17 June 2020
In March 2020, South Africa was Downgraded by Moody’s rating agency, putting the country at Junk status - leaving little to no confidence in those foreign investors with a remaining interest in South Africa. Many enterprises decide to liquidate their investments in the country and step away in anticipation of further decline.
Sentiments have since changed since the Covid-19 outbreak has sparked some movement. Global stimulus in the form of borrowing at a cheap interest rate from the IMF has provided some much needed relief for South Africa. This coupled with the strengthening Rand has attracted some investors back to the country. This provided upliftment about the poor economic situation of the country.
In May 2020, foreign investors sold R64 Billion of Government Bonds but they are slowly making a comeback. From the beginning of June 2020 up till around the 10th of June 2020, R6.9 Billion of Bonds were purchased. This is still a small number in comparison to the sell off however it inspires some confidence that there may be some hope for foreign investors in South Africa.
We hope the increasing investment will continue to rise in the upcoming months to provide South Africa with some more relief amidst this difficult time. As always, please feel free to contact us with any business, accounting or tax queries and we will assist where we can.
Yours Professionally
Virtual Solutions
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16 June 2020
China has reported a new wave of the virus starting to appear. This is purported to be a potential cause for the recent retracement on the oil price after its 6 week run up. This spreads fear that a second wave may spread to other parts of the world quickly.
Analysts are concerned that the decline is due to the fact that there may now be an oversupply of oil. If a second wave of the pandemic were to hit the world, this would result in a vast decrease in demand for oil as many sectors rely on oil to operate, for example the airline industry. If Lockdown continues or becomes more stringent again, this will result in the oversupply of oil now not being needed by various sectors, which will ultimately result in the drop in price again.
It is unlikely that oil will fall as drastically as it did earlier on the year, but further retracement on the current Bull run could be on the horizon.
We hope all our loyal followers and clients are remaining safe during these difficult times.As always, please feel free to reach out to us with any queries you may have around accounting, taxes or business management in general.
Yours Professionally
Virtual Solutions
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16 June 2020
Almost every industry in South Africa has taken a significant decline in profits since the COVID-19 Pandemic reached our shores. An industry reporting significant decline is the insurance industry. Brokers relying on face-to-face meetings have been hit hardest. Many claims have also been submitted, as well as job losses resulting in people having to lapse their monthly policy premiums. Certain insurers have also reduced premiums on various items such as motor vehicle insurance which has further contributed to such losses.
Sanlam, South Africa’s largest insurer, saw new business volumes drop between 50 to 70 percent compared to the same time last year. A positive side to this is that people are starting to realize the importance of having insurance in place as a protection mechanism against unforeseen events.
Insurers are attempting to raise awareness around health and safety, as well as assist clients with the pressures of the pandemic. Discovery has launched something known as the “ WHO Global Outbreak Benefit.” which allows clients access to various benefits related to COVID-19.
Insurers are also having to deal with many claims, especially in the tourism and hospitality sector. Often, policies are sold known as business interruption cover. The tourism and hospitality sector has been one of the hardest hit with the pandemic as no travel or hospitality has been allowed during Lockdown.
We do hope all our loyal followers are remaining safe during these difficult times and hope that there will be some much needed relief soon. Should you need assistance with your accounting, taxes or management of your entity, please feel free to contact us.
Yours Professionally
Virtual Solutions
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6 May 2020
Taking control of your finance starts long before your payslip. Today, the world is very different from what it was once just a few months ago, and probably will be very different once again in a few months from now. Your finance should be flexible enough to move with the times but stable enough to guarantee monetary security and freedom.
Just look around you, and you will see the impact of how something so small, such as a microscopic virus can have such a grand effect on the global economy. This proves that nothing is too small to make a difference, and it's time to respect the idea that small steps are the key to greater successes.
We have often been led to believe that robots, technology and AI will one day replace humans as workers. Perhaps we were shortsighted. The COVID-19 global economic pandemic happened sooner than we thought, to those who least expected it and holds an unknown after effect.
We can't be 100% ready for every crisis, but we can do our best to prepare for tough times while still enjoying our usual life. We also can't live our lives based around crisis control. We must find a balance between responsible spending and saving.
5 Personal finance considerations during a lockdown.
1) Re-purpose your money.
During a lockdown, specific activities such as driving are greatly reduced. People are spending a lot less time on the road and therefore are saving a lot of money on fuel. Additionally, some subscriptions are also paused which is halting spend. Perhaps re-direct this spend to other debts or into a savings account. The goal is to remain active with this spend, simply use it productively but for a different purpose.
2) Generate additional income.
Even though you may not be working during the lockdown, you are still a professional and have a valuable skill set. Not only will freelancing keep your skills up to date, but you will also be able to generate another income on the side. Find your niche, sharpen your writing skills and make use of your abilities. I suggest checking out FIVER and Upwork.
3) Complete a personal finance audit.
Nobody knows for how long the lockdown will last. Also, different countries will return to a new routine at different times to one another. Actively doing an audit of your debts, expenses and incomes will help you paint a clear picture of where you are financially positioned. This audit will help you to make responsible purchase decisions and close financial gaps.
4) Learn new skills.
Learning new skills can save you money. With all the information you need on the internet, you can learn how to do it yourself (DIY) instead of paying someone else to fix or do something for you. From YouTube tutorials to official online courses and certifications, find out exactly what you need to know across all subjects and topics. From fixing your TV to becoming knowledgeable about SEO and copywriting, it is worth it to invest time in gaining new knowledge and skills to become more independent.
5) Consider the free and flexible time that you have.
Think back to the days where you would spend your entire day at your desk in your office. Taking a break from work to do your personal responsibilities would have an impact on your work at a later stage. Perhaps you would have to recoup those hours that you took off, making you more stressed and feeding the cycle of lack of time. Now is the best time to take advantage of more flexible working hours, to attend to your personal responsibilities (given they can be done remotely).
Invest in your happiness is probably one of the most overlooked ideas when considering personal finance. Your happiness includes your motivations, your wants and desires. By setting aside time every day to do the tasks and actions that drive your happiness, you will generally be more motivated and productive. Manage your exercise, entertainment, family, workspace, goals and chores to avoid being a victim of wasteful time.
To sum up, one of the certainties during the lockdown is that we are uncertain what will be next and when it will happen. We have to think ahead, plan to the best of our ability and use the people and services around us to make effective and responsible decisions. Also, don’t forget to see the positive in this time, be grateful for what you have and be sympathetic to those who have not been so lucky.
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7 February 2020
Virtual Solutions, in conjunction with our strategic partner, Xero are happy to announce that Xero is due to roll out it's latest product offering in the form of Xero HQ Payroll.
Announced this past week, at a Xero convention held in Australia, Xero Payroll promises to deliver an industry leading software suite in the payroll space.
In our capacity as Xero Professional Advisers, we will be able to offer this new service offering to our client base, paving the way for greater flexibility and cost savings where applicable.
Yours Professionally
Virtual Solutions
7 February 2020
Discussions were held in 2019 around the medium-term budget policy speech regarding various tax amendments which needed to be made. Here is a summary of the amendments which have now been passed by the President:
1. Adjustments Appropriations bill:
The major amendment to this bill is an allocation of R17.65bn to Eskom in an attempt to reduce Eskom’s debts. This will provided much needed relief for Eskom in its current struggle to provide consistent electricity to the country.
2. Taxation Laws Amendment Bill
This amendment will lessen the amount which retirement funds can withold on spousal pensions. It also contains laws which reduce the cost of hiring people from ages 18-29 years old without work experience through a cost-sharing mechanism with government.
3. Tax administration laws amendment bill
All tax acts will undergo technical corrections in relation to tax admin laws.
4. The Rates and Monetary Amounts and Amendment of Revenue Laws Bill
This bill deals with changes in rates and monetary thresholds, changes to personal income tax tables and increases of excise duties on alcohol and tobacco, among other things. Amendments to personal income tax are expected to raise an additional R12.8bn.
5. The Division of Revenue Amendment Bill
This bill gives effect to changes to the division of revenue act for the 2019/20 fiscal year. It affects the division of revenue between local, provincial and national government.The adjustments include changes to allocations to provinces and municipalities.
This is a summary of a full article published on fin24, see full article here: https://www.fin24.com/Economy/South-Africa/ramaphosa-has-signed-5-key-tax-and-revenue-related-bills-heres-what-that-means-20200121-2
Please feel free to contact us should you require assistance with your accounting, tax or other business functions.
Yours Professionally
Virtual Solutions
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5 February 2020
See full original article here: https://www.iol.co.za/business-report/economy/sars-takes-steps-towards-building-a-modern-revenue-authority-42032049
“The South African Revenue Service's (Sars) work will now be informed by data-driven insights, self-learning computers, artificial intelligence and the interconnectivity of people and devices.”
We all know the struggle and pain of preparing our taxes from an admin perspective. Gathering documents and standing in queues at SARS branches is by far the least favorite task on anyone’s to-do list.
With SARS taking steps to build a more modernized system, this could mean less time spent in queues and searching for tax documents. This will make personal taxes a whole lot easier and certainly assist in streamlining the business tax process which can take months to finalize for certain businesses.
“Sars' strategic objectives include, amongst others, providing clarity and certainty of tax obligations, making it easier for taxpayers and traders to comply, detecting those who do not comply and making it hard and costly for them. The organisation is also in the process of modernising its systems to provide digital and streamlined services and rebuild public trust and confidence in the tax and customs administration.”
In our opinion, this can be a wonderful initiative. The capabilities of such a modern system are endless. SARS could use Artificlal Intelligence to track users tax habits/historical submissions and determine trends. This would allow SARS to identify any abnormalities in taxpayers habits and investigate these further. This would also reduce the burden on the taxpayer as perhaps less information will be required from the taxpayer, reducing the admin burden on all parties.
As we are in a digital age and current processes in all areas of life are progressing quickly, to a more digitized format, we believe its a good time for administration and finance process to move in the same direction.
Let us know your thoughts. P.S, should you need any assistance with your personal/business taxes, don’t hesistate to contact us for an obligations free quote!
Yours Professionally
Virtual Solutions
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5 February 2020
Private Transport giant Uber has recently been involved in a dispute with the UK Tax officials over the correct application of VAT to its transport services. UK Tax officials are attempting to classify Uber as a transport provider which could open it up to potential VAT and other unforseen tax charges.
This would in turn result in an increase in uber riders fees, something which may detrimentally impact the company. This begs the question - is your business correctly applying VAT charges?
According to SARS rules, VAT is levied on the supply of goods and services. Any person that carries on a business may register for VAT. A person does not only mean a natural person. If the taxable supplies of the person made or to be made exceeds R1m in any consecutive 12 month period, that person is required to register for VAT. A person can also voluntarily register for VAT if their taxable supplies in the past 12 months exceeded R50 000.
SARS increased the VAT rate from 14% to 15% from 1 April 2018. It is also important to note the VAT period in which the tax is owed to SARS and the payment date thereof. Failure to do so will result in unnecessary penalties.
Should you require any assistance with your VAT calculations and submissions, feel free to contact us for an obligations free quote.
Yours Professionally
Virtual Solutions
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UPDATED(01/01/2020) Virtual Solutions is happy to announce that we are open for business.
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