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THE TAXMAN COMETH - SMALL BUSINESS TAX AMNESTY DEADLINE LOOMS
If you aren't fully tax compliant, you only have until 31 May 2007 to remedy that without incurring some hefty penalties (200% + interest……...).
The Small Business Tax Amnesty applies to both registered and non-registered taxpayers that carry on any small business. A successful amnesty applicant will have peace of mind that they can close the door on their past tax history (the amnesty includes Income Tax, CGT, VAT and PAYE) and start with a clean slate for the 2006 tax year.
The amnesty could be of great benefit to small businesses which: -
- Have never registered with SARS; or
- Have registered but are in arrears with their returns, or might not have fully disclosed all their tax information to SARS in the past; or
- Have been assessed, and due to non-payment have incurred interest, penalties and additional taxes.
Take advice now on whether your business qualifies, and on how to apply.
31 May is just around the corner; so do not delay.
NOTE: See "Introduction to the Small Business Tax Amnesty" on the SARS website.
There are changes since that Introduction was posted in July 2006 - for updated information and advice, you may contact the tax consultant who helped me with this article, Di Seccombe at BDO Spencer Steward, ( di.seccombe@bdoctn.co.za or telephone 021-4178747).
THE BEE CODES - WHERE DOES YOUR BUSINESS STAND?
The BEE Codes of Good Practice have been gazetted. They are simpler than the drafts, and (as a result of higher exemption levels) there is more relief for SMEs from the administrative burden involved.
Businesses fall into one of three categories, based on turnover (number of employees is no longer relevant): -
- Where revenue exceeds R35m, the Generic Scorecard with all 7 elements (ownership, management, employment equity, skills development, preferential procurement, enterprise development and socio-economic development) applies;
- A "Qualifying Small Enterprise" (turnover R5m to R35m) has a reduced requirement, and can choose 4 of the 7 elements with different weighting and indicators;
- A "Micro Enterprise" (turnover under R5m) qualifies for micro exemption.
NOTE: The Codes and related documentation are downloadable from the DTI website at http://www.dti.gov.za/bee/beecodes.htm
DANGER: WORN TYRES COULD MEAN NO INSURANCE COVER
Don't drive with worn tyres if either the tread is less than 1mm in depth* or the pattern isn't clearly visible; nor (with tyres that have tread depth indicators), if the tread is level with an indicator.
If you do, you are not only breaking the law by driving an unroadworthy car, but your car insurance won't cover you. That could be a very expensive mistake indeed. In a recent case, a motorist risked losing out on a substantial claim for a written-off car - fortunately for him, the insurer was, on the facts, unable to prove its case after a highly technical argument over the precise meaning of the Road Traffic Regulations in question.
(* Although the legal requirement is 1mm, and indicators are often set at 1.6mm, road safety experts strongly recommend a tyre change at 3mm).
NOTE: Regulation 212(j)(i) and (ii) of the National Road Traffic Regulations of 2000, is quoted in the relevant judgment: Swanepoel v Auto & General Insurance Company Ltd, Case No. TPD 4356/2003, available to LexisNexis subscribers as [2007] JOL 19065 (T), at www.mylexisnexis.co.za.
UNLAWFUL ALTERATIONS AND THE VOETSTOOTS CLAUSE
Here's a nightmare scenario for you as proud owner of your newly bought dream house; a building inspector knocks on the door and announces that your house has to be demolished because it hasn't been approved by the local authority, and/or can't lawfully be used because it doesn't comply with building regulations. What recourse do you have against the seller?
In a recent High Court case (where fortunately only some alterations were unlawful, not the whole house), the seller argued (1) that it wasn't a term of the sale agreement that the alterations were lawfully effected, and (2) that in any case the voetstoots clause meant that he didn't have to disclose the fact that the alterations were unauthorised.
The Court however held that a purchaser of residential property is always entitled to assume that it has been built "in compliance with all statutory requirements and that it can be used to its full extent". Moreover, a voetstoots clause (which means that you buy the house "as is", with all hidden defects as well as obvious ones) only covers defects of a physical nature. So the seller was held liable for the buyer's losses.
Whilst we are talking about voetstoots clauses (which are standard in all sale agreements of immovable property), note that they will never cover a seller who knows of a hidden defect but fails to disclose it - that is fraud and will give the buyer a damages claim.
NOTE: The judgment in Van Nieuwkerk v McCrae, WLD Case 05/12141, is available to LexisNexis subscribers as [2007] JOL 19010 (W) at www.mylexisnexis.co.za.
WHEN A RESIGNATION IS CONSTRUCTIVE DISMISSAL
Just because an employee has resigned doesn't mean that the employer is exempt from liability under the labour legislation. Forcing an employee to resign by making continued employment "intolerable" will entitle him/her to compensation for "constructive dismissal". If you are an employer, be careful of changing working conditions in a way that may lead to constructive dismissal claims.
On the other side of the coin, if you are an employee, seek proper advice before resigning from an unhappy situation at work - you are going to have to prove that resignation was "the only reasonable option open to [you] under the circumstances" - the test being what a "reasonable employee" would find intolerable in the circumstances experienced by you, not simply your subjective view. That can be a tough onus to discharge, and if you can't, you will have resigned and will be without remedy.
NOTE: See, for an example of an employee's failure to discharge the onus, a recent decision of the Metal and Engineering Industries Bargaining Council - Arnolds v Flexoline (Pty) Ltd, Case no. MEWC 2078, available to LexisNexis subscribers as [2007] JOL 19155 (MEIBC), at www.mylexisnexis.co.za.
AGENTS - ACT WITHIN YOUR MANDATE!
If you agree with one of your debtors that you will sell the debtor's property in order to settle or reduce your claim, make sure that you have a written mandate which clearly spells out whether or not you are selling as the debtor's agent; and if so, exactly what your terms of reference are.
If you elect to sell as an agent, be aware that you have strict duties - you must act reasonably, honestly, in good faith, in the best interests of your principal, without a conflict of interest, and in line with your mandate. In a recent High Court case, a bank that sold a debtor's farms (per a settlement agreement) was ordered to pay damages of over R23m when it was held to have acted not as an execution creditor but as an agent, and to have exceeded its mandate.
NOTE: The judgment in SDR Investment Holding Co (Pty) Ltd & others v Nedcor Bank & another, CPD 555195/2003 is available at the University of Stellenbosch Faculty of Law website.
VICTIMS OF CRIME: APPLY FOR A COMPENSATORY ORDER
If you are a victim of crime and have suffered damage to or loss of property, and if you think that the perpetrator may be financially able to compensate you for your losses, ask the Court hearing the criminal trial to make a "compensatory order". This gives you an enforceable judgment against the offender, and you can even be paid out of any monies found on him/her when arrested.
But the Courts have recently held that such an order can only be made at the victim's request - so if you don't ask, you definitely won't receive. You can make the request direct, or through the prosecutor.
NOTE: Section 300 of the Criminal Procedure Act (not available online) refers. For an example of a compensatory order being set aside for lack of request by the complainant, see S v Kona, Eastern Cape CA&R 12/07 available to LexisNexis subscribers as [2007] JOL 19151 (E) at www.mylexisnexis.co.za.
WEBSITES OF THE MONTH: LAPTOPS, HOTSPOTS - AND USING THEM SAFELY
As more and more of us replace our "dinosaur" (i.e. more than a year old!) PCs with laptops, so the availability of public wireless networks is burgeoning. You can't beat them for convenience when travelling, or just out of office.
You can find a partial list of WiFi "Hotspots" in South Africa on ACSA's website at http://www.airports.co.za/home.asp?pid=1868 (airports and other locations), together with instructions for connecting once you're there.
Find other lists of locations at http://www.jiwire.com/browse-hotspot-south-africa-za.htm (325 listed there), http://www.totalhotspots.com/directory/za and http://www.wi-fihotspotsdirectory.com/Wi-Fi-Hotspots-In-South-Africa-191.html - try Googling for more in specific locations.
But beware - the challenge with wireless is that it opens you up to all sorts of security threats. For tips from Microsoft on how to "Use public wireless networks more safely" go to http://www.microsoft.com/athome/security/privacy/wirelessnetwork.mspx.
Note: Copyright in this publication and its contents vests in LawDotNews(law.news)
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