Page 5 - KZN Chambers Business Sense - Vol4 No5

IF PREVENTION FAILS, ACCOUNTABILITY IS THE CURE

Wendy Kemp, Founder Member/ access to an active credit database
Managing Director, Accountability of 22 million consumers and
three million businesses.
Managing the dangers of debtors Usually, any notification sent to
tudies have shown that debtors is perceived to be an empty
approximately 80% of small threat as most defaulters know
Sbusiness enterprises fail that amounts below R20 000 are
within the first five years and unlikely to be pursued via the
only 1% of the remainder grow legal process.
to employ ten or more people. Our notification to debtor
Further investigation has shown differs from the idle threat in
that two of the main reasons as much as there is recourse.
for a business’s downfall are the We clearly state that should the
mismanagement of debtors and situation not be addressed by
inadequate cash flow. the stipulated date (which is 28

Efficient debtor management is calendar days from the initial
critical to ensuring your business notification to debtor as per the
has sufficient working capital to National Credit Act), we will act
reinvest and grow. upon our member’s instruction
to list the business, directors or
The adverse effect of monies in the case of a consumer, the
not paid on time has the most individual, as a default payer with
negative impact on smaller with an insight into how potential payments (i.e. overdue invoices) your business, you will have the major credit bureaus.
businesses, and whilst cash on clients conduct their accounts. promptly, which will in turn, assist access to risk mitigation tools, as
delivery (COD) can be a way with controlling your cash flow. well as the ability to safeguard Our actions are determined
to reduce this impact, it is not Documentation your business and maintain by the provisions of the National
sustainable when growth is In order to protect yourself and Credit Management a strong, healthy cash flow by Credit Act, No. 34 of 2005 and
desired. the National Credit Regulator.
the consumer, you should have Close monitoring of debtors is managing your debtors with
Below are some aspects to the correct documentation signed the best way to avoid unexpected clarity and transparency. Visit us today at
consider when it comes to before providing services and or hidden obstacles; however, Accountability is a web- www.accountability.co.za
managing the dangers of or goods. Have your terms and inevitably, there will be situations based service with the aim of to find out more about our
debtors: conditions drafted by an attorney when internal measures are no "protecting" businesses through recovery process, as well as
to ensure that they comply with longer sufficient. for our full list of benefits and
Know Your Client legislature, are mutually beneficial Organisations should reducing the risk caused by support services. n
outstanding payments.
Prior to extending credit, it is and are clearly communicated. implement the use of debt
imperative to do a comprehensive recovery services, such as offered We are partnered with all the T: 0861 90 90 90
credit check to review the Keep Sufficient Records by Accountability, to manage the major South African based credit E: sales@accountability.co.za
payment records and credit Having a well organised filing risk and effects of bad debts. bureaus, and our members have W: www.accountability.co.za
information of the potential system in place will help you keep
client. This will help you mitigate track of outstanding payments. By incorporating
your credit risk by providing you This will ensure that you collect Accountability’s services into

CLARITY ON VAT FOR RESIDENTIAL PROPERTY DEVELOPERS

Khadija Ally, Tax Consultant, KPMG The South African Revenue was entered into for the first that is temporarily let from cashflow in that period as the
Service (SARS) issued Binding time from 10 January 2012 to 1 January 2018 no longer residential property would still
vendor that changes General Ruling No. 48 (BGR 31 December 2017. qualifies for the relief. be on hand but there would
the use of goods from a 48) on the 25 July 2018, have been a VAT liability due to
A wholly or partly taxable which provides clarity on the For example if the developer Although this BGR provides SARS.
purpose to a wholly non – VAT treatment of residential applied a property for much needed clarity, it would
taxable purpose is deemed to properties consisting of temporarily letting purposes on have been ideal if the ruling was Another concerned not
make a taxable supply in the dwellings which were developed the 1 November 2017 for the first issued at the time that section addressed in BGR is the
course or furtherance of that for the purposes of sale but were time, the vendor must account 18B expired. change in VAT rate from 14%
vendor’s enterprise. In this subsequently temporarily let by for the output tax adjustment For those residential property to 15% and how that would
regard, developers that applied residential property developers. in the tax period within which developers who accounted for impact the change of use
their residential property The BGR 48 further provides November 2020 falls. the change of use adjustment calculation. n
inventory for residential letting clarification for residential in January 2018 when section
purposes due to economic property developers following As section 18B expired on 31 18B expired, this would in all T 060 976 8436
factors (where the properties the cessation of relief under December 2017, any dwelling likelihood have affected their E: khadija.ally@kpmg.co.za
could not be sold) became section 18B of the VAT Act.
liable to make an output tax
adjustment under section 18(1) BGR 48 provides a general
of the Value-Added Tax Act, dispensation to residential
1991 (the VAT Act). property developers who
temporarily let residential
Section 18B of the VAT Act
came into operation on 10 properties held for sale and
January 2012 to provide relief to provides that:
residential property developers ■ developers are only required to
by allowing them to temporarily make the section 18(1)
let their residential units (held change in use adjustment in
for sale) for a period of up to 36 the tax period during which
months before the VAT under the 36-month period ends,
the change in use provisions even if this period only expires
became payable. The relief was after 31 December 2017, and
due to expire on 1 January 2015,
but was subsequently extended ■ the 36-month period is
to 1 January 2018 when it ceased calculated from the date that the
to apply. temporary letting agreement

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