WHAT IS POPI ACT?
The Act deals specifically with the protection and handling of personal information and data that is processed and received by both public and private individuals and institutions.
The aim of the Act is to enable all institutions across South Africa to securely store and regulate our personal information that has been obtained. The Act sets out conditions in order for companies to lawfully process all personal information of data subjects.
What data does it entail?
Any data that can be used to identify a living and natural person and where applicable existing juristic persons.
Examples are: race, gender, sex, educational, financial, criminal and / or employment history, identity number, e-mail address, etc.
Who needs to comply?
EVERYONE. All companies or individuals who deal with personal information will be affected by this Act.
What needs to be done in order to be complaint?
The Act proposes that a detailed investigation must be conducted pertaining to the type of information that is gathered and stored by ALL companies and individuals. They must classify consumer data and identify if it constitutes as “personal information”. Once this has been established, steps and polices must be implemented stipulating how you must handle and deal with the lawful processing of personal information and regulation thereof.
You can do this by appointing an information officer / compliance advisor who will conduct an information impact assessment. The information officer will develop a compliance framework which will be inclusive of processes, compliance policies and codes of conduct related to the handling of personal information. Your job, once this has been done, is to implement the policies at your place of business.
How much time do you have?
The deadline to be fully POPI complaint is 1 July 2021.
Consequences for not complying?
You are considered non-complaint if:
- Hinderance, obstruction or unlawfully influencing the Regulator;
- Failure to comply with an enforcement notice;
- Failure to attend hearings or lie under oath;
- Act unlawfully in connection with account numbers; or
- Do not have any policies in place to regulate the processing of personal information.
More serious offences – a maximum penalty in the form of a fine for R10 million or imprisonment for a maximum period of up to 10 years or both.
Less serious offences – a maximum penalty in the form of a fine or imprisonment for a maximum period of up to 12 months or both.
The offences will be established on a case-to-case basis.
Should you be interested in using our services to reach your POPI Compliance before 1 July 2021 or require more information, do not hesitate to contact our team of compliance advisors on: firstname.lastname@example.org / email@example.com.
BUDGET 2021: CORPORATE TAX AMENDMENTS
Finance Minister Tito Mboweni delivered his third annual budget address on 24 February 2021. The corporate tax rate reduction from 28% to 27% for years of assessment commencing on or after 1 April 2022 was arguably the most significant windfall for corporate taxpayers, although the actual cash benefits thereof will only be seen in the 2023 calendar year. Below, we highlight some of the other significant proposals, which will likely be contained in the Draft Taxation Laws Amendment Bill to be published for public comment in June or July this year.
Refining the interaction between anti‐value shifting rules and corporate reorganisation rules
The Income Tax Act curbs the use of structures that shift value between taxpayers free of tax. The anti-value shifting rules apply to transactions involving asset‐for‐share exchanges. Asset‐for‐shares base cost rules prescribe that a base cost for assets acquired by a company in exchange for its shares should be equal to the sum of the market value of the shares it issued and the amount of the capital gain triggered by the application of the anti‐value shifting rule to ensure that there is no double taxation on the future disposal of the assets.
Clarifying the interaction between early disposal anti‐avoidance rules and de‐grouping anti‐avoidance rules in intra‐group transactions
In addition to the early disposal anti‐avoidance rules outlined above, the intra‐group transaction rules contain de‐grouping anti‐avoidance rules, which apply when the acquirer and the party disposing of an asset in terms of an intra‐group transaction cease to form part of the same group of companies within six years of the transaction. The de‐grouping anti‐avoidance rules apply to reverse the tax benefit that was obtained in terms of the intra‐group transaction by triggering the greatest capital gain, gross income, or taxable income that would have arisen between the date of the intra‐group transaction and the date of de‐grouping. Because both of these anti‐avoidance rules apply to reverse the deferred tax benefit of an intra‐group transaction, it is proposed that changes be made to the tax legislation so that if one of the anti‐avoidance rules applies in respect of an asset, the other will not subsequently apply.
Reviewing the venture capital company tax incentive regime
National Treasury has determined that the incentive has not adequately achieved its objectives. The incentive has instead provided a generous tax deduction to wealthy taxpayers and most support has gone to low-risk ventures that would have attracted funding without the incentive. The incentive will therefore not be extended beyond its current sunset date of 30 June 2021.
BUDGET 2021: WHAT WAS MISSING?
Finance Minister Tito Mboweni delivered his third annual budget address on 24 February 2021. While there was plenty of information on both income and expenditure issues, as well as proposed tax amendments, some aspects were, concerningly so, not addressed at all.
In 2020, the Minister indicated that changes would be made to South Africa’s capital flow system regulated through the South African Reserve Bank’s exchange control regulations. Previously, the exchange control provisions restricted the use of so-called loop structures to protect the tax base. Such loop structures involved South African exchange control residents investing in South Africa from a non-common monetary area. The proposed policy was that, instead of an approval process, all transactions would be allowed unless specifically restricted or regulated. While the Reserve Bank has revised its policy against loop structures from 1 January 2021 and now allows such arrangements, nothing more has been done regarding South Africa’s archaic exchange control system.
The corporate tax rate reduction from 28% to 27% for years of assessment commencing on or after 1 April 2022 does not come without some trade-offs. One such trade-off includes the limitation on the utilisation of assessed losses. This was the second consecutive year in which the proposed tax amendments have alluded to a restriction on the utilisation of losses. However, taxpayers are still in the dark as to what the exact mechanism will entail and are left wondering if it will be an out and out restriction, or merely the phasing of losses. In the current harsh economic climate where many companies have suffered losses, any limitations imposed by Treasury will be met with fierce push back. It is disappointing that no further information in this regard was supplied by the Minister. We hope to see additional details in this regard come in the Draft Taxation Laws Amendment Bill in June of July 2021.
National Health Insurance
National Health Insurance (NHI) is being implemented in phases over a 14-year period that started in 2012. It will be established through the creation of a single fund that will buy services on behalf of the entire population. The funding for NHI will be through a combination of various mandatory pre-payment sources, primarily based on general taxes. Many tax practitioners were of the view that the NHI will be funded through the removal of the medical schemes tax credit, which taxpayers enjoy for monthly contributions to medical schemes. Surprisingly, not only has the medical scheme credit remained intact, but it has conversely also seen an upward inflationary adjustment.
Given the substantial expected costs of the NHI, it is concerning that the Minister made no further announcements in this regard, and taxpayers should remain hopeful that expectations are managed carefully to ensure that there are no surprises or substantial tax increases to fund the NHI.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.