By Riaan Grobler for News24

Health Minister Zweli Mkhize has warned that South Africa is on the verge of facing a spike in coronavirus cases and related deaths which means another hard lockdown “may become necessary”.

Speaking to Talk Radio 702 morning host Bongani Bingwa on Tuesday, Mkhize said things were “getting tough”.

“I wish I could say otherwise. We have warned that the surge will come, [especially] in the winter months. I’m afraid the numbers are increasing and we need people to be aware and take all the necessary precautions to try and protect ourselves.”

Mkhize said the infection rate in Gauteng, in particular, had increased faster than had been anticipated.

He added that the so-called “hard lockdown” – Level 5 – had helped prepare the healthcare sector for the anticipated surge in infections.

While he acknowledged that government could not extend the hard lockdown longer than it did, “we may still do it in the future”.

But people needed to get back to work and go about their normal lives, Mkhize said. “We are trying to balance those two – we need utmost cooperation as we go about it.”

On Monday, Health Minister Zweli Mkhize visited field hospitals in the Western Cape. Mkhize inspected the CTICC, and a facility in Khayelitsha that will collectively provide 900 beds.

According to Masuku, the Gauteng provincial government may possibly look at “intermittent lockdowns” as the province prepared for a peak in Covid-19 cases.

Intermittent lockdowns would see the province opening up and then closing the economy for a particular period of time, Masuku told News24 on Monday.

Mkhize said the number of infections in Gauteng had been rising sharply since the beginning of June, much more so than in the Western Cape, the country’s hotspot of coronavirus infections.

By Monday, the Western Cape had a total of 60 455 cases, and Gauteng 39 841 – but it was catching up to the Mother City, and at a rapid rate.

On Sunday, Mkhize said Gauteng would emerge with the highest number of cases in the coming days, overtaking the Western Cape.

Stay safe

On Tuesday, he pleaded with South Africans to adhere to health protocols such as wearing face masks, social distancing and washing hands.

“That’s the only way we can slow down the infection,” Mkhize told Bingwa.

He said he would be meeting with the Gauteng provincial government on Tuesday to discuss ways to fast-track preparations for the expected surge.

“If, in the future, there is a need for another lockdown, we will not hesitate. If the number of infections threaten the existing number of [hospital] beds that we have, obviously there will be a need for additional intervention and restrictions.”

Tax increases are coming

According to a recent article by Business Tech,  Finance Minister Tito Mboweni has said that the National Treasury has no plans to boost certain taxes – even as the coronavirus decimates the nation’s finances.

  • Income tax – with a top tax rate of 45% – will not be hiked, as earners are already strained
  • Corporate taxes will likely not be hiked, as they already sit at 28%
  • VAT (currently 15%) will not be hiked as this move is unpopular within the ruling ANC, because it affects the country’s poorest people
  • There is the possibility of an inheritance tax
  • There is also the possibility of a so-called solidarity tax as a bid to raise additional finances, but this would be limited in duration
  • Mboweni said that government expects to miss its tax revenue target by over R300-billion this year

Source: Supermarket & Retailer

Covid-19 and the pandemic’s subsequent lockdowns forced the Shoprite Group, with more than 147 000 employees, to implement a work from home environment almost overnight, rapidly facilitating thousands of virtual meetings per day in order to keep operations running smoothly.

As Africa’s largest food retailer, many of the Group’s employees continued to report to work on shop floors around the country – but those whose jobs didn’t necessitate visiting a physical store, distribution centre or office, made the change to working from home.

“Shoprite immediately made the move towards a comprehensive work from home policy as soon as government mandated it,” explains David Cohn, General Manager: IT for the Group. “And it’s been remarkably successful – within 3 days we enabled over 2 000 people to work from home; making new tools and resources available and increasing cyber security quite significantly.

“At last count, we have approximately 2 384 scheduled virtual meetings each day. Informal online meetings are even more popular – with more than 135 874 taking place since the start of lockdown.

“At present, over 3 700 Shoprite employees actively participate in online meetings – and the total number of virtual meetings sits at more than 124 000 for the lockdown period,” says Cohn.

Implementing these changes required a comprehensive IT policy that Cohn says was complex but rewarding to integrate into daily work practices.

“As most South African businesses, we’d never considered having such a rapid and complete shift to a virtual working environment, and doing so came as a shock to the system. But, as an organisation with such an agile and resilient IT department we were more than up for the challenge,” Cohn continues.

“What has been uplifting is seeing how the level of connection between our employees has remained intact. By so quickly and painlessly enabling our staff to work remotely, they’ve been able to carry on seamlessly.

“It’s certainly not been without its challenges,” says Cohn. “But employees have taken to the concept with remarkable spirit and tenacity, and together we’ve managed to keep the Group fully focused, ensuring seamless operation for the thousands of customers who depend on us daily.”

Liquidation may be the only option for SAA

By Babalo Ndenze for EWN

Some members of Parliament said that the only option left for South African Airways (SAA) was liquidation.

This comes after a vote on a restructuring plan was delayed until July after creditors and unions adjourned talks.

It also follows a decision by the Department of Public Enterprises to withdraw from the Leadership Consultative Forum working on a business model for a new and restructured SAA.

The Department of Public Enterprises said that instead of creating conditions for attracting investment and skilled South Africans, three unions had put SAA on a path towards possible liquidation.

The department said that unions had effectively aligned themselves with a competitor who stood to benefit substantially should SAA be liquidated.

However the Democratic Alliance (DA)’s Alf Lees, a member of the Standing Committee on Public Accounts (Scopa), said that liquidation was increasingly looking like the only option.

“Now it seems to me that we’ve hit the wall and liquidation is the only option,” Lees said.

He said that the business rescue process should ideally have ended in December and the rescue team should have applied to court for liquidation back then.

“They should have then done what the law required of them to do and applied to court for liquidation, so that step now remains.”

SA to miss tax target by over R300bn

By Lameez Omarjee for Fin24

SA will miss its original tax revenue target by over R300-billion this year, said Finance Minister Tito Mboweni.

During the tabling of the special adjustment budget on Wednesday, the minister explained that the country is already behind its 2020/21 tax revenue target by R35.3 billion. As a result, government has revised down the tax revenue target from R1.43 trillion to R1.12 trillion.

National Treasury recorded a R63.3 billion revenue shortfall in the 2019/20 tax year.

“We expect to miss our tax target for this year by over R300 billion,” Mboweni said.

While Mboweni did not announce any tax hikes to make up the shortfall, he said that tax measures of R40 billion would be needed over the next four years. Tax proposals will be announced in the 2021 budget.

Furthermore Treasury will work to find spending adjustments of R230 billion over the next two years.

He also touted the idea of zero-based budgeting. “This means that we will try to reduce all expenditure that we thought we can no longer afford. After all, we are not as rich as we were ten years ago,” Mboweni said.

Analysts had expected the budget to reveal a significant shortfall as a result of the lockdown which restricted economic activity and by extension tax revenue collections.

To cushion the blows of the lockdown on consumers and businesses, government implemented a R500 billion stimulus package, which included R70 billion in tax relief measures. These entailed deferrals on some tax payments such as excise duties, carbon tax and employee taxes. Government also opted to postpone tax proposals for corporate tax hikes and SARS was directed to fast track VAT refunds. Donations to the Solidarity Fund, set up to support the vulnerable in society, were also declared tax deductible.

A ban on cigarette and alcohol sales also had negative implications for excise duty collections. Back in April SARS Commissioner Edward Kieswetter said these restrictions saw a loss of R1.5 billion in excise duties. The minister has also been outspoken about his opposition to the ban on these items.

Bernard Sacks, tax partner at Mazars, noted that certain sectors of the economy had still not been able to restart operations, while some others are operating to a limited extent.

“The difficulties faced by Minister Mboweni are now immeasurably greater. Ways must be found to fund the steep rise in healthcare spending… Social grant spending will show steep increases as the unemployment rate soars even higher,” Sacks said.

By Edward West for IOL

In just over a month since the R200 billion Covid-19 Loan Guarantee scheme to help small and medium sized businesses was launched, only R7-billion has been paid out – according to figures from the SA Banking Association (Basa) released yesterday.

The scheme, managed by the banks on behalf of National Treasury and the SA Reserve Bank (SARB), allows qualifying companies to apply for loans from their primary bank to fund three months operating costs, such as salaries, rent and supplier payments.

Economic commentators have criticised the scheme, arguing in particular that banks have applied normal risk vetting procedures for the loans, which were too stringent considering the plight many small businesses found themselves in and the uncertain trading environment in the future.

For instance, financial intelligence and research firm Intellidex noted on Wednesday: “The R200bn guaranteed loan scheme is a crucial centrepiece of “phase two” of the economic response to the Covid-19 crisis and is now one month old. Take-up, however, has been low.”

Basa said yesterday that the banks had approved just more than R7 billion in loans for 4 800 small businesses, since the scheme was launched mid-May.

Basa said, however, they expect the approval amount to grow as the number of applications for loans continues to increase. As at June 6, banks had received 29 700 applications for the loans.

The banks had rejected some 5 200 applications as they did not meet the eligibility criteria, as set out by National Treasury and the SARB.

Five thousand two hundred applications were also declined because they did not meet bank risk criteria.

However, about 14 100 applications were still being assessed, while 200 loans were approved, but not taken up by the applicants, Basa said.

Basa said the Covid-19 loan scheme was a commercial arrangement and required a credit approval process, to ensure that banks did not lend recklessly and to protect the fiscus,

“Business owners may be required to sign surety, based on individual bank credit processes.

In addition to the Loan Guarantee Scheme, in the two weeks to June 6, Bas members approved another R2bn in voluntary debt relief to individual customers experiencing financial distress due to the pandemic.

This brought the cumulative relief offered by banks since they started assisting individuals with targeted relief, to R16.5bn.

In the two weeks to June 6, the banks also provided additional cash flow relief, including payment breaks, to commercial and small and medium enterprises worth R1.4bn. This brought the cumulative assistance offered by banks to commercial and small and medium enterprises to R11.7bn.

Of the 131 600 applications received for relief from commercial and small and medium enterprises, more than 124 400 had already received assistance, Basa said

The cumulative assistance offered to individuals and commercial and small and medium enterprises businesses amounted to R28.2bn.

Source: Supermarket & Retailer 

Retailer Massmart, whose brands include Makro and Game, says SA’s Covid-19 lockdown resulted in about R2.3bn in lost liquor sales in April and May.

This is based on comparable sales in 2019, the group said, as it warned the pandemic had worsened losses this year, though pent-up demand had helped sales as SA’s lockdown has eased from level 5.

The group said in a trading update that it expected its headline loss per share for the 26 weeks to end-June 28 to be at least 50% worse than the headline loss per share of 364.7c previously.

Total sales for the 23 weeks to June 7 2020 amounted to R34.8bn, which is 10.3% lower year on year. Sales from its SA stores amounted to R31.3bn, 11.5% lower than last year.

The group said operating costs in line with higher safety protocols amounted to about R50m, but that it was comfortable with its balance sheet, and had secured a R4bn intercompany loan from parent Walmart.

The retailer is implementing an organisational shake-up that has seen its four divisions reorganised into two business units. It said, saying on Wednesday it was continuing this plan.

Massmart Retail will comprise the Builders, Game, DionWired and Cambridge Food trading brands.

Massmart Wholesale will take in Makro, Shield and the group’s wholesale cash brands.

By Jasmine Stone for 2oceansvibe

The South African Revenue Services (SARS) will start issuing auto-assessments from 1 August.

On May 5, SARS announced new tax filing seasons and a much more heavy-handed approach to companies who are not submitting their EMP501s and IRP5s timeously.

There will be a renewed focus to ensure that all employers are fully compliant in terms of their filing and payment obligations. In order to achieve higher compliance, SARS will interface with the National Population Register, the Companies Registrar, and the Deeds Office.

SARS has put in place a three-phased approach:

  • Phase 1 – April 15 to May 31 2020 – Employer and third-party filing
  • Phase 2 –June 1 to August 31 2020 – Taxpayers to update their files (Bank Acc, addresses etc) / SARS follow up with non-compliant Employers/Third-party data providers / Auto Assessment of certain taxpayers and possible early filing for some taxpayers
  • Phase 3 – September 1 to January 31 2021 – Tax filing for the remainder

Due dates for the submission of IRP5s and all third-party data (Bank interest certificates, Pension certificates, Medical certificates) is May 31, 2020. SARS has said that third-party data providers who remain wilfully non-compliant will be criminally charged during the period of June 1, 2020 to August 31, 2020.

In the two days prior to lockdown, SARS sent a number of notices warning employers who had filed their previous IRP5’s late, of criminal prosecution.

During the period up to August 31, SARS will auto-assess taxpayers who only have one IRP5. The taxpayers will have an opportunity to accept this auto-assessment, and if not accepted, will be required to submit their returns later.

It seems that SARS will allow certain taxpayers to file their returns before September 1, but only if their employers and third-party data providers are tax compliant. The wording used by SARS is, “individual taxpayers who are required to file but have not been auto-assessed may file early via on-line facilities if their employers & other third-party data providers are fully compliant (which includes no PAYE debt without a proper and secure deferment arrangement)”.

For all other taxpayers, SARS has delayed tax season to only open on September 1, whereas in previous years, it opened on the July 1. SARS will notify taxpayers to whom phase three filing applies.

It seems as though SARS strategy is to allow employees of tax-compliant companies to file early whilst employees of non-tax compliant employers will be required to wait until September 1 before they can file. This seems particularly harsh as this will probably hurt the hardest hit industries the most. This will also be a blow to taxpayers who were counting on submitting their tax returns as soon as possible in order to get their tax refunds.

Tax season deadlines for non-provisional taxpayers will be November 16, 2020 and provisional taxpayers will be January 31, 2021.

The pressure is on employers to ensure that all their returns are submitted and deferred payment arrangements are put in place if they are not able to pay.

SA’s unemployment rate breaks 30%

Source: EWN

South Africa’s unemployment rate for the first quarter of this year rose by a percentage point to 30.1%.

The number of employed persons decreased by 38,000 to 16,4 million between January and March 2020, while the number of unemployed persons increased by 344,000 to 7,1 million compared to the fourth quarter of 2019.

South Africa’s unemployment rate increase by 1,0 percentage point to 30,1% in Q1:2020 compared to Q4:2019. The unemployment rate usually increases between Q4 and Q1 each year.

Chief economist at Stanlib, Kevin Lings, said that these numbers were exceptional.

“The unemployment rate from my perspective jumped quite substantially, it’s now at about 30%. What’s stood out in particular, is that in the past year, almost 900,000 more people have become unemployed and I think that is exceptional and it speaks to our inability to create jobs in a very low-growth environment.”

It’s important to note that these figures capture data from the first quarter of this year.

Discovery warns of 90% profit plunge

Source: EWN

South African insurer Discovery said on Monday its full-year profits could fall by up to 90%, hit by a 3.3-billion rand ($191-million) provision to cover the potential impact on claims and policy lapses due to the coronavirus.

It also said it would not pay an annual dividend, with the payouts to be considered when appropriate, sending its shares down 5.5% before recouping some losses.

The company said the hefty provision covered the potential impact on claims and anticipated policy lapses as stretched customers stop paying, while the outlook also covered the impact of long-term interest rates.

It warned its headline earnings per share – the main profit measure in South Africa – for the year to June 30 were expected to be between 70% and 90% lower than the 789 cents reported a year earlier, though it said the final outcome was subject to a high degree of volatility.

“Discovery is confident that the group is strong under high stress scenarios, with sufficient liquidity and solvency to weather uncertain conditions,” it said, adding capital ratios and cash buffers were expected to remain within or above target.

The provision, Discovery said, was intended so that all of the currently expected impact of the novel coronavirus as far ahead as 2022 was carried in this financial year.

Changes to interest rates in South Africa after the government lost its final investment-grade credit rating earlier this year, and historically low interest rates in the United Kingdom where it has a unit, were expected to have a further substantial impact on performance.

Discovery’s profits have been falling in recent years as it ploughed money back into new businesses including a hefty investment in launching a digital bank, which it said now has 177,000 clients and 2.1 billion rand in retail deposits.

So far, lapses in most of its businesses had been low, it said, while new business annualised premium income was up 4% for the 11 months to May 31.

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