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NEW COMPANIES ACT

DTI Minister announced that President Jacob Zuma finally signed the Companies Amendment Bill 1 May 2011, 3 years after it was drafted!. The Companies Act, 2008 and implementation of the Companies and Intellectual Property Commission (CIPC) will therefore finally become effective 1 May 2011.
Important issues accountants and attorneys need to note are:
- effect of the Comapnies Act, 2008 on the relationship between its advisors and clients.
- drafting of a Memorandum of Incorporation (MOI) for an owner-managed entity.
- Audit vs Independent Review.
- Various business forms - selecting business entity best for needs of company/shareholders.

The new Companies Act of 2008 was due to be implimented 1 April 2011, and in typical fashion despite assurances/threats that it would whether business was ready or not, it didnt happen. The date has now been postponed to 1 May 2011 !!! Dont count on that either.

TAX SYSTEM CHANGES
Significant and far reaching tax system changes have and continue to be made by SARS, unfortunately a good idea by government should remain just that, an idea ONLY, as problems happen thick and fast when they decide to implement them.

In summary:
In October 2007 SARS introduced their completely new electronic systems, not modelled on the successful VAT system, but completely new. Simultaneously discontinuing the old system, and not as best practice would have it, in parallel!

In March they advised employers NOT to submit EMP501 recons pending a new system model!

In July they announced that beta e@syFile PAYE module was ready for release, this was then delayed to August! The learning curve was steep and problems continue to this day.

In September they advised a new tax module due for release.

In October they advised a further delay in opening the 2008 tax filing season, this finally opened mid October, giving us a mere 4.5 months to cover an entire years work and on an untested system!

In November they announced the release of the new tax practitioners e@syTax system!

In November we launched our new website to keep clients up to date with the latest developments and breaking news.

4 weeks of intensive and frantic work to convert our clients across to the new offline platform was lost when a SARS software failure deleted all our input in favour of their incomplete data!

In December we had a special meeting with the software developers, in that season they resolved some issues it had taken SARS the previous 13 months to not even respond on! Other critical issues remain unresolved and continue to escalate to this day!

On 14 January 2009 SARS promulgated the new provisional tax rules, zeroing all data fields, resulting in us having to pull each and every tax file to extract critical past history, then call for live information before the year was even over and run full mock tax assessments on each and every account to meet the 90% accurate requirement! The increase in work load force on us in the 11th hour is currently estimated at 3 times more than normal (the Institute has reported the same problem for all members, suggesting practitioners may no longer offer this as a service).

On 27th February, 1 day to deadline SARS announce problems with the system AND that not all IRP6 forms had been issued BUT that the onus remained on the taxpayer to ensure they obtained a blank form and completed it for on time submission or face penalties - we have adopted a 'no form - no return' policy but advise the affected clients beforehand.

In February SARS reconfirmed their original deadlines despite admitting problems and having moved the goal post continually during 2008!

In May the scheduled opening of the 2009 filing season was delayed to July.

The filing season only opened one week into July, with numerous new requirements and system issues.

Good news being the addition of an understandable statement included with each assessment however the ITA34 are longer and more complex that the IT34 format they replace.

September 2009 SARS caves in to pressure (for once) and relooks at the draconian provisional tax rules.

January 2010, once AGIN just before the most important deadline in the year, SARS changes the provsional tax rules - at least this time more favoutrable for taxp[ayesr earning taxable income less than R1m (see the provsiioonal tax section for important changes)

To date:
We have completely written ALL our internal systems and we continue to development them as SARS flops from one badly thought through and badly implemented system change to another. As we provide solutions not additional problems, the only indication you would have had are the electronic communiqu├ęs and approval documents relevant to your circumstances.

e@syFile System

We were informed by a senior Institute and tax liaison committee member at a special pre-Beta release session that 'SARS had taken a decision earlier that they not longer needed to train their staff as the system did everything and if in the event there was a problem the tax practitioners would have to resolve the problem as they were under threat of penalty anyway'!

In summary the e@syTax system:
  • Will not accept certain taxpayer files,
  • Loses information,
  • Adds information we don't have,
  • Incorrectly assesses expenses, deductions and income,
  • Raises audit stoppers and data mismatches,
  • Accepts electronic tax clearance requests but does not process them, requiring manual submissions. Over writes files on 'synchronisation',
We only deal with SARS consultants and on an appointment basis, who OPENLY admit:

Serious and unresolved problems with the system.
  • That the powers that been are divorced from the reality on the ground and are unaware of the real problems.
  • Not being trained on the system.
  • Do not fully understand the system, even aspects they are tasked to support.
  • That the system 'loses' information, does 'strange' and 'weird things', and
  • Don't even know the new system terminology.
  • Change their procedures weekly without consultation or notification.