What’s hot on the regulatory front for September

As always, there’s plenty happening on the regulatory front, and September has been no exception. (Compiled with the assistance of technical advisor Lettie Janse van Vuuren).

Some of the big issues for the month:

  • Sars issues small business tax guide (defining thresholds for different tax-paying entities)
  • IRBA issues a new report, Auditing in the public sector, outlining the requirements for public sector audits
  • The National Health Insurance (NHI) Bill was released for comment and SA Institute of Chartered Accountants (Saica) issued a response detailing 23 areas of concern
  • The Administrative Adjudication of Road Traffic Offences Act (Amendment Act 2019): establishing a “demerit” system to improve road traffic quality and establishing an agency to manage the scheme.

Sars issues tax guide for small businesses

As accountants will know, a person wanting to start a business must decide what type of business entity to use. There are legal, tax and other considerations that can influence this decision.

The tax part of that decision has now been sorted out as Sars has issued its Tax Guide for Small Businesses 2018/19.

As soon as a person commences a business, whether as a sole proprietor, a partner in a partnership or as a company, the person is required to register as a taxpayer with the local Sars branch in order to obtain a reference number. The person must register within 21 business days after becoming liable for any normal tax or becoming liable to submit any return.

The year of assessment for natural persons and trusts covers a 12 month period which commences on 1 March of a specific year and ends on the last day of February of the following year.

Points to note:

• A taxpayer must retain all supporting documents to a return for five years from the date upon which the return is submitted to SARS, since SARS may require these documents for audit purposes.

• SARS will under certain circumstances, on request, still require the submission of documents for purposes of verification.

• SARS will do validation checks on the data submitted to ensure its accuracy, including validations against the electronic employees’ tax certificates (IRP5s) submitted by employers to SARS.

• SARS will generally issue assessments electronically.

Tax rates applicable

Companies and Close Corporations pay 28% tax. This does not include companies mining for gold, oil and gas companies (in respect of taxable income attributable to its oil and gas income), long-term insurance companies in respect of its individual policyholder fund, companies qualifying as small business corporations and companies qualifying as micro businesses.

The full guide is available here:



Independent Regulatory Board for Auditors (IRBA) issues new report: Auditing in the public sector

In terms of Section 188 of the Constitution, the Auditor-General SA (AGSA) is responsible for auditing and reporting on the accounts, financial statements and financial management of the public sector. it is independent and reports directly to Parliament. The AGSA is regulated by its own Act, the Public Audit Act (PAA) and the Constitution. The reputation promise of the AGSA states that the AGSA has a constitutional mandate and exists to strengthen our constitutional democracy by enabling oversight, accountability and governance in the public sector through auditing, thereby building public confidence.

The scope of an annual audit in the public sector is broader than in the private sector and includes the audit of financial statements, reported performance information and compliance with key legislation.

Auditors performing audits in the public sector are subject to the IRBA Code of Professional Conduct for Registered Auditors (Revised November 2018), as amended (IRBA Code), which is consistent with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA).

As part of the annual audit the auditor evaluates the implementation of internal controls in the areas of financial statements, reported performance information and compliance with key legislation, and the outcome of this is included in the management report of the auditee.

The full IRBA guide is available here:



23 areas of concern over National Health Insurance (NHI) Bill

The SA Institute of Chartered Accountants’ (Saica) latest Legal Update covers the 23 main concerns it has over the National health Insurance (NHI) Bill.

It says “ideally draft regulations should have been provided with the Draft Bill or even the Bill, and quality regulatory impact assessments should have been conducted.” It’s clea this has not been done in the case of the NHI.

The NHI Bill states that its purpose will be to create:

(i) A mandatory prepayment - health care services system; and

(ii) A Fund that will be the single purchaser and single payer of health care services in South Africa.

Some of the key concerns raised by Saica:

The NHI Bill will override the Competition Act, removing this vital layer of protection against anti-competitive behaviour

The Bill will supersede any other law, with the exception of the Constitution and the Public Finance Management Act, if there is any conflict between laws. Note: The Constitution considers common law, so that common law principles such as freedom to contract, inability to disclaim oneself out of gross negligent actions, and delictual claims based on negligent inaction, cannot automatically lose their significance.

Coverage: The Bill wants to dictate population coverage, including that a foreigner visiting South Africa for any purpose to have travel insurance to receive health care services under their relevant travel insurance contract or policy, failing which such foreigner will only have the right to emergency medical services and services for notifiable conditions of public health concern.

Note: There have been no indications of any meaningful regulatory impact assessments conducted in anticipation of the NHI, which assessments would have preferably included the impact on tourism where foreigners visit our shores for cosmetic and other treatments, while adding in a holiday.

Services not covered: The Bill will 'allow', for an indefinite period of time, for the purchase of health care services that are not covered by the Fund through a complementary voluntary medical insurance scheme registered in terms of the Medical Schemes Act, any other private health insurance scheme or out of pocket payments.

Note: Taking away the choice to use a different avenue, especially when still funding the government-level avenue, may be actionable, as it does not seem to serve a rational purpose, does not consider the least invasive infringement of rights, and seems to suggest that impact assessments were not entertained.

Other regulations and laws affecting accountants

The following laws were passed over the last month

o             The Administrative Adjudication of Road Traffic Offences Act (Amendment Act 2019): establishing a “demerit” system to improve road traffic quality and establishing an agency to manage the scheme

o             The Constitution of the Republic of South Africa (Transfer of administration and powers and functions);

o             The National Credit Act (Amendment Act 2019); provides debt relief for consumers who earn R7 500 per month or less and have unsecured debt amounting to R50 000 by suspending the debt in part or in full.

o             The National Qualifications Framework Act (Amendment Act 2019); and

o             The Public Finance Management Act (Standard rate on interest).


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