Read more about the article The Risky New Trust Landscape – What Trustees Need to do Now
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The Risky New Trust Landscape – What Trustees Need to do Now

“The common assumption is that trusts are some kind of tax panacea...Then, conversely, from a South African Revenue Service (SARS) perspective, trusts are viewed with a degree of suspicion and mistrust. [T]he truth lies somewhere between these positions.” (Broomberg on Tax Strategy) The legal and tax landscape in which South African trusts operate has changed substantially over the last few months, thanks to changes to the Trust Property Control Act (“Trust Act”) and the Financial Intelligence Centre Act (“FICA”) by the General Laws (Anti Money-Laundering and Combating Terrorism Financing) Amendment Act, as well as new rules and requirements from SARS. These changes impose new duties on trustees, and apply to all trustees, not only independent trustees. 1. Disclosure to Accountable Institutions you engage with, and record-keeping Changes to the Trust Act impose two specific new requirements on trusts to combat money laundering and crime-financed terrorism, and failure to comply is an offence. If convicted, trustees face a fine of up to R10 million, or imprisonment for a period of up to five years, or both. These requirements became effective on 1 April 2023, leaving most trustees already non-compliant. The first new requirement is that a trustee must disclose to any “accountable institution” (see here for the full list of what comprises an accountable institution, but the definition includes banks, attorneys, estate agents, long term insurers and brokers, trust companies and the like) that he/she engages with it in his/her capacity as a trustee, and that the relevant transaction or business relationship relates to trust property. The trustee must also record the details of the accountable institution the trust is engaging with. 2. Compiling and registering beneficial ownership The second requirement imposed by the changes to the Trust Act is to establish and record the beneficial ownership information of a trust; to keep an up-to-date record of this information; and to lodge a register of the beneficial ownership information prescribed with the Master of the High Court. This second requirement recently doubled, as SARS issued notice that trusts will now also be required to submit beneficial ownership details when completing a trust tax return, among a number of other tax changes affecting trusts, as discussed below. 3. Filing third-party returns – the IT3(t) A further onerous obligation was imposed by SARS: Most trusts are now also required to file third-party returns, in the same way banks report interest income and medical aids report medical aid tax information to SARS, which it uses to, for example, pre-populate tax returns. While trust distributions were not previously reported to SARS by third parties, the new requirements oblige trusts to file third-party returns to SARS to declare distributions and vesting amounts to beneficiaries. This must be done via an IT3(t) report which contains prescribed information relating to trust distributions and their beneficiaries and requires trusts to report on demographic information of the trust, demographic information of trust persons/beneficiaries, trust financial flows, and any amounts vested in a beneficiary, including net income, capital gains and capital amounts. The ITR3(t) must…

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Read more about the article Tips for Pacing Business Growth for Sustainability
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Tips for Pacing Business Growth for Sustainability

“Growth is never by mere chance; it is the result of forces working together” – (James Cash Penney, Founder of JCPenney) Every business decision carries profound consequences for the enduring existence of the organisation, and this is no more true than when it is applied to those decisions affecting business growth. Knowing how and when to expand, open new branches, roll out new features or engineer new products takes planning and is not something leaders should be trying to do by the seat of their pants in response to external events. A meticulously crafted business growth strategy is therefore essential to plotting sustainable growth. Here are the things you will need to consider when constructing yours. Set clear targets You know you want to be successful, but do you know what that success looks like? Just how much money do you want to make? What do you want the lifestyles of your employees and yourself to be like? What kind of turnover and profit would you consider to be successful? What would you like your reputation in the industry to be? If you haven’t considered the destination for your journey, how will you ever plot how to get there? Talk to customers You probably already realise the value of getting expert advice. Speaking to accountants about your finances, or lawyers about contracting just makes sense. But perhaps you have not considered that no one knows your customer’s needs quite like your customers? When choosing which customers to speak to, first look to those who are your ideal customers – those people who are getting good value from your services and who are happy with your products. By speaking to them, you will slowly uncover patterns for what you are doing right and what a successful business in your industry looks like. The next step is to speak to those customers who are not happy with your service and find out why. This will help you to uncover the opportunities you are missing, and the things you need to fix to get yourself onto the right growth path. Don’t ask these customers what you should be doing though, as changing everything based on the impressions of a few disgruntled clients is a sure-fire way to failure. Rather ask them what the challenge was that they came to you to fix, why they came to you specifically, and then what they were feeling at each stage of their journey. Once again, it is about uncovering patterns, and by asking these sorts of questions you will quickly work out whether you did something wrong, whether your services lack potential solutions the industry might need or whether you were simply the wrong fit all along. Now that you know what a successful client interaction looks like, and where your business is falling short, it becomes easier to see which holes will need to be plugged and where you can comfortably expand over the coming years. Build a road map Now that you know where…

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Read more about the article Why the Four-Day Working Week Just Might Happen
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Why the Four-Day Working Week Just Might Happen

“We need to do a better job of putting ourselves higher on our own ‘to-do’ list.” (Michelle Obama, former First Lady of the United States) The four-day work week has been in the news a lot recently with a number of significant studies and trials coming out in favour of the arrangement. While many would assume that workers are thrilled with four-day weeks, but that bosses are finding it hinders business, the results do not back this up. Repeatedly, these studies are coming out in support of the four-day work week with the benefits simply racking up. Here are the reasons why it just might work: Employees want it In terms of work schedules, employees are increasingly seeking flexibility, with a four-day workweek emerging as their top preference, according to a recent survey of American employees conducted by Bankrate. The survey revealed that a significant majority of full-time workers and job seekers, a staggering 81%, express strong support for a four-day workweek over the conventional five-day arrangement. What's more, an impressive 89% of these respondents indicated their willingness to make sacrifices in order to enjoy a four-day workweek. Among these concessions, a noteworthy 54% are open to working longer hours, while a substantial 37% are even willing to explore career changes or transition to different industries. Additionally, a considerable 27% are open to increasing their in-person office presence or working entirely on-site. Productivity Increases Many assumed that a four-day work week would hamper productivity, but a recent study in the UK that included 61 companies and more than 3000 workers found exactly the opposite. The study, which followed the companies and their workers through a six-month test of a 32-hour, four-day week, with no loss of pay for employees was the largest of its kind, making its results extremely impactful. Perhaps more impressive though, is that after the study was over, 56 of the 61 companies that were involved decided to continue with the shorter week indefinitely, and two more said they were voluntarily extending the trial. Among the benefits reported by companies were an increase in revenue over the same period in previous years, as well as a sharp decline in resignations. One company reported a productivity increase of 22%, a lower carbon footprint as well as an increase of 88% in job applications, and a 66% decrease in absenteeism. The results back up those achieved by a smaller pilot program that covered another 30 companies and 1000 employees. Employees are happier As for employees, well they were almost unanimously happy. Participation in the above trial led to a significant decrease in people saying they lacked sufficient time during the week to attend to their responsibilities towards children, grandchildren, or elderly family members. Additionally, they reported feeling reduced work stress as well as better mental health, more time for exercise, better sleep and generally less negativity. 55% reported an increased ability to work. The results also suggest that the shortened workweek could lead to better gender parity as the time men reported spending with their…

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Read more about the article Don’t Fall Prey to the Most Common Cybercrimes!
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Don’t Fall Prey to the Most Common Cybercrimes!

“The bottom line is that cyber risks sit right alongside rising systemic risks, and is the biggest emerging, and constantly evolving risk facing businesses today.” (SHA Specialist Risk Review 2022) In Africa, Interpol has identified phishing – particularly Business Email Compromise (BEC) – as well as online scams, as both the biggest current crime threats, and the crimes most likely to increase in the next three to five years. This is Interpol’s list of the prominent cyberthreats identified in the African region: Business Email Compromise Phishing Cyber extortion including ransomware attacks Online scams Banking trojans and stealers Below, find out how these cybercrimes are perpetrated and how to protect yourself, your company and your employees with tips from SABRIC and CISA. Business Email Compromise (BEC) For 7 consecutive years, BEC attacks have been the most financially devastating cyber threat worldwide, and continue to be the most prevalent cybercrime, says Interpol. A type of phishing attack, it causes significant financial losses and often reputational damage. It includes cybercriminals using an organisation’s email account to send out fraudulent messages with malicious links or attachments that install malware or steal confidential information. Most commonly, however, BEC involves cybercriminals manipulating emails, especially payment requests containing bank account details. This is because it’s common business practice to send confirmation of or changes to bank details, or invoices containing bank details, via email. In BEC attacks, these emails are intercepted - or fraudulent emails or invoices are created - changing the account details to the cybercriminal’s account. Any payments subsequently made are lost to cybercrime. A recent High Court ruling in this regard, set a precedent applicable to all businesses, as the judge noted: "… the plaintiff’s case established clearly that sending bank details by email is inherently dangerous, and so must either be avoided in favour of, for example, a secure portal or it must be accompanied by other precautionary measures like telephonic confirmation or appropriate warnings which are securely communicated." Specific BEC preventative measures include: Inform clients that your company will never change banking details via letter, SMS or email. Consider not putting banking details on your invoices - rather ask customers to phone you to check the details they have. Use bank-defined beneficiaries for online banking where possible. Before making payment to a supplier’s bank account after receiving an emailed invoice, check that the bank account details on the invoice are genuine. If you receive any instructions to change banking details from a supplier, call them to verify. Check with your insurers if you can get cover for this risk. Phishing One of the oldest, most pervasive cyberthreats and a major source of stolen credentials and information, phishing is a cyber-attack aimed at stealing sensitive information like usernames, passwords and credit card details, typically using deceptive emails or websites, apparently from trusted sources, that contain malicious attachments or links to viruses or malware. Phishing is linked to an estimated 90% of data breaches and causes not only direct financial losses but enables other forms of cybercrime. Cyber…

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Your Tax Deadlines for October 2023

6 October - Monthly Pay-As-You-Earn (PAYE) submissions and payments 30 October - Excise Duty payments 31 October - Value-Added Tax (VAT) electronic submissions and payments & CIT Provisional payments where applicable. Disclaimer: The information provided herein should not be used or relied on 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 professional adviser for specific and detailed advice. © CA(SA)DotNews

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