January Newsletter 2021
/Happy new year to everyone! I’m sure 2021 will be a great year. 2020 served up some troublesome fare, but hopefully all of this has only made us tougher and more resilient.
We start the new year, focussing internally on our staff because if our staff are happy, our clients will get the very best experience possible.
We welcome Grizelda to the Anlo team, and we look forward to working with her!
Nastassja is unfortunately leaving us at the end of January; we will miss her very much and wish her all the very best.
We are working on some new software tools that we will incorporate into our daily routine to make the reports our clients get even better and more informative. Watch this space!
SARS Updates
Foreign tax credits
SARS has recently released Interpretation note 18 issue 4 explaining the documentation requirements for people earning foreign income and paying foreign taxes.
The basic information that will need to be kept for every taxpayer is:
The foreign tax year during which the income was received. Detailed documentation explaining the period of the tax year
The full name of the country where the foreign income and tax were paid
The type of income earned, and taxes paid i.e., Pay as you earn.
The relevant legislation that charged the tax i.e., the act
The name of the tax authority that charged the tax i.e., HMRC in the UK
The status of the body that levied the tax i.e., national or local authority
The above documentation should be in English and if it is not in English, should be translated to English. The translator has to verify that the information is true and correct.
The advice in terms of interpretation note 18 has been helpful but it does not answer all the practical problems surrounding the taxes that we can potentially deal with internationally.
Our advice is to keep all documentation and hope that it will be enough and please make sure that they are translated into English.
SARS Refunds stopped at the bank
We have come across situations where refunds from SARS have been frozen at the bank and not made available to the taxpayer.
A taxpayer is entitled to a refund of an amount which is lawfully due to them, with interest paid on the refund.
Banks have a risk management rule that is applied to all transactions and will flag any suspicious activity on any accounts and report it to FIC (Financial Intelligence Centre) while some activities will also trigger an internal fraud investigation.
In some instances, the SARS refund appears to trigger the bank's risk management procedures and the bank is then legally obliged to report the SARS refund where it suspects that the refund may be related to a tax offence.
These transactions have to be reported to the FIC and SARS. For security reasons neither SARS nor the bank can disclose why they are freezing the refund. Once the transaction has been reported, the bank must place a hold on the transaction.
It can all get extremely complicated then, as the bank and SARS will conduct further investigations and may request supporting documentation from the taxpayer if required. In extreme situations, the bank can freeze the bank account if they suspect other fraudulent transactions.
SARS can then perform in depth audits and raise additional assessments to correct the transactions.
If no fraudulent activities are found, then the refund will be released.
The problem is exacerbated because some of the people at the SARS call centre do not always provide the correct information, even though all the notes and information are on the system.
If taxpayers are upset about the process followed by the bank or SARS, they can contact
VAT Refunds:
Recalledrefunds-VAT@sars.gov.za
Income tax refunds
Recalledrefunds-IT@sars.gov.za
Book Review - The Psychology of Money by Morgan Housel
This year we will start including quarterly reviews of books we read that we feel were both interesting and useful.
The Psychology of money helped me understand why everyone’s view of money is different, and that people are not (always) crazy!
Even though you may struggle to understand why people react the way they do when it comes to their finances, this doesn’t necessarily imply a failing on their part - it just means that they have a different background and experience when it comes to money.
Here are some extracts from that book that I thought were helpful:
"Go out of your way to find humility when things are going right and forgiveness/compassion when they go wrong – It is never as good or bad as it looks. Luck and risk are both real and hard to identify. Respect the power of luck and risk and you’ll have a better chance of focusing on things you can actually control.
Less ego, more wealth – saving money is the gap between your ego and your income, and wealth is what you do not see. So, wealth is created by suppressing what you could buy today to have more stuff or more options in the future. No matter how much you earn, you will never build wealth unless you can put a lid on how much fun you can have with your money right now.
Manage your money in a way that helps you sleep at night – To each their own. But use the foundation of – ‘will this help me sleep at night?’ – guidepost.
If you want to do better as an investor, the single most powerful thing you can do is increase your time horizon – Time is the most powerful thing when it comes to investing. Little things grow big and big mistakes fade away. It can’t neutralise luck and risk, but it pushes results closer towards what people deserve.
Become OK with a lot of things going wrong, you can be wrong half the time and still make a fortune.
Use money to gain control over your time, because not having control of your time is such a powerful and universal drag on happiness.
The ability to do what you want, when you want, with who you want, for as long as you want to, pays the highest dividends that exist in finance.
Be nicer and less flashy. No one is impressed with your possessions as much as you are.
Save. Just Save. You do not need a specific reason to save.
Define the cost of success and be ready to pay it.
Worship room for error.
Avoid the extreme ends of financial decisions. Everyone’s goals and desires change over time.
Define the game you are playing, and make sure your actions are not influenced by people playing a different game.
Respect the mess – smart informed and reasonable people can disagree in finance because people have vastly different goals and desires.
There is no single right answer, just the answer that works for you.
The more you want something to be true, the more likely you are to believe a story that overestimates the odds of it being true. Everyone has an incomplete view of the world. But we form a complete narrative to fill in the gaps.
Progress happens too slowly to notice but setbacks happen too quickly to ignore. Another is that pessimists often extrapolate present trends without accounting for how markets adapt.
There are many things never worth risking, no matter the potential gain.
Enough is not too little. The hardest financial skill is getting the goalpost to stop moving."
I thought the book was brilliant, full of insights in the way each of us approach money and wealth and, surprisingly, a real page turner.
Xero Updates
We love using Xero and there have been some exciting and new developments we would like to make everyone aware of:
VAT201 Report update
Previously, you could not close or finalise a VAT report on Xero, which meant that if transactions changed in a period before the current VAT period, differences might arise, and it could be hard to figure out and reconcile the transactions.
Now, you can finalise a VAT report and once finalised, Xero will lock the previous returns, and finalise all subsequent returns in sequential order. Any changes or additional transactions entered for the period will not be included in that return and will then be included in subsequent periods as late claims.
If you need to update the VAT report, you can revert the VAT report to draft and run the VAT report.
You can read more about this here.
Business Dashboard
You can now have a one-page dashboard for your company in Xero.
Nedbank and Xero - Xero
The Nedbank bank feed is now live, and you can get a 50% discount if you sign up with Xero for the first time and have a Nedbank account.
You can also get explanatory guidance on how to connect the bank feed.
Cloud Convert
It’s worth remembering that you can convert from any accounting software to Xero for free. With Cloud Convert you can move your current and previous period information onto Xero. It is really easy and quick. We have helped numerous companies do this with amazing success.
If you are considering moving onto Xero, why not look at our retainer packages that include everything that you need?
