long to realise that the coronavirus lockdown has opened up a whole new avenue of opportunity for them.  

Malware, phishing and ransomware attacks are surging, and schemes offering some form of financial relief are particularly evident. All forms of online communication including emails, SMSes and Social Media posts should be treated with caution. 

We share tips on how to protect yourself and your business in these dangerous times, with news on some of the more common scams going around and a link to the latest examples identified by SARS. 

There has been a surge in internet scams over the past three months – from malware, phishing and ransomware to obtaining your log-in details. 

Take extra precautions such as dual authorisations for payment, carefully validate new beneficiaries and get your IT staff or consultants to regularly check that no malware is loaded onto your IT platforms. 

Recently, SMSes were being sent out from the “Public Investment Corporation (PIC)”, promising money from a “Business Personal Relief Fund”. If you replied, you got an approval letter and money was promised once you paid a “handling fee”. If you Google the PIC, there is no mention of Covid-19 relief money.  

SARS have reported scams whereby taxpayers get messages from “SARS” about their income tax return or about an audit on the taxpayer or asking for missing documents and you are asked to disclose confidential information in your reply to “SARS”. See some examples of the latest scams on the SARS “Scams and Phishing Attacks” page. 

There are other scams involving Transnet. 

Treat emails, SMSes, and Social Media with caution, particularly if you get offered some form of relief. 

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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Who will Emerge as Winners and Losers in the Post Covid-19 Marketplace? 

As we wend our weary way through the pandemic and the lockdown’s economic fallout, let’s not lose sight of the fact that eventually we will inevitably return to some form of “normal”. As the wry Internet joke has it “This too will pass. It may pass like a kidney stone, but it will pass.” 

We can all of us – businesses, investors, individuals planning our futures – profit from understanding how there will be both winners and losers emerging from this period of fundamental disruption. We analyse the evolving trends that are driving and will continue to drive this process, with examples of those sectors expected to end up as big winners, and of those predicted to be big losers. 

Many trends that emerged in the lockdown period will almost certainly continue post Covid-19Technology, for example, has received a huge boost with products like Zoom now household names. 

One thing we shouldn’t forget is that periods of anxiety and boredom provide a perfect platform for creativity to flourish. Hopefully, many of you have taken the extra time that lockdown gave you to flesh out the idea that you have had for many years. 

The winners are…   

The big trend of the global lockdown has been the move to working from home which  has worked out well and is set to continue  

There will be many spinoffs from this: 

  • Home improvements will benefit as people spending a lot more time at home  will become aware of items that can enhance their houses. Furniture companies will get more business. Redecorating businesses will also see an uptick in their sales as will TV and sound systems suppliers. 
  • The businesses where staff work at home will be able to scale back on the size of their offices (there will still be a demand for offices, but it will be reduced). As rent is usually one of the high cost items that most businesses have, this downsizing will contribute to cost reductionAnother cost saving will be in reduced travel costs as staff will continue to take advantage of virtual meetings and save travel time – companies will see less airfares and petrol costs along with reduced accommodation and meal costs. 
  • With the reality of climate change and the petrol industry slowly dying, there will be renewed focus on solar and wind energyThis swing to renewable energy will bring in a new surge in investment – something badly needed in the difficult economic times ahead. 
  • Smaller towns stand to gain from this as people working from home realise they can relocate to a simpler, healthier lifestyle (a recent survey in New York showed that 50% of those surveyed would like to move out of big cities). Already parts of the Karoo are marketing the attractiveness of living in quieter and cleaner areas and are upgrading technology so that people can work there.   
  • Distributors and online shopping should continue to be amongst the winners as consumers see how convenient and efficient ordering online is.    
  • Health products and pharmaceuticals should also be successful post Covid-19 as people have grasped how important staying healthy is. 

And the losers 

  • The property sector has already taken some body blows – the retail sector and shopping malls will need to think creatively as consumers take to online shopping and spending will remain weak for a while. Whilst an obvious solution might be to convert shopping malls into residential units, the potential trend of people moving out of the large cities could negate this. 

Office blocks will also be under pressure as demand for office space will likely continue to fall. Again, creative thinking may be needed, perhaps along the lines of office “hot seating” i.e. allowing different people to book a desk for say a day or a few days a week, or conversion to residential or small industrial units. 

Industrial properties may experience some success as distribution centres for online sales grow and companies bring crucial parts of their supply chain back from overseas production. 

  • The coal, oil and gas industry will continue to decline. Before Covid-19, many financial institutions were refusing to finance projects in these fields and they expect renewables and electric cars to become more prominent. 
  • Tourism and the travel industry will take time to recover as consumer spend will remain muted due to ongoing job losses. This will have knockon effects on restaurants, hotels and bed and breakfast facilities which additionally have been struggling with lockdown restrictions. 

It will take a while for the world and South Africa to recover from Covid-19 with forecasts that the first world will not get back economically to where it was in 2019, until at least 2022. In South Africa it will take even longer. 

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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Giving is Good – Just Know Who You are Giving To

There are many worthy causes trying to help vulnerable South Africans in this time of national crisis. Supporting these initiatives is of course absolutely the right thing to doand the only note of caution to be sounded before you make a donation is this – if you are approached by an organisation claiming to be a genuine NPO (Non-Profit Organisation) or PBO (Public Benefit Organisation), undertake some due diligence before committing to anything. 

We show you how to check that anyone soliciting donations is on the level, we discuss the question of tax-deductibility (with a special mention of The Solidarity Fund’s enhanced PBO status), and we share some thoughts on creating a formal “giving policy”. 

There is usually an upsurge in giving when there is a severe crisis. COVID-19 is no exception – witness the outpouring of help for vulnerable people who face lockdown without income or food.  

This reaction is to be admired as it affirms our humanity, but it is worth doing some due diligence on who you are giving to, especially considering the sudden spate of NPOs (Non-Profit Organisations) and people soliciting donations and assuring you that whatever you give is either tax exempt or taxdeductible as they are a PBO (Public Benefit Organisation). 

It is easy to verify these claims 

Although it is not mandatory to register as an NPO, virtually all non-profit organisations do so as it shows a commitment to the spirit of altruism and good governance required of such organisations. NPOs are under the jurisdiction of the Department of Social Development (DSD) and it is a quick process to check if an NPO is registered here by typing in the box the name of the NPO 

Many of these NPOs are also PBOs which are usually registered with SARS to enable you as donor to claim the tax allowances available, and can be verified on the SARS website 

Other due diligence 

Ask the NPO to give you proof that the money you are giving is going to where the NPO promises. This is a standard requirement – Foundations that give to NPOs require that they report back verifying not only that the money was correctly spent, but also showing the impact this giving has had on the targeted individuals and communities.  

When you make a donation to a section 18A registered PBO, they must issue you with a prescribed certificate that SARS will require you to submit when you claim the deduction in your tax return. The certificate also verifies that the donation will only be used for certain purposes as prescribed by law and approved by SARS. 

Formalise your giving  

Instead of donating to causes on an ad-hoc basis, why not have a giving policy? Establish how much you are prepared to donate and the causes you want to supportMany companies are now encouraging their staff to donate to good causes.  

To do this, an understanding of tax legislation is important  

Donations tax 

A company will not incur donations tax for the first R10 000 per annum in donations and an individual R100 000 per annum – any amounts over the company or individual limit are taxed at 20%. 

Note that you cannot claim a tax deduction for any donations tax you pay in this regard. 

PBOs 

Over and above this, SARS allows both registered and non-registered NPOs that meet the legal criteria in the Income Tax Act to register as a PBO. One advantage of being a PBO is that individuals or companies will not be subject to donations tax on their donations to the PBO even for amounts over the limits set out above. 

To also get a tax deduction, check that the PBO is registered in terms of section 18A of the Income Tax Act – only those PBOs which are additionally approved by SARS in terms of section 18A can also issue donation tax receipts for donations received. Donors can then deduct up to 10% of their taxable income (for individuals, adjusted for retirement lump sums and severance payfrom donations to PBOs on assessment of their taxes. Note that SARS will require presentation of a valid donations tax receipt from the donor to claim the deduction. Should the individual or company have given more than 10% of their taxable income in one year, then the excess over 10% can be carried over to the next year. Thus, you get favourable tax treatment by donating to PBOs.  

Staff can also get tax relief on their PAYE through “payroll giving” whereby the employer donates on their behalf up to 5% of the employee’s remuneration (adjusted for pension and RAF contributions) to qualifying section 18A PBOs. The donation will then be reflected on the employees IRP5 at the end of the year and the PBO will issue a section 18A receipt to the employer as proof.  

Having a companywide giving campaign will forge closer links with employees, as this is something all the staff can be involved in and buy into.  

There are intricacies to this aspect of tax, so consult your accountant. 

The Solidarity Fund 

This fund has been set up as a COVID-19 relief fund and has PBO and section 18A status which has been enhanced to allow taxpayers donating to it to claim 20% of their taxable income as a deduction. There will thus be a limit of 10% for any qualifying donations (including donations to the Solidarity Fund in excess of its specific limit) and an additional 10% for donations to the Solidarity Fund. Where staff elect to do “payroll giving”, employers can deduct up to either 33% for 3 months during 1 April to 1 July 2020 or 16,6% over 6 months during 1 April to 1 September 2020 for the 2021 tax year, of employees remuneration, when staff donate to the Solidarity Fund. The same rules apply in terms of section 18A certificates as covered above – make sure that you will get a section 18A receipt. 

Having a policy of giving leads to more consistent and larger flows of funds to non-profit entities. Not only does this help the less fortunate communities, but it makes our society (and therefore our businesses) more sustainable.  

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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Tax Season 2020 will be Easier Thanks to SARS’ New Approach!

SARS has announced changes to this year’s tax filing season, driven partly by its ongoing innovation program and partly by the Covid-19 pandemic. Whilst as author Margaret Mitchell pointed out there never is a convenient time for “death, taxes and childbirth”, SARS’ new changes offer time-saving benefits to taxpayers, and it is important to understand how they will impact on us in practice. 

To that end we set out how Tax Season 2020 is now split into three time frames. We discuss each of them, with additional insight into the “auto assessment” notices that will be sent via SMS. 

We end with a table conveniently summarising the deadlines. 

Death, taxes, and childbirth! There’s never any convenient time for any of them” (Margaret Mitchell, Gone with the Wind)  

This year’s tax season will unfold in a different manner to previous years. These changes have been driven by ongoing innovation at SARS and by the Covid19 pandemic. 

The tax season is split into three time frames: 

 April 15 to May 31 

This is the period when employers submit their reconciliation of employee earnings and all third party information providers (providers of interest certificates, medical aid certificates, retirement earnings are three examples) send their certificates to SARS and the relevant individuals. 

All of the above had to be with SARS by the end of May. 

SARS have used this time to verify information from the National Population Register, the Deeds Office and the Companies’ Register.  

As all of this information becomes available, SARS have begun populating individuals’ tax returns. 

June 1 to August 31 

Taxpayers need to ensure that all their information is up to date and accurate – for example, if they have moved, they need to reflect their new address on eFiling.  Taxpayers should also be testing their eFiling usernames and passwords and ensuring they can communicate electronically with SARS. They should also verify that all third party information is correct. 

SARS will be following up on third party information, checking it for accuracy. In cases where SARS finds substantial non-compliance, they may lay criminal charges against third party information providers (including employers).  

Auto Assessments 

During this period SARS will issue a large number of taxpayers with auto assessment notices via sms and taxpayers need to check theiron SARS eFiling or SARS MobiApp and indicate to SARS if they accept the assessment outcome. Where the taxpayer accepts the outcome of the auto-assessment, the taxpayer will not be required to submit a return. 

The auto assessment process will take a significant amount of work out of the tax season – many taxpayers benefit by not needing to submit a return and SARS do not need to assist that many people in SARS branches plus they save much admin work.  

SARS will notify taxpayers whose third party data is compliant that they may file early i.e. before September 1. 

September 1 to January 31 

SARS will issue a public notice to confirm which taxpayers need to submit a return. 

Those taxpayers who file manually at a SARS branch must do so by October 22. Taxpayers must make an appointment online to see an assessor and need to arrive on time for their meeting with a reference number SMSed to them by SARS. Due to the impact of Covid19, these appointment rules by SARS will be rigidly enforced.    

Non-provisional taxpayers who file electronically have until November 16 to submit their tax return on SARS eFiling. 

Provisional taxpayers who complete their return electronically must do so on or by January 31, 2021.    

To summarise due dates:  

TAX SEASON 2020 DEADLINES 

Type of Taxpayer  Channel  Due Date 
Non-provisional and provisional taxpayers  Manually at a SARS Branch  22 October 2020 
Non-provisional taxpayers  File electronically  16 November 2020 
Provisional taxpayers  File electronically  31 January 2021 


Although there will be the inevitable teething problems with the new approach, it offers time saving for both taxpayers and SARS.
 

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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Technology, COVID-19 and How the World Will Change

We must all adapt to the rapidly-changing world thrown at us by the pandemic. We have no alternative – both our businesses and our personal lives are already deeply dissimilar to what they were only a few short months ago, and there is no sign that things will start stabilising any time soon. 

What part is technology playing in this process, what part will it play in the future, and will it be used as a weapon or as a helpful toolWhat will our post-pandemic world look like? Who better to ask than the President of Microsoft, so we share his thoughts on these questions in a discussion ranging from the impact of online crime to the future of offices and the shift to remote working, the fight against fake news, the role of Artificial Intelligence, and much more.    

There are decades where nothing happens; and there are weeks where decades happen (Vladimir Lenin, who would have known!) 

In a recent seminar, the President of Microsoft, Brad Smith, gave his thoughts on what is unfolding in business due to COVID-19plus how he saw the post-pandemic world. 

Fasten your seatbelts! 

Ransomware and hacking rose to high levels in 2019 and there is no sign this is abating. For example, private patient data is being hacked in U.S. hospitals with demands that unless a ransom is paid, the data will be put in the public domain  

As many people now work from home, so vulnerability to being hacked is risingPeople should “strap on their seatbelts” and take precautions – a two-pronged approach is often used now and is effective in containing the vast majority of hackers. For example, using a password and then getting an SMS to use a PIN to activate a PC.  

Up your digital skills 

Working from home will almost certainly continue to be widely used after the pandemic is over, so it will pay long term dividends for staff to hone their digital skills now. 

These two points may seem obvious, yet in the rush to swiftly react to COVID-19, they are often being overlooked.  

Keep your company culture alive   

Spending most of your day looking at a screen is not conducive to fostering the business’s culture. Frequent news on how people in the company are doing plus the company’s performance and human interest stories such as how the company is helping its staff and communities in alleviating the plight of those adversely affected by the Coronavirus will help to lift the spirits of your staff.  

The future of offices 

The trend of working from home has been successful and Smith expects some form of hybrid between employees at the office and working from home to emerge in the postpandemic years. The saving in travel time resulting in increased productivity plus a greener environment from less travel ensure that working from home will be a feature in future business. But there will still always be a need in many businesses for an office. Let’s not forget that man is a social animal and requires human contact. 

Upheavals, history and massive changes 

Great events have long lasting impacts on future generations. The Second World War transformed air travel from a small elite industry into a mass transport business which led to massive growth in airlines and the tourism sector. It also gave impetus to globalisation 

Another trend from thSecond World War that has had a lasting effect was the harnessing of research auniversities by governments which led to technological breakthroughs.  

With the aftermath of COVID-19Smith expects that online business will be fully embedded in businesses due to the innovation surge which has followed the emergence of Coronavirus. 

Another important feature has been the rapid assimilation of data to help governments quickly understand and fight COVID-19. As the stakes in this pandemic are extremely high, the emphasis has been on providing fact-based information which is transparent and can be interrogated. The search for a vaccine illustrates this – usually it takes up to ten years to find a vaccine but there is hope that this can be reduced to ten months and be ready before the end of the year 

6 principles to fight fake news 

A bugbear for all countries that just seems to keep growing is “fake news” and the growing amount of false information on the internet. Smith says that disinformation spreaders have found it difficult to fight the massive amount of scientific data that has been put out in fighting COVID-19. Microsoft now uses six principles when developing software to support open government, which are:  

  1. Fairness – all people will be treated fairly. 
  2. Transparency – the system will be fully documented, and capabilities and limitations will be set out. 
  3. Accountability – technology can have a significant impact on people and an appropriate level of human control will be exercised to prevent adverse consequences from occurring. 
  4. Non-discriminatory  no unlawful discrimination will be allowed. 
  5. Notice and Consent – people subject to the technology must consent to its use. 
  6. Lawful Surveillance – Microsoft will campaign for people’s rights to not be infringed by use of software. 

Smith said if these principles can be accepted as an industry standard, it will promote openness which will reduce the impact of “fake news”.   

There has been limited application for Artificial Intelligence (AI) in combating the virus, but it has been useful for example in diagnosing whether a caller needs to come into a clinic or hospital and take a coronavirus test. This allows medical staff to focus on helping the confirmed sick. AI is also being used to predict how severely affected each patient who tests positive will be and it helps tailor the treatment the person should undergo.  

Lastly, and very importantly, it has shown how important cooperation is in finding answers to COVID-19. Without multilateral and bilateral approaches, it will take longer to find solutions. 

Smith said technology can be used either as a weapon or a helpful tool. It is up to governments and civil societies to ensure that it is used as the latter. 

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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Tax Freedom Day: How Many Days Did You Work for The Taxman in 2020?

“Tax Freedom Day” is a concept telling us taxpayers just how long we have to work every year to pay the Taxman his share before we start earning for ourselves. 

Normally our “Freedom Day” gets later and later every year in line with the general trend towards more and more taxation, but 2020 as it turns out has been an exception. In fact this year it arrived signifcantly earlier than it did in 2019.  

Why is this, and why is it bad news for us all? We discuss the answers to those questions in the context of the pandemic, the lockdown and the resulting economic crisis, with some (as you’d expect, rather gloomy) pointers to the future trajectory of our embattled economy.  

“I Have Bad News and – No, Actually I Just Have Bad News” (Rick Riordan) 

In the current year it has taken the average South African 126 days to pay off their taxes and only from the next day did the taxpayer then work for him or herself. This date fell on May this year and is globally known as Tax Freedom Day (TFD).  

So, what does this tell us?  

This should be good news as last year TFD took 11 days longer to achieve than in 2020. However, this 11 day drop reflects the calamitous falloff in the economy due to the COVID-19 crisis. Peoples’ incomes are dropping in 2020 which means less tax will be paid – this is the main reason for the 11 day improvement over last year 

This is not good news as the impact of lower taxes on government finances will push South Africa into a worse debt crisis. Some economists are predicting that our budget deficit to GDP will be 17% versus the 6.8% in the Budget presented by the Finance Minister in February – this shows just how fast our economy is tumbling. At least we are in good company – the USA shed 36 million jobs in the first seven weeks of their lockdown. Across the world, virtually every economy has slipped into recession. 

The problem is it will take, depending on how long the pandemic lasts, some years for South Africa and the global economy to recover. This will not be good news for TFD, as taxpayers will probably be required to shoulder a higher burden of taxes to pay off the debt incurred due to the pandemic. 

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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Life Made Easier (and Safer) For Non-eFilers

When SARS have requested documentation from taxpayers who do not use eFiling, the taxpayers have had to take these documents into a SARS Branch. Now SARS have launched on online form that taxpayers can complete and upload with the documentation requested by SARS. 

The online form can take ten documents which need to be 5MB or less in size.  

The process is very simple, and taxpayers merely need to follow the instructions set out.  

As a trip to SARS can take a full morning, this is a time saver for taxpayers and is safer as taxpayers are less at risk of catching COVID-19.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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How Different Will Our Landscape Be Post-Coronavirus?

Predicting the future can never be easy, but we all of us need to prepare as best we can for the future landscape that will greet us when the current COVID-19 crisis is finally over.  

Perhaps we can learn a lesson or two from the history of the world’s past global pandemics and their after-effects on people, societies, and economies. 

With that in mind, commentators have suggested four main trends which they think likely to characterise our post-coronavirus world.  

“Forewarned being forearmed”, let’s have a look at them… 

“Prediction is very difficult, especially if it’s about the future” (Niels Bohr) 

Pandemics kill more people than wars – the introduction of the Black Death plague led to 14th Century Europe losing 40% of its population within two years. What will our world look like when normal life begins to return?  

Predicting the future can never be an exact science, but the consensus seems to be that the following four main trends arein line with historical precedent (except perhaps the 1918 Flu Pandemic which was dwarfed by the effects of the First World War) likely to await us –

  1. Labour is stronger, capital is weaker 

A recurring feature of pandemics is that workers get higher wages for up to four decades after the end of the pandemic. Already, a strike at Amazon has led to better benefits for workers. In South Africa, we have seen health workers demanding better protective equipment. 

Research shows that this increase comes at the expense of capital which means lower returns for shareholders. 

  1. Globalisation will be weakened  

Coronavirus has exposed the flaws within global supply chains, such as an over reliance on China supplying key medical ingredients. Governments are reducing this risk by turning to local manufacture and services for such ingredients. Thus, globalisation will be clipped in favour of local production and services – creating opportunities for South African companies. 

  1. Slow recovery 

The end of a war is accompanied by massive investment as businesses and infrastructure are rebuilt. This usually quickens economic growth. Pandemics result in no or anaemic growth – there is no scope for massive investment and economic recovery takes a while to reboot.  

This is exacerbated by people feeling down and exhausted after the pandemic. They are cautious and save money, contributing further to the economic malaise. This reduction in economic activity leads to low interest rates. 

  1. Victimisation 

Another thread running through postpandemic times is people looking for someone to blame for the virus – often foreigners become the targets. Here with our record of xenophobia, this is something we need to guard against. 

Whilst the historical evidence of events after a pandemic points to difficult times, there may be opportunities for your business in, for example, the reduced global supply chain. You will also need to keep an eye on your staff to keep their morale up

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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Be Ready for a SARS Lifestyle Audit 

Being suddenly subjected to a SARS “Lifestyle Audit” is a nerve wracking business with the risk of penalties of up to 200%, backdated interest, and criminal prosecution.  

What external sources of information does SARS have access to? How does SARS select targets for lifestyle audit? If you are unlucky enough to be selected, what will happen and how can you be prepared? Can you refuse to co-operate and/or demand access to information from SARS before complying? 

We address those questions and discuss a High Court decision in which an individual faced the imprisonment for failing to answer a lifestyle questionnaire.  

We read about Eskom staff having to undergo lifestyle audits so that corruption can be identified and stamped out.  

SARS have been conducting lifestyle audits since 2007. These audits are conducted when SARS suspects that the taxpayer is not declaring all his or her income and thus is underpaying tax due. 

SARS have access to many sources of information  

Data can be accessed from: 

  • Your banks 
  • The Deeds Office for property transactions 
  • Financial institutions for mortgage loans or motor vehicle finance 
  • Vehicle registrations 
  • Social and other media where your lifestyle can be ascertained 
  • Perhaps most significantly jealous neighbours or “friends” who tip off SARS that your lifestyle exceeds the purported income you earn (SARS actively encourage people to tip them off when they think people they know are living beyond their means).  

How do SARS select people for lifestyle audits?  

SARS does not disclose the criteria it uses to start probing taxpayer’s affairs or how it selects those who have to complete a lifestyle audit. If you are selected, you have to complete the audit in the time set out by SARS.  

One individual selected demanded to know the reasons why he was picked, and refused to complete the 26 page “lifestyle questionnaire” sent to him by SARS (seemingly after a ‘third party’ tip off). He had never registered as a taxpayer, nor had he ever submitted tax returns. The matter went to the High Court which rejected the individual’s right to demand “SARS confidential information” and ordered him to provide the information required by SARS, on pain of committal to prison for contempt of court until he submitted the lifestyle questionnaire. 

What to expect if you are selected 

You will need to provide details of day to day living expenses including rent or bond payments, groceries, entertainment, vehicle expenses, holidays – in fact every item of cost you and people related to you incur. These will be reconciled to bank statements. In addition, SARS will probe all sources of your income. 

In doing this process SARS can request information going back five years. If you don’t have the necessary documentation to justify income or expenditure, then SARS can levy taxes on these amounts. Keep good records 

It pays to be honest and as thorough as possible when completing this process. As noted above SARS have many sources of information to check the data provided by you. 

The bad news 

If a taxpayer has been under-declaring income or cannot justify expenses that have been claimed, then SARS will issue assessments for these amounts. Penalties of up to 200%, plus interest may be levied by SARS who can also report the taxpayer to the National Prosecuting Authority for potential criminal proceedings. The only bit of good news is that SARS do not use search and seizure operations when conducting lifestyle audits – these are for criminal cases that SARS pursues. 

Lifestyle audits are nerve racking and risky for taxpayers. Keep good records and consult your accountant before submitting information to SARS.  

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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Tips for Managing your Staff Working from Home  

One of our new realities in this topsy-turvy world of global crisis is the many businesses that have had to close their offices and work remotely.

The resultant explosion in the number of people working from their home environments brings with it many serious challenges for businesses. Fortunately however there is a lot of guidance available on how to maintain high levels of morale, loyalty and productivity amongst your work-from-home employees.

For example, researchers at Harvard University have identified five main areas as key to achieving the best possible results from a remote working situation. Read on for some thoughts on them…

In this brave new world of COVID-19, many people are working from home. Even after there is a cure for the virus, this trend will likely continue.

Researchers at Harvard University have come up with some good ways to ensure you get maximum productivity and loyalty from your employees working remotely.

Key points

  1. Both managers and staff miss face to face meetings – managers worry how effectively their people are working and employees miss the support and guidance they get from managers.

Managers should introduce structure and discipline into their interactions with their staff – setting up a time each day (or whatever is needed) to connect to each other and, possibly, the team the employee is in. This can cover all the employee’s and team’s work requirements, bringing them up to date with events in the company. Not only does this improve productivity but it increases staff morale and loyalty.

  1. Access to information can become difficult between staff members – for example, a relatively new employee asks a staff member for information who initially ignores the request until the new staff person starts sending out more aggressive emails.

Managers need to be aware of this type of conflict and focus on new employees to iron out any potential difficulties.

  1. Employees get lonely and can over time feel they’ve been cut adrift which is bad for their stress levels and can lead to a drop in productivity.

If managers don’t have good listening skills and empathy, then they need to add these to their armoury and be on the lookout for loneliness manifesting in people who report to them. In the initial stages, it may pay to also have Human Resources contact employees working remotely.

  1. Home distractions. Working from home can lead to distractions of members of staff by spouses and family.

The company needs to ensure that the employee has the required technology and IT security in his or her home. Having a separate office in their homes is also important.

  1. Staff need time to catch up with their colleagues’ personal lives and the manager should allow time for this when there are video calls. This will reinforce that employees belong to and are part of a team.

There is much to learn in terms of skills and keeping staff morale and productivity at high levels, when employees work from home.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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