Month: May 2020

Be Ready for a SARS Lifestyle Audit 

14/05/2021

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)

Tips for Managing your Staff Working from Home  

14/05/2021

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)

COVID-19 and Directors: Your Duties and Liabilities in the Coronavirus Crisis

14/05/2021

Your focus as a director right now will no doubt be on keeping your business afloat through these trying times. 

Don’t lose sight however of the fact that the onerous obligations and duties placed on all directors by the Companies Act still apply. Failure to live up to the required standards exposes you not only to a significant risk of personal liability for company debt, but also to criminal prosecution. 

We recap in summary what the Act requires of you, we discuss the impact of King IV on your risk profile, and we end off with a caution on the extent to which you can rely on indemnity insurance for cover. 

There are significant obligations placed on directors by the Companies Act and personal and criminal liabilities if they fail to meet these obligations. 

As a director you will no doubt be focusing on critical issues like keeping your business afloat and solvent (the CIPC has waived its right to intervene when a company becomes temporarily insolvent due to the lockdown and other restrictions imposed. This concession will be withdrawn 60 days after the lifting of the National Disaster regulations), don’t forget that the Companies Act is still in force. 

The coronavirus has created an unprecedented situation which demands swift, decisive action by directors – for example, the President only gave the country 72 hours’ notice before the lockdown came into effect, which gave little time for directors to react to the new reality. 

No change in your duties or liabilities 

Despite the coronavirus there is no change to the duties or liabilities of directors. They must perform their role: 

  • “in good faith…,  
  • in the best interests of the company 
  • with the degree of care, skill and diligence that may reasonably be expected of a person – 

(i) carrying out the same functions in relation to the company as those carried out by that director; and  

(ii) having the general knowledge, skill and experience of that director.” 

“Good faith”, “best interests” and “care, skill and diligence” are onerous terms. For a director to be protected against falling foul of these provisions that director needs to show that he/she took diligent steps to be informed of the issue and made a rational decision in the best interests of the company. This is known as the Business Judgment Rule and courts look to this when considering a director’s personal liability. 

The impact of the King IV Report   

When considering the Business Judgment Rule, the courts have relied on whether a director followed the King IV Code of Good Governance when reaching their decision.  

One issue that will arise with the coronavirus is that King IV mandates that a company be a good corporate citizen and part of this is to look after the health and safety of employees (following the requirements of the Occupational Health and Safety Act and now government’s Disaster Management Act Regulations) – for example, were adequate steps taken in terms of the National State of Disaster declared by the President such as social distancing (working from home where feasible) and  ensuring employees had access to masks, hand sanitisers and so on at work?  

Failure to comply with King IV in this scenario means directors will not be able to rely on the Business Judgment Rule and can be held personally liable for losses incurred. 

Will your indemnity insurance cover you? 

Directors can take out indemnity insurance, covering claims awarded, in their personal capacity, when they commit “wrongful acts”. However, the insurance will not apply if there is “wilful misconduct or wilful breach of trust” by the director (check your policy’s exact wording). An example might be the director being convicted under the Occupational Health and Safety Act.  

As a director you could find yourself being held personally liable for your decisions and being denied access to your indemnity insurance cover. 

Dealing with the pandemic increases the pressure on directors but doesn’t absolve them of their liabilities. 

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)

Logista Gerat vir die Toekoms 

14/05/2021

Promosie 

Jacques Coetzee, besturende direkteur van Logista, en Heinrich Regenass, direkteur, die bestuurspan by Logista is gerat vir die veranderinge wat die vierde industriele revolusie meebring. (Foto: Jeanie de Klerk/Verskaf.) 

Die vierde industriële revolusie (4IR) bring baie veranderinge mee. Sommige bedrywe soos die finansiële bedryf, kan heeltemal vernuwe word en baie beroepe wat ons vandag nog ken, sal wegval terwyl nuwe geleenthede weer geskep sal word. 

Die bestuur van Logista, ’n suksesvolle ouditeursfirma in Pretoria-Oos, is egter nie bekommerd oor die veranderinge wat dié nuwe era inhou nie. 

“Ons maak gereed vir die behoeftes van die volgende generasie,” sê Heinrich Regenass. Hy is tans die besturende direkteur van Logista, maar gee binnekort die leisels oor aan Jacques Coetzee wat tans een van die direkteure is. 

“Dit is tyd om plek te maak vir iemand met vars nuwe idees.” 

Regenass meen dié besluit is nie ligtelik gemaak nie. 

“Ons is reeds vir meer as twee jaar besig met opvolgbeplanning en het vir Jacques stelselmatig voorberei om sy pos vol te staan as nuwe besturende direkteur.” Hy glo die besluit demonstreer die firma se toegewydheid aan innovasie en verandering. “Ons wil uiteindelik ’n firma ontwikkel wat steeds in die toekoms relevant is, daarom is ’n goeie opvolgplan deel van ons strategie om as firma volhoubaar te bly.” 

Heinrich Regenass, voormalige bestuurende direkteur van Logista is reg om bietjie meer gholf te speel en fiets te ry, alhoewel hy steeds nou betrokke by die firma gaan wees. (Foto: Jeanie de Klerk/Verskaf.) 

Coetzee prys Regenass vir sy bydrae tot die firma se sukses. 

“Hy is ’n baie goeie leier en het die firma reeds so geposisioneer dat ons die besigheid, gegrond op integriteit en vertroue, verder kan bou.” 

Regenass gaan gelukkig nie die firma verlaat nie, en bly steeds aan as ’n mentor vir Coetzee. 

“Ek sal seker so ’n bietjie meer gholf speel en fietsry, maar ek wil graag steeds deel wees van die firma en Coetzee verder bystaan.” Hy sal ook nog die bestaande lojale kliënte soos altyd met goeie raad bedien. 

Regenass en Coetzee is dit eens: hulle is nie bang vir die uitdagings wat die vierde revolusie inhou nie. 

“Die sleutel tot sukses is die vlak van aanpasbaarheid wat ’n besigheid kan handhaaf,” sê Regenass. “Ons wil deel wees van die era waar tegnologie ’n groter rol speel. Ek glo mense se vaardighede gaan altyd nodig wees om stelsels doeltreffend te bestuur – dit is die insameling van inligting en bestuur van data wat belangriker gaan word, maar syfers en data beteken niks as ’n kundige dit nie kan ontleed nie.” 

Regenass glo Coetzee se internasionale ondervinding in die bedryf sal handig te pas kom in sy nuwe pos. 

“Dit is vir ons belangrik aangesien Logista reeds ’n lid is van BKR International, ’n wêreldwye organisasie van onafhanklike rekeningkundiges en besigheidsadviseurs. Ons wil ook graag ons mark verder uitbrei en ons vlerke sprei.” 

Die firma is bekend vir die persoonlike aandag wat hul kliënte ontvang en die hoë gehalte professionele dienste wat hulle aanbied. Logista het oor die jare ’n aanpasbare struktuur van gespesialiseerde kennis saamgestel wat dit maklik maak vir hulle om kliënte se spesifieke behoeftes te vervul. 

Die organisasie het in twee dekades soveel gegroei dat hulle tans een van die markleiers in die bedryf is en hulle spog met ʼn lang lys van tevrede kliënte in verskeie sektore. Logista se bestuursmodel bestaan uit sewe direkteure wat deur sowat sestig tegniese, en administratiewe personeel ondersteun word. 

Jacques Coetzee, nuwe besturende direkteur van Logista, sien uit daarna om die firma na nuwe hoogtes te neem. (Foto: Jeanie de Klerk/Verskaf.) 

Coetzee sien uit daarna om Regenass se skoene vol te staan. 

“Ek wil graag voortbou op dit wat hy reeds tot stand gebring het. Ons wil graag markleiers bly en steeds aanpas by die besigheidswêreld wat so vinnig verander. Met al die nuwe verwikkelinge kom nuwe uitdagings, maar ook nuwe geleenthede. Ons is voortdurend op soek na maniere om die uitdagings in geleenthede te omskep. Ek is bly om steeds te kan leer by een van die bestes. Iemand wat uit die boks kan dink en nie bang is om te innoveer nie.” 

Coetzee is oortuig daarvan dat Logista vir die toekoms gerat is. “Ons gaan nog lank hier wees.” 

Logista great for the future 

Promotion 

The Fourth Industrial Revolution (4IR) brings with it many changes. Some industries, like the financial industry, can be completely renewed and many careers we still know today will fall away as new opportunities are again created. 

However, the management of Logista, a successful auditing firm in Pretoria East, are not worried about the changes that this new era will bring. 

“We are gearing up for the needs of the next generation,” says Heinrich Regenass. He is currently Managing Director of Logista, but will soon give over to Jacques Coetzee, who is currently one of the directors. 

“It’s time to make room for someone with fresh, new ideas.”  

Regenass said the decision was not made lightly. 

“We have been doing succession planning for more than two years and have systematically been preparing Jacques for his position as the new managing director.” He believes the decision demonstrates the firm’s commitment to innovation and change. “We ultimately want to develop a firm that is still relevant in the future. That is why a good succession plan is part of our strategy to remain sustainable as a firm.” 

Coetzee praises Regenass for his contribution to the firm’s success. 

“He is a very good leader and has already positioned the firm so that we can continue to build the business, based on integrity and trust.” 

Fortunately, Regenass will not leave the firm and will continue as a mentor for Coetzee. 

“I will probably play a little more golf and cycle more, but I still want to be part of the firm and continue to assist Coetzee.” He will also continue to provide existing loyal clients with sound advice. 

Regenass and Coetzee agree: they are not afraid of the challenges of the Fourth Revolution. 

“The key to success is the level of adaptability a business can maintain,” says Regenass. “We want to be part of the era where technology is playing a bigger role. I believe people’s skills will always be needed to manage systems effectively – it’s the collection of information and data management that will become more important, but figures and data mean nothing if an expert can’t analyse it.” 

Regenass believes Coetzee’s international industry experience will come in handy in his new position. 

“This is important to us, seeing as Logista is already a member of BKR International, a global organisation of independent accountants and business advisors. We also want to expand our market further and spread our wings. ” 

The firm is known for the personal attention their clients receive and the high-quality professional services they offer. Over the years, Logista has put together a customisable structure of specialised knowledge that makes it easy for them to meet customer-specific needs. 

The organisation has grown so much in two decades that they are currently one of the market leaders in the industry and boast a long list of satisfied customers in various sectors. Logista’s management model consists of seven directors supported by around sixty technical and administrative staff. 

Coetzee looks forward to filling Regenass’s shoes. 

“I would like to build on what he has already achieved. We want to remain market leaders and continue to adapt to the rapidly changing business world. With all the new developments come new challenges, but also new opportunities. We are constantly looking for ways to turn the challenges into opportunities. I am happy to continue to learn from one of the best, someone who can think outside of the box and is not afraid to innovate. ” 

Coetzee is convinced that Logista is geared for the future. “We’re going to be here for a long time.” 

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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