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WATCH THIS SPACE FOR A PROPERTY TAX GAP......
If you hold your home in a company or close corporation, stand by for a possible opportunity to save a lot of tax. If new tax legislation is passed as is (it's still in draft form), you could benefit significantly by transferring the property into your own name without paying transfer duty and STC (CGT will be rolled over) - potentially a very big saving!
If you plan to buy or sell a residential property in the interim, take advice now on how best to go about it. Otherwise, there's no desperate rush at the moment.
The concession won't apply in all cases - we'll give you the details once the legislation is finalised and promulgated, so watch this space!
PYRAMID SCHEMES - THE REPAYMENT RISK (AND INNOCENCE IS IRRELEVANT!)
A pyramid scheme must, by definition, eventually collapse; leaving (statistically) up to 88% of investors queuing for whatever the liquidator is able to recover for them from the perpetrators.
Even those investors who "got out early" can expect a claim for repayment from the liquidator, and a recent High Court judgment illustrates the dangers of investing in any scheme that looks suspiciously profitable, even if the investment is made entirely innocently (that is, without any knowledge that it is going into a pyramid scheme).
Ordering an investor to refund to the liquidator all monies that the scheme had distributed to him prior to liquidation (a total of R549.500, being both capital invested, and interest accrued thereon), the Court commented that it was irrelevant whether or not the investor "may have been unaware that an offence was being committed by the payer". The whole business activity of the scheme being unlawful, repayments could never have been made "in the ordinary course of business" (which would have validated them).
If an investment looks just a bit too profitable, tread very carefully - you risk losing it all!
TAX RETURNS DUE SOON!
SARS has gazetted the following deadlines for submission of income tax returns for the 2009 tax year: - - Individuals and other taxpayers except companies ("natural persons, trusts and other juristic persons, such as institutions, boards or bodies") -
- Manual returns, by 18 September 2009; or
- Electronic format via e-filing, by 20 November 2009
- Companies - within 12 months from date of end of financial year.
"SURVIVING SPOUSE" MAINTENANCE
When a spouse dies, the surviving spouse has a claim against the deceased estate for the provision of "reasonable maintenance needs until his[her] death or remarriage in so far as he[she] is not able to provide therefor from his[her] own means and earnings".
In awarding maintenance recently to a surviving spouse, the High Court established two principles of great practical relevance: -- Any financial assistance that the survivor may receive from third parties (in this case, two sons were making voluntary contributions towards their mother's living expenses) must be excluded from a calculation of her "means and earnings". So you can't prejudice someone's maintenance claim by helping them make ends meet.
- A survivor cannot be awarded a lump sum by way of maintenance - the deceased estate must provide periodical (normally monthly) maintenance payments until death or remarriage. This is likely to cause major practical problems for both executors and heirs - how much do they keep back to cover the future maintenance obligation? How do they finalise the estate? Avoid the problem by drawing your Will so as to provide your spouse with sufficient means to cover his/her "reasonable maintenance needs".
CLOSE CORPORATIONS: TO CONVERT OR NOT? THAT IS THE QUESTION
Now that the new Companies Act has been signed into law, should you rush to convert your company to a close corporation (or vice versa)?
Note firstly that, until the new Act actually comes into force next year (10 April 2010 at the earliest), you can continue to register new CCs, and to convert between CCs and companies. Moreover, existing CCs will continue as such even after the new Act kicks in.
The close corporation has been widely favoured as a simpler and cheaper alternative to the company (audit costs being a particular negative for many smaller companies), and hopefully the new Act will not only retain these advantages for existing CCs, but also extend them to smaller private companies, by exempting them from their existing audit requirements.
There is no certainty in this regard yet - regulations are still to be made regarding the exact circumstances in which audit will be required. But it seems likely that there will be no audit requirement if your business doesn't fall into a category that renders it "desirable in the public interest" for it to be audited. Hopefully most smaller companies will fall outside that net, in which event their financials will need only to be subjected to "independent review" - likely to cost a lot less than a full audit.
In a nutshell, the new laws don't force any change on you - the decision of which route to take must be a commercial and practical one taking account of your particular circumstances. Take advice in doubt - but until there is clarity on exactly how the new auditing and reviewing provisions will be formulated, there is probably no need to rush around changing entities.
THE SOUND OF SILENCE, AND THE "DUTY TO SPEAK" PERIL
Can you be forced into a contract by someone making you an offer and telling you that you will taken to have accepted it if you remain silent? Generally not - our law requires active acceptance before a binding agreement is formed. But there is an important exception to this rule, and it was neatly summed up in a recent High Court case as follows: -
"Silence may amount to acceptance of an offer in circumstances which give rise to a "duty to speak" if the offeree is not prepared to accept the offer. This means that the offeree who remains silent on receiving an offer, does so at his peril."
In the case in question, a firm of engineers proposed an increase in fees to its clients, and the Court found, on the particular facts, that a relationship existed between the parties that gave rise to a duty on the clients to reject the proposal if it disagreed. As they had remained silent, the engineers were awarded their increased charges.
So whether the "Sound of Silence" is "Yes" or "No" boils down to whether or not you have a "duty to speak". That may not be easy to decide - so don't take a chance. If you receive any offer, proposal or notification that you don't agree to, say so - clearly, and in writing!
THE "UNTIL DEATH DO YOU PART" INDEFINITE CONTRACT DANGER
In a case recently before the High Court, a house owner sought to evict two occupiers who had a verbal agreement with the owner to occupy the house indefinitely (free of charge). The owner conceded that the occupation right was for an unstipulated period, but claimed to have a right to terminate the agreement "on reasonable notice".
Not so, held the Court - "the clear intention is that the contract would endure in perpetuity. It could only be terminated by the death of the first defendant".
If you don't want to be stuck with unwanted occupiers "until death do you part" -- Have a proper written agreement drawn up - avoid any doubt as to its duration
- If no end date is specified, make sure that you have a clear right to terminate on reasonable notice!
THE SEPTEMBER WEBSITE: SWINE FLU - PROTECT YOURSELF
The Internet is full of information on the new H1N1 strain of flu - its spread, symptoms, severity (or hopefully lack thereof!), prevention and treatment. There's a useful summary on the Cape Gateway website at www.capegateway.gov.za/other/2009/8/h1n1_fct_sheet_wc_health_dpt.pdf.
Prevention being as always better than Cure, protect yourself by staying in good general health - get enough sleep and exercise, eat healthily, control your stress levels. And for particular advice on toughening up your body's first line of defence - your immune system - have a look at Health 24's guide "Boosting Your Immunity" at www.health24.com/dietnfood/The_immune_system/15-3853-3861.asp. Aim for a balanced immune response - there is evidence that immune system over-reaction is a potentially fatal risk with pandemic flu, so Cicero's admonition to "Never go to excess, but let moderation be your guide" may be particularly good counsel here!
Keep well, and enjoy Spring!
Important dates to remember this month - Secretaries Day on the 2nd, and Heritage Day on the 24th.
Note: Copyright in this publication and its contents vests in LawDotNews(law.news)
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