Current Edition >> Archives Section >> Spot Coverage >> 1 February 2006

Tax amnesty granted for non-compliant SME's

Finance Minister Trevor Manuel's 2006 Budget speech clearly had growth as its central target.
For companies with tax years that end on April 1, or later, the annual turnover threshold to qualify as a small-business corporation moves from R6 million to R14 million. In addition, the taxable income threshold for the lower 10% will be increased from R250 000 to R300 000, while the small business income-tax exemption is increased from R35 000 to R40 000. One-time capital-gains tax relief moves up from R500 000 to R750 000 after 1 March and the asset-value threshold for immediate depreciation increases from R2 000 to R5 000. These measures are set to cost the fiscus some R400-million.
Over and above this, a tax amnesty for small businesses, with a turnover of less than R5-million and that have not previously been tax compliant, is also offered by SARS.
Manuel explained in his speech that one of the reasons for this is to offer those “who have been historically marginalised an opportunity to regularise their tax status”. Taxes and penalties will be waived for years of assessment ending on or before March 31, 2004, which is subject to a non disclosure penalty of ten per cent on 2005's taxable income. The first phase of the amnesty will take place between August 2006 and May 2007, and will focus on the taxi industry. Later in the year, a second phase will extend the amnesty to other small businesses.
Regional service and joint service council levies will fall away in July this year, costing municipalities some R7 billion, which is, however, being added back to local government's equitable share in 2006/7 with R24 billion being added back over the medium-term expenditure framework to compensate.
Also aiming to aid job creation, the learnership allowance - introduced in 2002 - will be extended for a further five years in view of its contribution to encouraging on-the-job training and skills development. In addition, the allowances will be increased in value at a cost to the fiscus of R80 million. Encouraging further investment in technology and innovation, the deduction for current research-and-development expenditure is increased from 100% to 150%, with a “more favourable regime” for depreciation of research-and-development capital expenditure is for later proposed.
From March next year, a simplified set of rules for the tax treatment of bursaries and scholarships provided by employers is to be introduced. Meanwhile, Manuel hinted at one of the Accelerated and Shared Growth Initiatives' priorities when he said that an enhanced learnership allowance for the business process-outsourcing sector is currently under consideration.

Gold fading - cold facts

VMuch is being said about a possible rise in the gold price and resultant revival of the gold mining industry, especially as it could perhaps impact positively on also the economy of the Free State Goldfields, but pure statistics recently coming to the fore reflect a different picture.
According to a review Gold in South Africa published by Virtual Metals Consulting, the remaining gold resources in SA are only some 40 000 t of this, between 8 000 t and 10 000 t can be recovered profitably, depending on the rand gold price. Between 1884 and 2004, the gold-mining sector produced 50 055 t of gold, which accounts for about 33% of all gold above surface.
Reserve Bank Governor Tito Mboweni said at a London Bullion Market Association (LBMA) conference in November 2005 that “exports of gold have receded from 51% of total visible exports in 1980 to 9,4% in 2004. Over the past decade, the contribution of gold-mining in total gross domestic product (GMP) declined from 3,2% in 1994 to 1,5%.”
The changing fortune of the sector, observed Mboweni, is also mirrored in sliding employment figures while 476 000 people were employed by the gold-mining industry in 1980, the sector's workforce gradually whittled away to 175 000 in 2004.
As some remedy, development of gold beneficiation in SA is mooted. 97% of SA's gold production ever has been exported in the form of gold bars and local gold beneficiation does not even reach 1% of the world figure. Meanwhile, India, which produced only 3,4% t of gold in 2004, has a jewellery-fabrication share of 20%.

Questions on and response to alleged MEC's involvement in business contracts

Two questions were raised in the Free State Legislature on the involvement of two MEC's in two different state contracts. Mr. Abrie Oosthuizen of the Freedom Front + and also chairperson of the Public Accounts Committee of the Legislature asked about, firstly, the interest of Mr. Tate Makgoe, MEC for Finance, in Makomota Consultants who have a contract to review the financial system of the Dept. of Tourism, Environmental and Economic Affairs and secondly, the directorship of Mr. Neo Masithela, MEC of Tourism, Environmental and Economic Affairs, of MPS Consulting Engineers, who has been contracted for the spatial development of the Vredefort Dome Area.
In response in the Legislature, the Premier, Ms. Beatrice Marshoff, said that before becoming MEC for Finance, Mr. Makgoe was a director of Makomota, who has been inter alia subcontracted by PricewaterhouseCoopers to do financial management and administration for various municipalities. Ernst & Young was contracted to do the financial system of the Dept. of Tourism, Environmental & Economic Affairs and in this also subcontracted Makomota. There is a mechanism for members of the Legislature to declare their financial interests and in terms of which matters such as these are being dealt with.
As regards the issue raised in respect of Mr. Masithela, the Premier said that Masithela has declared his business interests before becoming MEC and that there is nothing preventing members of the Legislature from participating in economic activity at any level. It has also been made clear earlier that the Dept. of Tourism, Environmental & Economic Affairs had nothing to do with the allocation of the contract to MPS Consulting Engineers.

Harmony doubles outside SA

Harmony Gold Co, originating from Virginia in the Free State and later having shifted its corporate head office to Johannesburg, is according to a report in Mining Weekly currently planning to double its production outside South Africa.
The company's proposed Hidden Valley project in Papua New Guinea (PNG), which involves the construction of a $250million opencast mine, will produce an estimated 285 000 oz/y of gold. Besides gold, Hidden Valley will also produce 3,9million oz/y of silver, which will put the project's equivalent gold production at 345 000 oz/y. It is expected that the project will produce 2,6million ounces of gold and 39million ounces of silver over 10 years. It is expected that the new mine will start production by early 2008, meaning that offshore production will contribute about 20% of Harmony's gold ounces by 2009.
Meanwhile Harmony's mining operations in Australia currently contribute 280 000 oz/y of gold to total production, which will be an estimated 2,7million ounces this year.

Assistance with firearms

In the Eastern Free State the Harrismith Firearms Proficiency Centre is now up and running as a SABS/SAPS approved shooting range in terms of the Firearms Act 60/2000. The Centre is situated on the farm Glen Garriff 14 km outside Harrismith .
Individuals are invited for training, testing and renewal of firearm licence applications. The centre is full accredited by SAS SETA and approved by SABS offering three lane indoor handgun range as well as legal testing.
Peter Schofield is the assessor and moderator and is accredited with SAS SETA (SA Safety & Security, Education Training Authority) and THETA. He is an experienced instructor on hand guns, rifles, shot guns and sub machine carbines as well as legal testing.
For information and bookings, contact Dawie on 058 6222 18 or 082 849 4455.