COVID-19

Giving is Good – Just Know Who You are Giving To

14/05/2021

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 do, and 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 tax–deductible 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 support. Many 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 pay) from 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 employee’s IRP5 at the end of the year and the PBO will issue a section 18A receipt to the employer as proof.  

Having a company–wide 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)

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

14/05/2021

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 Covid–19 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 theirs on 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 Covid–19, 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)

Life Made Easier (and Safer) For Non-eFilers

14/05/2021

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)

How Different Will Our Landscape Be Post-Coronavirus?

14/05/2021

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 are, in 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 post–pandemic 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)

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)

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