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South Africa mulls tax hikes on alcohol, vaping, and smoking.

Reference: Published by Luke Fraser (BusinessTech), 16 February 2024

South African excise duties, popularly known as “sin taxes,” are about to be raised by the government. This could result in higher costs for South Africans who indulge in their favorite vices. According to PwC’s estimate for the 2024 Budget, the South African Police Service, and the South African Revenue Service (SARS) have collaborated to recover illicit goods. However, the black market remains a major threat to the country, particularly to cigarettes.

The Transnational Alliance to Combat Illicit Trade (TRACIT) released a report titled “Organised Crime, Illicit Trade and Corruption: Spotlight on South Africa” through Business Unity South Africa (BUSA). The report suggests that the nation’s widespread trade in illicit goods may be costing it close to R100 billion in tax revenue annually. The research attributes the rise in illicit trade to the COVID-19 pandemic, which allowed illegal merchants to expand their operations in the face of government lockdowns, prohibitions, and constraints that affected legitimate markets and led to shortages.

PwC anticipates that new initiatives to stop illicit trading will be included in the 2019 budget in light of these issues. They also demand that the World Health Organization’s treaty, which seeks to outlaw the illegal tobacco trade by 2024, be ratified by the government. PwC further suggests developing a workable track-and-trace system to stop illegal trading.

Right now, PwC genuinely anticipates modest hikes in the excise levies on alcohol and tobacco. The government’s current excise tax policy sets rates at 11% for wine, 23% for beer, 36% for spirits, and 40% for the cost of the most popular tobacco brand, based on weighted retail prices. PwC points to previous budgets that raised tobacco and alcohol excise taxes at rates more than inflation, and they predict that the 2024 budget will announce a similar inflationary increase.

Tax increases on vaping products are also projected. Starting in 2022, the government imposed a fixed excise charge of R2.90 per milliliter on vaping goods that contained nicotine or not. This obligation became operative on June 1, 2023. According to PwC, this commitment will increase in step with inflation.

The government’s goal of stopping illegal commerce and raising tax revenue remains the same, even as South Africans brace themselves for potential increases in sin taxes. When Finance Minister Enoch Godongwana releases his next budget statement, more details about the specific policies and changes that are anticipated will become apparent.

South Africa mulls tax hikes on alcohol, vaping, and smoking. Read More »

SARS TAX Rates 2024: What are the SARS TAX Rates & will they rise in 2024?

Reference: Published by Usher (IT Gujarat), 4 January 2024

The individual must pay the South African Revenue Service, which collects and oversees tax compliance. The revenue department is in charge of customs, executive services, and economic protection. Continue reading this article to learn more about the SARS Tax Rates 2024, what it is, the tax rate in 2024, and other important information.

The South African Revenue Service offers a variety of services and taxes policies to taxpayers. The revenue service determines the various tax rates for each fiscal year. These rates are determined by your individual income and corporate earnings.

The tax rates are determined by the Minister of Finance in a yearly budget speech, which is fixed and passed through Parliament each year. Income tax, employers’ tax, turnover tax, transfer duty, and various additional taxes are among the tax rates.

What is the Tax Rate?

A tax rate is a proportion of an individual’s income that must be paid to the federal government as income tax. These rates are calculated based on an individual’s annual income. This is determined by the taxpayer’s income; the higher the income, the higher the tax.

The rates contribute to the construction and maintenance of national infrastructure, as well as the provision of some social services to residents. This is a proportion of an individual’s taxable income that varies according to income and tax bracket.

What are the SARS Tax Rates?

Taxable IncomeTax Rate
R1 to R 237,10018 per cent
R 237,101 to R 370,50026 percent taxation with an additional R42,678
R 370,501 to R 512,80031 percent tax with an additional sum of R 77,362
R 512,801 to R 673,00036 percent tax with an additional sum of R 121,475
R 673,001 to R 857,90039 percent tax with an additional sum of R 179,147
R 857,901 to R 1,817,00041 percent of tax with an additional sum of R 251,258
R 1,817,001 and more than this45 per cent tax with R 644 489

The taxation rates are determined by the fiscal year, which begins on April 1 and ends on March 31. The following are the South African Revenue Service tax rates for 2023-24:

Individual income determines the tax rates. The one who earns more must pay higher taxes. Individuals are obligated to pay 18% of their income in taxes. Along with the tax rate, the individual must pay an additional payment of a percent after R237,100. They are compelled to pay a particular amount of tax based on their income.

Individuals who earn R 1,817.000 or more are liable to pay a 41 percent tax as well as an additional payment of R 644,489. The taxpayer who earned between R 857,901 and R 1 817 000 must pay 41 percent of their earnings plus an additional R 251,258 to SARS.

Will There Be An Increase in 2024?

Every year, the government sets different tax rates for taxpayers. As a result, there will be certain specific modifications in taxing rates in 2024. These rates change depending on economic growth, population, SASSA funds, public employee compensation, and other factors.

The South African Revenue Service calculates rates based on inflation. Taxpayers’ contributions aid the nation’s social and economic prosperity. The eligible beneficiaries receive their government benefits through this income. The government must publish the new tax rate; for March 31, the taxation rate will be the same as the present year, after which the government will offer a new taxation rate for another fiscal year. The taxpayer will learn about their new tax rates, which are based on social and economic growth.

SARS TAX Rates 2024: What are the SARS TAX Rates & will they rise in 2024? Read More »

South Africa’s new smoking rules are a job killer in plain packaging.

Reference: Published by Luke Fraser (BusinessTech), 18 September 2023

More public hearings on the new Tobacco Products and Electronic Delivery Systems Control Bill have been held by the Portfolio Committee on Health, with attendees expressing mixed feelings.

Depending on the clauses under consideration, the new Bill has received both support and severe criticism.

The following are the broad objectives of the bill:

  • Indoor public locations and some outdoor areas will be declared smoke-free.
  • Cigarette vending devices must be prohibited.
  • Plain package with health warnings and illustrations.
  • Display at the time of sale is prohibited; and
  • Electronic nicotine delivery devices and non-nicotine delivery systems are regulated and controlled.

The Committee held three public hearings in Limpopo, in Polokwane, Louis Trichardt, and Tzaneen, and the attitude to the Bill was mixed, as it had been in the North West, with widespread concerns about the Bill’s economic implications.

The following is a summary of the responses from the three public hearings:

Jobs

Informal traders say the new legislation will compel them to close their enterprises, raising South Africa’s unemployment rate.

They were particularly concerned about the strong penalties for selling single-stick tobacco products, which might result in a fine, jail for up to ten years, or both.

The high fines for the sale of single-stick cigarettes, as well as the potential impact on developing tobacco farmers, were also raised by public participation.

Plain packaging

Those opposed to the Bill also claimed that standardizing tobacco packaging and labeling would reduce job prospects in the advertising industry.

Opponents said that the new simple packaging will encourage the underground cigarette market.

Those who supported the Bill, on the other hand, claimed that prohibiting attractive packaging would eventually lead to a decrease in tobacco product consumption.

Inadequate capacity

Members of the public raised concern about the state’s failure to implement current tobacco legislation due to a lack of capability.

Those who opposed the bill claimed that drafting a new bill without first making the current one work was a waste of time.

They advocated for stricter adherence to existing laws before enacting new legislation.

Electronic delivery methods

Provisions relating to vaping and e-cigarettes were met with a more positive response.

There was widespread agreement that the Bill closes regulatory gaps and ensures that consumers are aware of the adverse impacts of these items.

Those opposed to the Bill, on the other hand, claimed that all tobacco products are unique and that electronic delivery systems should be governed differently.

However, proponents of the Bill criticized tobacco and electronic delivery system manufacturers, claiming that profits were more important than people’s health.

Security precautions

Participants at all three public hearings emphasized that the Bill will ultimately help safeguard nonsmokers, children, and pregnant women from smokers.

There has been considerable concern that school-aged children were missing crucial teaching and learning time by leaving class to smoke, with high hopes that the new Bill will assist parents in preventing their children from smoking.

Supporters of the Bill also claimed that it would protect nonsmokers from secondhand smoke.

South Africa’s new smoking rules are a job killer in plain packaging. Read More »

South Africa will soon have new smoking legislation, including a total public ban and changes to packaging.

Reference: Published by Luke Fraser (BusinessTech), 16 August 2023

This weekend, the Portfolio Committee on Health will host public hearings on the Tobacco Products and Electronic Delivery Systems Control Bill, encouraging South Africans to voice their concerns about the contentious legislation.

The North West Province will be the first to convene national hearings on the contentious bill.

The bill proposes legislative and policy reforms that will affect the following:

  • Indoor public locations and select outdoor areas will be declared smoke-free.
  • The sale of cigarettes via vending machines will be prohibited.
  • Cigarette packs must have plain packaging with explicit health warnings and pictorials.
  • A comprehensive prohibition on point-of-sale display; and
  • Electronic nicotine delivery systems and no nicotine delivery systems are regulated and controlled.

Recognizing court judgements that highlighted issues with public participation in the creation of laws, the committee stated that parliament and the legislative sector as a whole are committed to strengthening this fundamental mandate, which is also a constitutional responsibility of Parliament.

“The hearings are in accordance with Section 59 (1) of the South African Constitution, which requires the National Assembly to facilitate public participation in the legislative process.” Furthermore, the legislative sector adopted a public involvement approach that prioritizes public input,” said Dr Kenneth Jacobs, Chairperson of the committee.

In addition, the committee will schedule public hearings during the week and on weekends to provide stakeholders, organizations, and people enough chance to engage.

“In order to create a favorable environment for meaningful public participation, we decided to hold hearings at times and days that will allow interested individuals and stakeholders a reasonable opportunity to participate.” “We are prepared to listen,” Dr. Jacobs stated.

The hearings will be held in two or three districts each province to guarantee that a sufficient number of residents can participate.

The committee has also recently moved the deadline for written submissions on the bill from Friday, August 4, 2023, to Monday, September 4, 2023.

Objections to the bill

The bill has attracted extensive criticism from the industry, with a study conducted by Clippa Sales and Casa Tabacs revealing that 200 professional tobacconists in South Africa did not support it.

“While the Tobacco Bill causes significant problems for all tobacco product retailers, research into specialist tobacconists shows that proposing a total ban on displaying the only products they sell in their stores poses an existential threat to their businesses.” “These are legal products that can only be sold to people over the age of 18,” Clippa’s Alex Jacovides explained.

98% of respondents said they did not favor the display restriction, and 99.5% claimed it would harm their firm and cause job losses.

According to Diane Bravo, proprietor of Casa Tabacs, a specialty tobacco outlet, enforcing the display prohibition would result in business closures, significantly impacting the country’s revenue and employment rates.

The bill also mandates a 10-year prison sentence and/or a fine for displaying cigarettes on the counter, even if done by mistake. According to 99.5% of respondents, this punishment was excessive.

Many people were also concerned that the restriction on displaying tobacco goods would lead to a surge in illicit tobacco sales, similar to what happened during the Covid-19 outbreak.

Respondents also raised concerns about the bill’s use of standardised or plain packaging, which would make all cigarettes and associated items look the same.

“This makes them easy to forge, which will exacerbate crime and lawlessness in our country and entrench the organized criminal networks that have grown and prospered since the Covid-19 tobacco ban,” Bravo added.

South Africa will soon have new smoking legislation, including a total public ban and changes to packaging. Read More »

Tax advisories for South Africa

Reference: Published by Daily Investor, 20 June 2023

https://dailyinvestor.com/south-africa/20606/tax-warning-in-south-africa/?utm_source=everlytic&utm_medium=newsletter&utm_campaign=businesstech

The country cannot afford to raise taxes, according to economist Dawie Roodt, since wealthy individuals and businesses will flee if it does.

The Laffer curve, which depicts the correlation between tax rates and the total amount of tax income collected by governments, was mentioned by Roodt.

Two extremes form the foundation of the Laffer curve idea:

  • Tax income would be zero if the tax rate were to be 0.
  • Everyone would be unemployed and there would be no tax collection if the tax rate was 100%.

The tax revenue will rise to an ideal level where it is maximized if the tax rate is gradually reduced from 100% to 0%.

As the tax rate falls below what is necessary to properly raise tax revenue, it would eventually reach zero.

To maximize tax revenue, or the revenue maximising point, the government would aim to arrive at the ideal tax rate.

People are more motivated to engage in tax planning and set up their finances in order to pay the least amount of tax when the tax rate is raised above this threshold.

Productivity would decrease as the tax rate grew because people would opt to remain in lower tax bands because the payoff for working hard would be insufficient.

Another issue is that wealthy people are movable and can choose to leave a nation if taxes are too high.

High taxes may also hinder economic expansion and strain the economy, which lowers tax revenues.

The Laffer curve does not favor South Africa.

After tax collections fell short of expectations, South Africa will probably fall short of its primary budget surplus goal for the 2023 fiscal year by roughly R8.9 billion.

According to the National Treasury, the nation’s primary budget deficit for the fiscal year ending in March 2023 was R1.53 billion.

Slow economic development brought on by load-shedding, bad economic policies, and alignment with Russia makes the issue worse.

The government might think about increasing taxes to close the budget gap. It is difficult, though, as it may lead to even more serious issues.

According to Roodt, South Africa had passed the Laffer curve’s maximum point, making it challenging for the government to raise taxes.

According to him, raising income taxes may give the government a temporary boost in revenue, but it may also have unfavorable effects.

The majority of taxes in South Africa are paid by a tiny group of citizens. They are already leaving the nation and can do so with ease.

Higher income taxes will push wealthy people out of the country, according to Roodt, when coupled with the high crime rate and unstable economic climate.

The same issue as with personal income taxes may arise if we choose to increase corporate taxes as a second alternative.

Two-thirds of all business taxes are paid by just 770 companies, and they already pay some of the highest taxes in the world.

“We are unable to raise business taxes. Companies will simply relocate to another nation if you raise it any further, he claimed.

The government may also choose to raise the value-added tax (VAT). It will, however, upset the working class and unions, making it politically undesirable.

A greater gasoline fee, which is difficult to evade and simple to collect, is the ideal way to raise taxes, according to him.

Simply put, according to Roodt, “the state must spend less money and concentrate on fostering economic growth.”

Tax advisories for South Africa Read More »

What you need to know about the six new laws coming to South Africa

Reference: Published by Staff Writer, 8 June 2023

https://businesstech.co.za/news/government/694659/6-new-laws-coming-to-south-africa-what-you-need-to-know/?utm_source=everlytic&utm_medium=newsletter&utm_campaign=businesstech

A number of laws being processed by Parliament are currently available for public comment, and a few more will likely be submitted in the upcoming months.

A handful of the bills being considered will significantly affect all South Africans or their way of life, even though some of them are related to administrative or procedural adjustments for departments.

Changes to the labels on food products on shop shelves and significant adjustments in a number of work sectors that may have an influence on employability are just a few of the new regulations that are currently up for comment.

Changes to the labels on food products on shop shelves and significant adjustments in a number of work sectors that may have an influence on employability are just a few of the new regulations that are currently up for comment.

The police force or the way the public service is run are being changed, and many departments are attempting to amend existing legislation and submit them to Parliament.

Draft Employment Equity Regulations, 2023

  • Public comments are welcome until June 12, 2023.

By now, the majority of South Africans—as well as all businesses—would be aware of these requirements. The public had 30 days to comment on the Draft Employment Equity Regulations 2023 after they were released in the middle of May.

The regulations include specific sectoral racial and gender targets for each of the nation’s major job sectors, which businesses must meet within five years.

The goals are to have job sectors in South Africa that are demographically representative of the racial and gender composition of their respective provinces or countries. The goals force companies with 50 or more employees to gradually change the racial and gender composition of their workforce, paying special attention to top and senior management roles.

The restrictions have already received harsh criticism and will probably be the subject of numerous court challenges because of claims that the precise targets are racial quotas.

The Employment Equity Amendment Act, which was recently signed into law and gives the Minister of Employment and Labor the authority to set the targets, prompted the publication of the draft regulations. However, the Act has not yet been published.

Independent Police Investigative Directorate Amendment Bill, 2023

The Independent Police Investigative Directorate (IPID) Amendment Bill and an explanation note will be submitted to Parliament by the Minister of Police, according to a notice published in the Gazette.

The bill is anticipated to put into effect the 2016 ruling by the Constitutional Court in the case of McBride v. Minister of Police and Others, which determined that the former Police Minister Nathi Nhleko’s suspension of IPID head Robert McBride was unconstitutional because it constituted undue influence and infringed on the directorate’s independence.

The new bill is a significant step for independent police in South Africa since it will codify IPID’s institutional and operational independence and grant it the freedom to carry out its duties without interference, fear, favor, or bias.

The bill will also expand the scope of the IPID’s mandate to include the investigation of rape allegations and deaths that may have been committed while not on duty. The conditions of service for IPID investigators, including their pay and benefits, may also be determined by the Minister in consultation with the Minister of Finance.

Public Service Bills

On the first introduction of the Public Service Amendment Bill and Public Administration Management Amendment Bill, the Portfolio Committee on Public Service and Administration will receive a briefing.

The Public Service Amendment Bill aims to amend the Public Service Act of 1994 in order to, among other things, provide for the devolution of administrative powers from executive authorities to heads of department, enhance the Director-General’s role in the Presidency to support the President, and provide for a mechanism to deal with the recovery of overpayments of remuneration and benefits. It also clarifies the Public Service Commission’s role in relation to grievances.

The Public Administration Management Amendment Bill, on the other hand, seeks to amend the Public Administration Management Act of 2014, among other things, by expanding the provisions for employee transfers and secondments and by clarifying the ban on employees transacting business with state organs.

The government has been working hard to make the public sector more professional and to put a stop to the irregularities, fraud, and corruption that have crept into local administrations and the public sector as a whole.

These two measures constitute a component of the effort to achieve this.

Independent Municipal Demarcation Authority Bill

  • Comments accepted till 20 June 2023

End of May saw the release of the Independent Municipal Demarcation Authority Bill for public comment by the Department of Cooperative Governance and Traditional Affairs.

The measure allows for the creation of a separate body that would decide on municipal boundaries and categorize and organize them.

In general, it stipulates the standards and procedures to be followed in the determination and redetermination of municipal boundaries, the delineation of wards, and the appeals and assessment procedures related to these.

Notably, it also places limitations on implementing these kinds of adjustments. A municipal boundary involving categorization, merger, or other boundary modification that affects the movement of more than one complete ward in a municipality may only be determined or redetermined by the board of the authority every 10 years.

Municipal boundaries and demarcation have a significant impact on election outcomes, notably in local government elections, as well as service delivery in the nation. Gerrymandering should be avoided in part thanks to restrictions on changing boundary lines.

National Identification and Registration Bill

  • Comments accepted till June 30.

The government is pushing through laws to establish a “one-stop” national identity database in the country, which has implications for foreign nationals, as well as opening up for allowing citizens to get their IDs at the age of 10.

The main push behind the laws is to provide for a biometric national identity system (NIS) that will enable a single view of a person by providing for particulars to be included in the population register and the identification database.

The NIS is intended to interface with other government and private sector identity systems, which should speed up all kinds of processes – like driving licence, ID and passport applications – while also helping with policing and crime detection.

The bill will also apply to permanent residents and foreigners who sojourn temporarily within the republic.

The bill also makes provisions for the compilation and maintenance of a population register and identification database; the assignment of national identity numbers and reference numbers; and for the issuance of national identity cards and temporary identity, deaths, births and marriage certificates and other connected matters.

Regulations relating to the Labelling and Advertising of Foodstuffs

  • Comments accepted till June 20.

The South African Department of Health has moved in the direction of implementing significant changes to food labeling, including the addition of warning labels on harmful foods.

The Regulations Relating to the Labeling and Advertising of Foodstuffs have been gazetted by the department, allowing for public comment on the proposed amendments to the Foodstuffs, Cosmetics, and Disinfectants Act.

The proposed revisions include a number of adjustments for more contemporary changes in food advertising while also reinforcing numerous laws currently in place for product packaging in South Africa, such as ingredient listings and sell-by dates.

The government seeks to make measures that will, among other things, require food products with excessive sugar and fat content to have prominent warning labels and to not be sold to minors.

The government wants all pre-packaged foods that contain added sugar, added salt, added saturated fat, or those have more total sugar, total sodium, or total saturated fatty acids than the nutrient cut-off levels to be required to have front-of-package labeling (FOPL).

‘Super foods’ claims and other uncontrolled marketing words are also severely restricted by the legislation.

What you need to know about the six new laws coming to South Africa Read More »

There will be changes to taxes, laws, and other aspects of smoking in South Africa.

Reference: Published by Staff Writer, 8 May 2023

https://businesstech.co.za/news/business/685915/smoking-in-south-africa-will-never-be-the-same-again-taxes-laws-and-more/?utm_source=everlytic&utm_medium=newsletter&utm_campaign=businesstech

E-cigarettes and other market disruptors have changed how South Africa’s government controls and levies taxes on smoking.

From 1 June 2023, nicotine-substitute items, including as vaping products, will be subject to a flat excise duty rate of R2.90/ml, demonstrating the government’s keen effort to expand the tax net to include emerging and novel smoking behaviors in the nation.

The Vapour Products Association of South Africa and British American Tobacco, the largest participant in the tobacco industry, have cautioned that the increased tax will probably result in price increases of up to 138%, driving users to the black market.

The Tobacco Products Control Act and the Medicines Act do not now encompass vaping products, but legislation is being prepared to close any remaining legal loopholes.

The Tobacco Products and Electronic Delivery Systems Control Bill, which was introduced at the end of 2022 after considerable consultation, is now being debated in Parliament.

In general, the law seeks to tighten regulations on e-cigarettes as well as smoking in general.

When the bill is passed into law, the minister of health will have the power to impose smoking bans in specific public venues and outdoor spaces as well as to control tobacco product packaging and advertising.

The law also has a clause that prohibits the exhibition of any type of tobacco product, including heat-not-burn items like e-cigarettes and vapes, at retail establishments like specialty tobacco stores.

Similar to government control, equity analysts Siphesihle Zwane and Varshan Maharaj of Allan Gray claimed that the tobacco industry never paid much attention to novel nicotine use methods.

According to Allan Gray, “the industry never aggressively invested in new ways to consume nicotine.”

This changed when JUUL, a popular vape brand, started to experience rapid growth in the US thanks to the introduction of flavor-infused new products and clever marketing strategies. Due to the surge in “JUULing,” incumbents were obliged to invest more in next-generation products (NGPs), which marked a significant departure from the industry’s previous stability.

Modern oral products, tobacco-heating, and other new ways all aim to reduce consumer harm, which will unavoidably have an impact on the traditional tobacco business.

The majority of major market regulators, according to Allan Gray, recognized that the vaping industry’s regulatory edge would not last indefinitely. The abundance of advancements in the e-cigarette business at the moment is evidence of this.

According to the equity analysts, Big Tobacco is currently pushing smokers to give up or, if they are unable to, switch to next-generation products through a variety of consumer education activities, such as storefronts in malls.

“These products are all very new, and the latest research on damage reduction has been encouraging, demonstrating a risk reduction of up to 90% or more from exposure to dangerous compounds. To better understand the long-term effects, demographic studies are being undertaken, but we are still keeping an eye on the science, according to Allan Gray.

Investments in the tobacco industry, which was once a dependable sector for decades, now carry higher risks as a result of significant industry upheavals.

The risks linked to legislative reforms have not yet significantly impacted the tobacco industry’s earnings, but they have led to a lower multiple of earnings for the sector, according to Allan Gray.

Heavy hitters in the business like British American cigarette are worried about the potential reduction in cigarette revenues because smoking rates have declined while the population has increased.

However, businesses like BAT might experience revenue and margin expansion if long-term combustible volumes do not decline sufficiently and real price increases are realized.

Allan Gray said that when more consumers switch to Next Generation Products (NGPs), profit per stick may increase. The number of smokers has remained constant since 1990 at between 1 billion and 1.1 billion, notwithstanding the fall in smoking prevalence.

There will be changes to taxes, laws, and other aspects of smoking in South Africa. Read More »

Next month, South Africa will impose a new smoking tax.

Reference: Published by Staff Writer, 2 May 2023

https://businesstech.co.za/news/government/684261/new-vape-tax-hits-south-africa-next-month/?utm_source=everlytic&utm_medium=newsletter&utm_campaign=businesstech

With a flat excise duty rate of R2.90 per milliliter beginning on June 1, 2023, nicotine-substitute solutions, including vaping products, will be subject to taxation.

Excise taxes on tobacco products used in vaping have been discussed for a while; the tax was first mentioned in the 2022 budget address by finance minister Enoch Godongwana.

The Tobacco Product Excise forms have been changed to include vaping items, according to the South African Revenue Service (SARS).

Manufacturers of these goods must, therefore, file their first excise duty account by July 28, 2023, and apply for and receive licenses for their manufacturing locations with SARS before June 1, 2023.

“Special storage warehouses in respect of such products should similarly be licensed with SARS before 1 June 2023,” the taxman advised.

Asanda Gcoyi, the CEO of Vapour Products Association SA (Vpasa), claimed in February of this year that the sector would suffer if an excise tax were imposed on e-cigarettes.

The CEO claimed that the government had not carried out sufficient impact analyses for how the tax would affect an industry worth R1.5 billion in 2022.

According to her, the tax may cause a 22% decrease in sales.

Concern about the tax on vaping stems back to British American Tobacco South Africa’s statement that the proposed charge might cause the price of vape items to more than double at a standing committee on finance in September last year.

In September, Gcoyi predicted that e-liquid consumption would decline by 36% and that the average cost of vape products would rise by 138%. Gcoyi and British American Tobacco both concurred that a high tariff would drive customers to the black market.

The Tobacco Products Control Act and the Medicines Act do not apply to vaping products, which makes them mainly uncontrolled.

Inhaling vaporized liquid solutions that may contain nicotine and other chemicals from a device is known as vaping.

It has become very popular as a substitute for conventional cigarettes and has also become popular among younger generations. In a recent paper, UCT professor Richard van Zyl-Smit examined the vaping practices of more than 5,500 high school pupils from a number of wealthy institutions.

According to the report, more than 25% of matric students use vaping devices. A quarter of respondents said they couldn’t get through a school day without vaping, and over 30% of respondents said they used their vaping device within an hour of waking up.

Next month, South Africa will impose a new smoking tax. Read More »

The expense of handling a deceased person’s estate

Reference: Published by Devon Card – Crue Invest (Pty) Ltd, 24 April 2023

It is clear that ensuring that your estate has enough liquidity to pay your numerous commitments is an essential component of estate planning.

The Administration of Estates Act of 1965, whose provisions are applicable whether the deceased died testate or intestate, must be followed when a person passes away with an estate worth more than R250 000.

Keeping in mind that the heirs and beneficiaries can only get their inheritances once the debts in the estate have been paid off, the executor’s primary duty is to maintain track of the liabilities in the decedent’s estate.

In this article, we examine the numerous expenses related to handling a decedent’s estate.

Tax

One of the executor’s first duties is to see that Sars receives the taxes it is due, keeping in mind that they will actually have to perform two tax assessments: the pre-date of death assessment and the post-date of death assessment. The post-date of death assessment includes dividends, interest, and rental income that was accumulated throughout the administration process up until the Master has formally approved the liquidation and distribution account, whereas the pre-date of death assessment includes all income and deductions that were applicable to the deceased up to the date of death.

It is crucial to consider any potential estate duty and capital gains tax liabilities you may have while creating your estate plan. The first R3.5 million of the value of your estate is not subject to estate duty, which is a tax paid on the dutiable estate of the deceased and is assessed at a rate of 20% of the first R30 million and at 25% of everything over R30 million. If the dead was married when they passed away, the R3.5 million estate duty exemption can be carried over to the surviving spouse, who will then be eligible for a R7 million exemption when they pass away.

Claims for maintenance and accrual

It’s crucial to comprehend how maintenance responsibilities and accrual claims can impact the administration of your estate. These two costs are frequently ignored when determining estate liquidity. The accrual method governs the growth of each spouse’s inheritance starting from the date of marriage and is computed at the death of the first-dying spouse if you are married and have separate estates while you are still married. The surviving spouse will have a claim against the deceased spouse’s estate for their part of the accrual, having in mind that their claim is a preferent one, if the value of the deceased spouse’s estate is more than that of the surviving spouse. Similar to this, if the deceased had support duties under a divorce decree, these obligations did not end with their owner’s passing. The executor must make sure they are honored, which is often done by making a lump sum payment. The executor may need to sell assets meant for other beneficiaries if the dead did not make provisions for them, which could have disastrous financial ramifications.

Existing debt

The executor must make sure that all other estate debts are paid after Sars has been paid and all accrual and maintenance duties have been satisfied. This is accomplished by publishing a Section 29 advertisement in the Government Gazette and the local newspaper, which essentially serves as an advertisement for the estate’s creditors to submit their claims. The Master will only authorize the executor to distribute inheritances and bequests to the heirs and beneficiaries once all of the creditors have been satisfied. Once more, the executor may need to sell assets to cover the estate’s death expenses if the decedent did not leave enough money in their estate to pay off their debts.

Fees for an executor

As of right now, an executor is only allowed to charge a maximum of 3.5% of the gross value of the estate’s assets plus 15% VAT. Additionally, from the time of the decedent’s death until the estate’s final winding up, an executor may charge 6% of all revenue received on the estate’s behalf, including rental, interest, dividend, trade, and farming income. You have the option to negotiate a reduced executor’s fee when naming an executor in your will, which is typically done afterward.

Expense of administration

A deceased person’s estate may also incur the following expenses:

  • Costs of burial and funerals: Funeral and burial expenses are covered by the estate of the deceased person, but it is ideal to make sure that your loved ones have access to money or a funeral policy to pay for the funeral so that they can later recoup those expenses from your estate. Keep in mind that funerals can range in price from R10,000 to R50,000, depending.
  • Paying the master: According to existing regulations, master’s fees will be charged at a rate of 600 for estates valued between R250 000 and R400 000, and thereafter on a sliding scale up to a maximum of R7 000.
  • Late bank account for an estate: The opening of an estate-late bank account, for which most banks charge somewhere in the neighborhood of R600, is one of the executor’s first tasks.
  • Transfer expenses: Your estate will be obligated to pay the transfer charges, which are the attorney’s conveyancing fees, in accordance with a sliding scale decided from time to time whenever immovable property in your estate is transferred to an heir, whether via testate or intestate succession. It is crucial to remember that beneficiaries and heirs are free from paying transfer duty on assets they inherit from a deceased estate either through testate or intestate succession.
  • Costs of bond cancellation: The estate is responsible for the bond cancellation expenses, which can range from R4 000 to R5 000 depending on the lender’s terms, if the executor needs to cancel a bond over fixed property.
  • Expert charges: The fees associated with hiring professionals to help the executor of your estate wind it up will be covered by the estate. For instance, if you and your spouse use the accrual system, the executor may need to hire an accountant to figure out the accrual. To sell any immovable property, you must also pay the estate agent’s commission, if applicable.
  • Costs of advertising: Depending on the publication rates, the Section 29 and Section 35 advertisements that are mandated by the Act cost about R1,500.
  • Upkeep of an asset: The estate will pay for any expenses paid in relation to maintaining an asset, such as gardening services, plumbing, electricity charges, or cleaning expenses.
  • Costs of valuation and appraisal: These costs, together with the appraiser’s travel expenses, will be covered by the estate when the Master demands that an asset in the estate be valued by a sworn appraiser.
  • Costs of duplicate rates clearance: Your estate must pay rates and taxes to the municipality up to six months in advance if your estate owns immovable property.

With the aforementioned in mind, it is clear that a crucial aspect of estate planning is making sure your estate has enough liquidity to satisfy your numerous commitments without taking away from the inheritance you want to leave to your loved ones. Our recommendation is to collaborate with a knowledgeable estate planner to make sure that all estate costs are estimated and fully covered.

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South African business owners are at a new low.

Reference: Published by Staff Writer, 27 March 2023

https://businesstech.co.za/news/trending/675503/business-owners-in-south-africa-hit-with-new-low/?utm_source=everlytic&utm_medium=newsletter&utm_campaign=businesstech

With the end of the global financial crisis in 2009, according to the Bureau for Economic Research (BER), South Africa’s attitude about merchants has fallen to a new low.

According to the BER’s most recent Retail Survey for the first quarter of 2023, confidence in the retail sector fell from 42% to 34%, or 6% points, below the long-term average.

This indicates that the retail industry is struggling and that customer demand is now poor.

Retailers’ business conditions are poor according to an index, which shows a similar negative trend from -23 to -41.

Retailers anticipate lower sales this quarter than in the first quarter of last year, but it is typical for the first quarter of the year to have lackluster sales compared to the holiday season.

In actuality, Stats SA reports that January’s retail sales were 0.8% lower than they were in the beginning of 2022. The results of the BER’s 2023 Q1 survey show a continuation of the decline in sales volumes of durable and non-durable items that began in the fourth quarter of 2022.

Yet, due to a rebound in the sales of clothing and shoes, semi-durable products appear to be holding steady.

This, according to the organisation, shows how consumers are being squeezed by rising inflation and a high interest rate that affects both durable and non-durable goods.

Consumer confidence is at levels last seen during the pandemic, the second quarter of 2022, when KwaZulu-Natal saw significant flooding, and the beginning of the war in Ukraine’s worldwide ripple effects, adding salt to the wound.

Consumer confidence fell to a negative 23 point level in Q1 2023, down from a negative 20 point level in Q3 2022 to a negative 8 point level in Q4.

The BER identified the electrical issue and worries about the high cost of living as the primary causes of the negative sentiment.

At the moment, load shedding is one of the most prominent handbrakes on enterprises.

By investing their hard-earned money in backup power solutions, retailers are attempting to lessen the impact of rolling blackouts.

Major businesses including Pick n Pay, Woolworths, and Shoprite have built up costs for diesel to fuel generators that total millions of dollars.

Though they are now elevated, the selling and purchase price indexes for retail items may taper in the future, the BER did point out this more encouraging development.

South African business owners are at a new low. Read More »