Imagine your business takes a visit to the doctor. Now imagine this doctor is an accountant, your business advisor or mentor. How would the visit go and what should you get out of that visit?

I have not been to a doctor in a very long time. But, I do remember, from a few visits that I have had, what the visit was like and what we chatted about with my doctor. The last time I went there, the visit took the following steps:

1. Familiarity: 

The first thing my doctor did was greet me and made me feel welcome. We also chatted about a few personal things that we had talked about on my last visit. What also made me feel good was that he remembered what we last spoke about and he also remembered and knew my name.

Accountants, before you start a meeting with your client, take some time to talk with them on a human level. This is important because it shows that you do not just care about the money that you are getting out of the relationship but also about the welfare and wellbeing of your clients. Remembering their names and what you last spoke about may also be a sign that you value them and their businesses.

2. Symptoms: 

The next phase of my visit involved me as the patient having to present my complaints or symptoms to the doctor. This was my turn to chat about what I thought was wrong with me. At this stage the doctor was quiet, just taking notes as I spoke.

As accountants, we often want to jump to provide solutions. Maybe this how we were trained. Maybe it is because we know a client who came to us with a similar business and we immediately assume they have the same problems.

But this approach is wrong. You need to take time to listen to what challenges your client faces before jumping into solutions. If you jump into solutions, you may provide the wrong prescription that will not work.

Also, very important, do not interrupt your client when they speak to you about their “symptoms.” If you have a question, write it down and only come back to it when they have finished talking. Similarly, if you think of a solution while they speak, hold off your excitement to provide a solution. It may be too early or maybe a wrong solution altogether.

3. Diagnosis: 

The discussion about my symptoms was followed by an in-depth diagnosis. The diagnostic procedure involved the process of the doctor obtaining further information about my symptoms, previous state of health, living conditions, and so forth.

Satisfied that he had understood my situation, I was made to lie down on his surgery bed for further examination. I do not know what this process is called but, I would imagine it was a process to check if my body system was functioning properly. At one of the visits, he even drew a sample of blood, which was sent for further examination.

How does this work for accountants?

After, your client has given you a series of “symptoms” you need to ask further questions that make you understand their business and/or situation better. Take this process as though you are looking at a tree and then going into each branch to analyse why this branch has no leaves, if it needs pruning, if it needs additional care or if it needs to be cut down altogether. Just bear in mind that you are still not providing a solution at this stage. You may need to take some of the branches away for further examination at your laboratory (your office for you and your teammates.) The process may also involve having to look at their systems and process to further understand the challenge at hand.

4. Prescription: 

The next step involved the doctor handing me a few tablets and medicines, some of which I had to take right in his office. But, of course, he first had to find out if I have any allergies and if I had tried or was on any other medication. I also had to get a prescription to get more tablets at the pharmacy.

Accountants should only be providing proposed solutions after they have understood the clients business and their challenges. I say proposed solutions because businesses do change every day and you also do not want to tell your clients how to run their businesses. They came to you to get insights. They are still the directors/shareholders responsible for making decisions in the business.

Have you noticed that I have not spoken about the prescription that has to be taken to the pharmacy yet? I want to combine this with my next point.

But, before we get there, please remember to find out if your client has tried or tested any process or solution before jumping to providing a solution that they may have tried and has not worked or that their business is ‘allergic’ to.

5. Specialist: 

There are certain things that my doctor may not be able to do because he is not trained to do those things. As a result, sometimes he may have to refer me to a specialist that deals with those specific issues. For example, at one stage he had to refer me to an ear specialist for further examination.

Accountants should not pretend to know everything and try to provide a solution for something that is outside their skill set. There is no shame in referring your client to a specialist as long as you maintain and manage the relationship and project. I call this the contractor model.

There are some projects you just have to outsource because you are not a specialist in these. Your client will still respect you for this.

Oh, the prescription! This is the same as giving your client “homework.” For example, this could be where you tell them how they should and implement a new process. Giving a “prescription” is good, but always follow this up to ensure that it is being implemented as intended. And hopefully, your fees cover this as well.

6. The past: 

Have you noticed how much time my doctor spent on past events? Not much. The majority of his time was spent on the present (how I feel and why) and the future (getting me better and back to health.)

There is little value in historical financial information. Accountants should be focusing more on the future projections, cash flows, plans and strategy for the business. The focus should be on helping your client to grow their business, not punishing them for past mistakes like “you have not allocated this expense item correctly.”

7. Duration: 

My visit to the doctor was something in the region of 16 mins. But, so much was done in that 16 minutes.

I am not prescribing time for meetings, but I am encouraging accountants to be prepared as much as they can. There is nothing as embarrassing as inviting a client to a meeting only to appear unprepared and arranging for another meeting. Ensure that the agenda is clear before the meeting starts.

Value is not in how long your meeting with a client lasts. In fact, as one of my clients put it, “The shorter the meeting, the more prepared you were.”

Taxpayers are required to be fully compliant in all their tax matters by submitting and paying their taxes on time. SARS is within their legal rights to recover monies owed to them by taxpayers. One of the ways they do this is through Section 179 of the Tax Administration Act, which can allow them to instruct third parties such as your bank to deduct payment on their behalf as soon as your account has some money.

How do I know how much I owe? 

By running your compliance status, you should be able to get a glance at how much you owe SARS. If you are not 100% certain how much you owe SARS, you will need to contact them on their call centre to enquire of your outstanding balances. If you stay not far away from a SARS branch, a visit to the SARS branch would not kill. When you visit, just ensure you have all your particulars with you to avoid being turned away. Lastly, if you were registered for e-filing, run a statement of account to see how much you owe SARS. Your next step is to make the outstanding payment to SARS. Contact SARS or your tax practitioner to help you load a payment that can then be released from your bank account.

What if I do not agree with what SARS says I owe them? 

After you submit your tax return, SARS may ask you for supporting documentation to verify your submission. If you believe that you made an error on your tax return, request a correct and resubmit your tax return with complete and accurate information. If you believe your tax return was correct, submit the requested documentation and every other document that supports the information on your return.

After SARS has verified your information, they will issue an assessment and will show you how much you owe them or how much they owe you. If you do not agree with this assessment, you are within your rights to request reasons for this assessment or to object to this assessment within 30 days from the date that the assessment was issued.

It is important to note that the lodgment of a notice of objection does not waive your obligation to pay what is due. SARS adopts a “pay now, argue later approach.” This means that your obligations towards them still stand until otherwise cleared by a corrected assessment. Therefore, it is important for the taxpayer to apply for a “suspension of payment” to prevent SARS from instituting a collection process.

SARS has 10 business days to approve this. If they approve, this means that SARS may not institute a collection process for the debt in dispute pending the objection or appeal. If the suspension of payment is not allowed, the debt remains collectable by SARS.

What if I cannot pay? 

Apart from the suspension of payment getting declined, it may also happen that the assessment is correct and the debt remains payable by the taxpayer. In this case, the taxpayer may apply for a payment arrangement. This is where a taxpayer goes to SARS with a proposed payment plan. SARS will apply its discretion in allowing this or not allowing it.

Another mechanism available to the taxpayer is what is called a compromise. This is where the taxpayer can approach SARS and ask for part of the debt to be written off. Please do note that a compromise may affect a taxpayer’s credit history. Therefore, consult your financial advisor before asking for one.

What if SARS proceeds to collect after suspension of payment or after I have reached a compromise or payment plan? 

If you applied for a suspension of payment, a repayment plan or compromise and SARS still proceed to recover the debt via a third party you have the following resources:

1. Lodge a formal complaint via the SARS complaints management process known as the Complaint Management Office (CMO.)
2. If this fails, you can approach the office of the Tax Ombudsman.
3. If this fails, and maybe as a last resort, you can institute legal proceedings against SARS.

Please consult your tax consultant for advice relating to this as each case needs to be assessed on its own merits. This is not formal tax advice or opinion. But I hope this has been helpful.

Should you need more detailed consultation, please consult us here.

WHAT IS BLOCKCHAIN TECHNOLOGY? 

Blockchain technology was initially developed by a person or group of people who called themselves Satoshi Nakamoto. This technology was initially developed for the digital currency called Bitcoin.

I do not believe that every one of us should learn to code. We just need an understanding of how things work or what they do. If you want to go and learn to code, by all means, do so because it may teach you problem-solving and critical thinking.

You don’t have to know how this blockchain technology works or how it is built to use it. You just need a basic understanding of what it is and how or where it can be used.

Let’s give a simple example and hopefully it can simplify things for us.  Let’s assume that we have a spreadsheet of our church members that are duplicated across the entire network of all our churches across the globe. Let’s also assume that this network is designed to update this spreadsheet regularly, say every ten minutes.

Now, this is a very simplified version of a blockchain. There is no one church entity that can say they own this data. If a new member is added to the spreadsheet, then every church across the globe knows about this new member. What is also more interesting is that each church can simultaneously verify the new member. The record of all our members is public and available at each location at the same time, in the same format. So, no one church location can change or manipulate the data without the other churches accepting the change because a change at one location requires a change at all locations. So, is it possible for one church to change or manipulate the data? For this to happen, the computer at one location basically has to overpower all the other computers in the network. Is this possible, in theory, this could be possible but in practice, it is unlikely to happen?

Apply this to a world of products and let us assume this product is a fish. Using blockchain technology, we can be able to trace a fish from the time one places an order to the fishermen at sea, follow it to the storehouse, then to the supermarket and then to the household that bought this fish without mixing up the records. This is possible.

Let us assume another example. Assume that Zimbabwe or any other country uses this technology for elections whereby the votes counted (results) are not essentially owned by ZEC or any election commission but are distributed and owned by several entities across the country (so all partial parties, all polling stations and the general public) then in my view, it would be very difficult for ruling entities to manipulate the results.

Blockchain technology has no transaction costs: 

Blockchain technology may require a huge initial cost outlay to build the infrastructure, but it has no transaction cost. This is because blockchain is a smart way passing information from one entity to another in an automated and safe manner. There are no transaction costs because there is no middleman involved in the transaction. Like in the digital currency Bitcoin, one person initiates a transaction (a block) and this block is verified by millions of users around the globe and the network. This means that a unique transaction (block) with its own unique history is created. Trying to manipulate this record/block would mean manipulating the entire chain in millions of transactions/instances.

How can this technology benefit your business and/or consumers?

Let’s assume credit transactions between you and your customers. Your customers buy merchandise online. The credit card company/pay gate takes a cut from the transactions. But, if we applied blockchain technology to this transaction we eliminate the pay gate company because now your customers can now transact directly with you saving on credit card fees and you also save on pay gate processing fees. How was this made possible in this example? Because we used a blockchain to transfer and store money instead of the pay gate.

You can think of other ways that blockchain can help your business. But also think about how blockchain technology can disrupt some middleman businesses such as:

• Airbnb
• Uber
• Fivver and the entire Gig economy
• Auction houses
• Even banks or music selling companies like Spotify and Apple

The pillars of blockchain: 

1. Decentralisation: It is not owned by a single entity, hence it is decentralised.
2. The data is cryptographically ( using codes) stored inside.
3. Immutability: The blockchain is difficult to change or is unchanging over time, so this means no one can tamper with the data that is inside a blockchain. Therefore imagine the impact blockchain technology can have in the fight against corruption in the future.
4. Transparency: Blockchains are transparent and so one can track the data if they want to do so. Remember the example of fish we gave earlier.

Beneits to businesses of using blockchain technology: 

1. There is enhanced efficiency because you are now able to do without intermediaries. No issues like, “I couldn’t pay because the pay gate was offline.” Or “I couldn’t get paid because the pay gate system was offline.”
2. Advanced data security. Remember in the example of Bitcoin, a created block has to be verified by millions of users across a block network.
3. Traceability of transactions of goods becomes easy. Imagine how this could be of benefit in tracking goods in a supply chain in terms of knowing where some components are.
4. Increased transparency because data is shared among everyone in the network.
5. The reduction in transaction costs because we have eliminated the middle man.
6. Assurance of quality is also made easy. In our example of the fish, if one fish goes bad before it reaches the final consumer we can trace exactly where it went bad. So, it enables businesses to conduct investigations and take actions exactly where the action is required.
7. It could result in increased profitability for your business. For example, one guy in Nigeria is requesting his customers to pay him in Bitcoin and he, in turn, pays his suppliers in Bitcoin thereby avoiding the need to buy US$ and currency fluctuations. This is according to a report titled How bitcoin met the real world in Africa in MoneyWeb on 8 September 2020.

Acknowledgements: 

1. https://blockgeeks.com/guides/what-is-blockchain-technology/

2. https://yourstory.com/mystory/top-7-benefits-of-blockchain-technology-for-busine

This could be the number one reason why we can’t grow our business, we don’t have time to grow our businesses. We are often caught up in working in our businesses as opposed to working on our businesses.

What is working IN your business? 

You are working in your business if you are:

• Client facing, in other words dealing with your clients daily.
• The one fire fighting.
• Afraid of delegating because you believe a job done by you is a job well done. In other words, you do not trust anyone else to do the job.
• Consistently telling yourself that you do not have time to grow your business because you are busy with work.

What is working ON your business? 

You are working on your business if you:

1. Have headspace to grow your business. We will look at what headspace is later on in this discussion.
2. Delegate effectively.
3. Are not always fire fighting.

What is headspace and what is stopping you from having daily headspace? 

Headspace is about having time to think or meditate.  It is about turning off all the noise around you and giving your mind time to pause, think, and reflect on important matters about running your business or giving your mind the freedom to go where it wants to go. This essentially means taking your brain away from the day to day distractions (emails, telephone calls, WhatsApp messages, Youtube Music, unproductive conservations, gossip, family issues, home chores, shopping, cooking, bills, the list is endless.

How to find time for headspace? 

First, it should start by a commitment to say, “I will give myself time to think.” The next step is finding that time in your busy day. You probably know which times work for you or when are you in the best frame of mind to do this.

For me, I have good headspace when I take a long walk without music in my ears. Sometimes it is when I take a long shower. Sometimes, it is those few minutes in bed before my system shuts down. Sometimes it is when I get my hands on a thought-provoking book or article.

So, for me, these are the places where I get my “aha” moments. Sometimes I can be struggling with something in my head and I give myself a ten or 15 min walk, and before long, I have figured out a way to handle the situation. I record my “aha” moments on my phone. You can record them in a small book or using whatever system that works for you.

Make sure you have this system next to your bed when you go to sleep too because you may have forgotten that thought by the time you wake up the next morning.

Practical steps to getting headspace: 

1. Be realistic with yourself. Headspace will not come to you after getting through a busy day or period. You have to make time for it.
2. Clear and organise your calendar to make sure it includes a headspace slot. For me, I do not work on Friday. I dedicate my Friday entirely to thinking about my business. I also try to give myself 30 mins of walking daily. Each end of the day, I am trying to learn something new.
3. Do not be tempted to cut down your thinking time. Decide on the times that work for you and stick to this routine.
4. Start small and grow naturally into this habit. Start with 15 mins a day, until you can get at least 8 hours a week of thinking about your business. Book this time on your calendar and stick to it.
5. Find ways of telling your staff not to bother you during this time. For example, you can say to them “if you see me wearing headphones, I do not want to be disturbed.” Choose a method of letting your staff (or people you stay with) know that you must not be disrupted.
6. Switch off your phone and computer.
7. Go out of your office if you can, take a walk. Do whatever makes you think, even if it is reading a book about growing your business or solving a problem you currently have.
8. As you walk around or read that book, play around the idea of solving the problem you are currently facing or the ideas on how to grow your business. Think about what is stopping you from growing your business.
   1. Is it because you do not have the right skills within your staff?
   2. Is it because you are doing everything and not delegating enough?
   3. Is it to do with the culture you set for your organisation?
   4. Do you even have that culture set?
   5. Do you have the right staff members doing the right things?
   6. Is there a system of accountability and responsibility within your business?
   7. Are your systems and processes working as intended?
   8. Have you automated what can be automated?
   9. Are there any productivity issues and how can these be fixed?
   10. Are your employees’ heart in your business? Do they feel like partners and not employees?
   11. Is it because you have some unprofitable clients and can you get rid of them? Is there some of your work that you can outsource so that you can focus on what matters for you and your clients?
   12. Do you need to hire more staff?

We have developed a tool that can help you think through some things/issues you may be having personally or in business. This tool can be accessed here.

Let us know what you think.

The world is changing and technology is slowly taking over. Does technology give you a competitive edge over other businesses? For us to answer the question, we need to understand a few terms first:

What is strategy? 

The Wharton school defines strategy as “a set of actions and tactics to answer a series of questions…” For me, my school principal put it well when he said, “strategy is simple as saying, I want to go to a certain town and ask yourself how you would like to get there, bus, own car, or by plane…then choosing the next best choice of transport.”

Let’s get back to the Wharton definition. What questions should be asked? These can include:

• What objectives are we, as a business, trying to achieve?
• Why do customers come to us and not our competitors?
• What is our value proposition? That is, what is our customers’ willingness to pay and your businesses cost drivers. Because simply put your competitive advantage equals willingness to buy minus cost.
• What is it that allows us to make money in this business? Is it high prices or lower costs or a combination of both? In our discussion, can technology allow you to charge higher prices, and achieve lower cost or both?
• Where do we want to compete? In other words, what is the scope of our strategy in terms of:
  • Product
  • Customers
  • Technology
  • Geographical areas.

These are the main four aspects of strategic competitive advantage. But, the most important of all is the question, “where are we not going to compete (what is it that we will not do?) In other words, are we not going to be selling certain products in certain areas, to certain people using or adopting certain technologies?

What is a competitive advantage? 

Simply put, it is a business’ position compared to its competitors. The question is, is the business in a position to outperform its competitors/peers? Is the business able to charge higher prices than competitors? Is the business able to operate at a lower cost than competitors? What is that special ingredient that set them above the competition?

In our discussion, we are asking if technology can be that special ingredient that can set a business above the competition. That is, can technology allow a business to charge higher prices while being able to operate at lower costs? Lower cost may imply operational effectiveness.

What is Operational effectiveness? 

Operational effectiveness arises from achieving industry best practices. It also comes from businesses copying each other. For example, all accounting firms adopting cloud accounting technology does not result in a strategic competitive advantage. It results in all accounting firms looking the same in the eyes of the customer, and this is what results in fierce competition. This leads us to the next question or term, that is Strategic Positioning. 

What is strategic positioning? 

As opposed to operational effectiveness, strategic positioning is about doing different things that will make a business look different in the eyes of the customer. It is not about focusing on operational effectiveness because operational effectiveness on its own is not sufficient. It is about having a variety of activities that work together to give you that slight edge over the rest, thereby making it harder for competitors to copy your activities or advantage. If they are brave enough to copy you, it should result in their costs going up or prices going up to an extent that it almost pushes them out of business.

Remember, operational effectiveness may result in strategic convergence (a situation where your business will look the same as other businesses in the same field as your competitors.) Therefore, the question we should be asking in this discussion is whether technology can create this distinct positioning (where your business stands out) for your business. Let’s answer this question at the end of this discussion. For now, let’s think about something else. Does strategic positioning come from doing one thing differently?

Should you implement one or many things? 

Can strategic competitive advantage come from doing one thing or many things differently? Can one piece of technology give your business the edge? Remember, the objective is making it harder for competitors to copy you. Therefore doing one thing may result in the competition being able to copy and even overtake you. If you base your competitive advantage on one piece of technology, your competitive advantage may be short-lived.

Uber vs taxify and inDrive: 

Let’s consider these companies briefly. Uber was the first one to start, setting up in 2009 when a 19-year-old student founded the business, then inDriver in 2012  and then Taxify in 2013. All three companies offer an almost exact kind of service build on the same kind of technology. A technology that relies on car owners moving people across cities on their respective platforms.

Having used all three service providers, Uber stands out for me. You can also see that Uber can charge slightly higher prices and have lower costs than their rivals. Uber did not rely on one thing to give them this edge. If you have used uber you will agree with me that they have put security, safety and customer service at the heart of what they do.

So, can technology give your business that slight edge over your competitors?

Does technology give you a strategic competitive advantage? 

To answer this question, a few questions come to mind. Can technology answer these questions:

• Can technology improve the quality of your products over that of your competitors? Yes, it could, but if all firms in the same industry are using the same technology who then gets the edge over others in the industry?
• If it can improve the quality of your products over that of your competition, what technologies can you use to do this that your competition is not using?
• Can other businesses copy and use the same technology as our business? If the answer is YES then that technology alone may not result in strategic competitive advantage. You may need other activities that complete this technology and that your competition will find it hard to copy because it can either drive their prices or costs up.
• Can you block other businesses from using this technology through registered IPs? This would be ideal but may be very difficult in other industries. It would work well where your business develops its technology that can be patented.
• Can technology make your customers happy and willing to pay more for your products? There is a huge possibility of this happening. But as said earlier, can you stop other players in your industry from doing the same?

Conclusion: 

There is no doubt that technology can result in lower operating costs and operational effectiveness. For your business to derive strategic competitive advantage from technology, then it has to develop a specialized and patented piece of technology that no one else can copy. Otherwise, your business will have to rely on other factors that can bring about competitive advantage. I do not know what businesses you are involved in. But, you can think about looking at how the following activities can complement technology and bring about a competitive edge over your rivals:

• Investment in research and development
• Investment in aggressive marketing plans
• Investment in brand management
• Investment in relationships
• Customer experience

Doing one thing different is not enough. You need a web of interconnected activities that make it difficult for competition to copy from you.

What is rental income? 

Rental income arises when one rents out a portion of their home or when they entirely rent out their property (residential accommodation) and they receive rental income for this property or portion of it. Rental income can include:

• Holiday homes
• Air BnB
• Bed and breakfast establishments
• Guesthouses
• Renting a section of your home
• Other similar residential dwellings where you receive rent

How is the tax calculated on rental income? 

The rental income and any other amounts paid to you for rental or residential accommodation must be added to your other income on your tax return. These amounts will be subject to normal tax at the normal individuals’ tax rates applicable for the applicable tax year. These amounts can include:

• Lease premiums paid to you monthly
• Lease premium lump sum paid at the beginning of the lease and covering the applicable tax year/period. This must not be confused with a rental deposit.

The receipt of a rental deposit does not need to be included in a taxpayer’s gross income at the stage the initial deposit is paid. This is so specifically if there is an expectation for the lessor to pay the deposit back at some stage. The deposit will only become part of the gross income (taxable income) if the landlord applies the deposit. For example, the tenant moves out having damaged the property and the landlord applies the deposit to pay for the repairs.

Can the rental income be reduced? 

Yes, the rental income can be reduced by allowable deductions (expenses) for the period that the property was let. Which expenses can you apply to reduce the rental income? Permissible expenses incurred in the production of that rental income can be claimed against that rental income. No private expenses can be claimed against the rental income. The following expenses can be applied against the rental income:

• rates and taxes
• bond interest
• advertisements
• agency fees of estate agents
• insurance (only homeowner’s insurance and not insurance for household contents)
• garden services
• repairs in respect of the area let and
• security and property levies

What if I am not renting out 100% of the property? 

You will need to apportion the costs of running your property concerning the space applied for the rental income. You may need to measure the space rented out versus space not rented out. For example, if your entire house is 500 square metres but you only rent out 300 square metres, then the apportionment ratio will be 60% applied to the property running expenses. This means you can only claim 60% of the expenses.

Which expenses cannot be claimed? 

Any expenses of a capital nature cannot be claimed against the rental income. This calls for a distinction between repairs and improvements. Repairs are such expenses that restore something to its original condition whereas an improvement usually results in the creation of a better asset. While improvements cannot be claimed against rental income, they form part of the base cost of the property, which effectively reduces the capital gain on the property when the property is sold.

Tax evasion is a crime which can see you spend a few of your days in prison. We are talking about a possible 5 years in prison. That is quite serious!

When does the 2020 tax season begin? 

Due to Covid-19, the tax season will be shorter than normal. Normally, the tax season starts around June. This year, SARS announced that the tax season will open on 1 September 2020. This is for taxpayers who would have not been auto-assessed by SARS. For taxpayers who would have been selected for auto-assessment, the tax season starts 1 August 2020.

What is auto-assessment? 

This will be an automatically generated (computer-generated assessment, without any input from the taxpayer) and will be based on the information that SARS would have received from third-parties. This third-party information will include information from employers in the form of IRP5s, information from financial institutions, medical aid certificates, retirement annuity, interest and dividends certificates. SARS will select the taxpayers that will be auto-assessed. They have not said how they will do this, but one would assume that it is a risk-based selection process. We would expect basis, non-complex returns to be selected for this process.

What happens after you are selected for auto-assessment? 

SARS will send you a message from 1 August 2020 saying that you have been selected for auto-assessment. You will then be given a chance to accept or decline this assessment. Accepting it means you agree with the return that SARS has prepared for you. It says you are happy that your taxes return is complete and accurate. By complete and accurate, you accept that your return includes all income that accrued to you in the year and that SARS has taken into account all allowable deductions. Will this be the case though?

Should you accept the auto-assessment? 

Our view is that you should not accept the auto-assessment because of the risks involved. You may end up paying more taxes than you should pay. You may also end up paying less tax than you should pay. Why would this be so?

• SARS may not be aware of any additional income that may have accrued to you in the year but that you should be declaring on your tax return.
• Because of COVID-19, SARS may not have received all third party information. In other other words, SARS may not have received all your tax certificates from third parties.
• Auto-assessment may not (may fail to pick up all your genuine deductions)include genuine deductions that are due to you. These may include:
  • Home office expenses that came up as a result of your working from home during the lockdown.
  • Donations where you have received valid Section 18A certificates.
  • Other deductions such as wear and tear, and travel expenses.
  • SARS may miss and not include additional income from a trade you started in the tax year. You may face penalties and interest later if SARS later discovers that you understated your income on your tax return.
  • Qualifying out of pocket medical expenses may also be missed that you should take into account on your tax return.

What should you look out for before accepting or rejecting the auto-assessment? 

First, you need to ask yourself if you have received all the relevant and necessary tax information from all third parties. If you are satisfied that you have received all the required documents, you will next need to check the assessment versus what you have received. Check that they have included all your IRP5s, your retirement annuities, medical aid, interest and dividends certificates, capital gains and any other third party certificates.

If you do not have these documents in your personal-data room, contact your employer or financial institutions and ask them to send you these documents.

What happens if you reject the auto-assessment? 

If you accept the assessment, you will not have to file a tax return at all. But, if you do not accept the auto-assessment from SARS, you will be required to file as you normally do. This can be done by filing a correction. The submission can be done on eFiling, at a SARS branch or via the SARS eFiling App. You can do this from 1 September 2020.

References: 

1. https://www.sars.gov.za/Media/MediaReleases/Pages/25-June-2020-Filing-Season-2020.aspx
2. https://www.businessinsider.co.za/sars-may-auto-assess-your-tax-returns-2020-6
3. https://businesstech.co.za/news/finance/409737/sars-will-start-issuing-auto-assessments-to-taxpayers-later-this-year-heres-how-it-works/
4. https://businesstech.co.za/news/finance/414853/sars-will-do-your-tax-filing-for-you-from-next-month-heres-what-you-need-to-know/
5. https://www.bowmanslaw.com/insights/tax/taxpayers-beware-sars-auto-assessments/

Technology is taking over some routine tax and accounting tasks. This means accountants now need to make the move to trusted business advisors.

William Reeb and Dominic Cingoranelli asked an important question in their book Becoming a trusted business advisor: how to add value, improve client loyalty, and increase profits, namely if accountants can name the top strategic concerns, opportunities, challenges and initiatives for their clients in the next few years. If not, I will argue that they are not forward-looking. In other words, if what you thought about when I asked this question are tax or accounting matters, you may be still stuck in historical reporting and may be punishing your clients for historical issues and mistakes instead of proactively dealing with their challenges and opportunities.

CAs are highly technical individuals. Most clients and businesses assume CAs’ technical competency as a given. The minute you say you are a CA, you are already highly regarded because of your technical ability. But it is your ability to look forward and advise that will set you apart as an industry leader.

Technology may take over most routine tasks such as tax and accounting matters. As a result, clients and businesses are looking for an accountant who can provide a value-added service. So, how do you proactively deal with your clients and by so doing add value to their businesses?

RELEVANCE

Relevance implies being closely connected or appropriate. The first step to relevance is remaining up to date with industry trends, developments and technology. SAICA’s new CPD policy plays right into this. It requires CAs to identify areas where they want to develop and to work towards this particular area of development.

Accountants should offer their clients what they need and when they need it and do so proactively. Therefore, one has to understand their client’s business well before serving them. Not understanding their business may mean the solutions provided will not be relevant.

Read widely and seek information from many sources. This can be through reading articles linked to client industries and attending webinars and online seminars where their specific industries are discussed. If possible, have some of your team members specialise in specific industries. This can be the case where you do not have a market niche.

Training is also a major element of remaining relevant. Ensure that your staff is trained on matters to do with their field of work and interactions with clients. This training can cover such areas as:

• Communication
• Customer experience
• Use of technology
• Dealing with conflict
• Empathy, and
• Creativity in dealing with customer complaints or matters

RELIABILITY

Reliability is doing things on time and consistently. This means addressing your clients’ questions before they become big and urgent issues, or before it becomes too late to resolve them. If you let things go far, you may lose the relationship that you have with your clients as well.

Keep up to date with changes in your clients’ businesses. This can be achieved through regular touchpoints − monthly only may be too late. Businesses change every day. Some clients want regular calls just to check how things are going and how they are doing personally. This is even more important during the time of the COVID-19 pandemic. When you call, show genuine care.

It is also important to inform your clients of the communication schedule so that they can expect to hear from you. This will also help them prepare for the call and to think about issues they want to tell you about.

Follow up on every opportunity to help your clients and make sure you understand that a relationship comes before money. Once your relationship is solid, the money will follow.

RESPONSIVENESS

Listen more than you talk back to your clients. Listen with the intention to understand your client’s challenges or opportunities. Listen with a view to help, not to respond. If you listen with the intention to respond, you will miss what the client is saying. While your client is speaking, make notes of things you think you have not understood and only come back to these things to seek clarity after your client has finished talking.

Focus more on the future of your clients’ businesses than their past. You can do this by simply asking them, ‘What do you see as opportunities and challenges for your business in the next few weeks, months or years?’

Some clients may still not tell you much about their business after this question. But this is an opportunity for you to know your client’s top strategic concerns, opportunities, challenges and initiatives. So, you have to structure your questions to cover the following fundamental business functions:

• Planning
• Personnel
• Operations
• Governance
• Technology
• Marketing
• Management
• Profitability
• Accounting and finance
• Information management
• Succession management
• Products/services
• Business continuity plans

Responsiveness is about listening more than you talk. So, after asking the above questions, take time to listen. Questions should be about finding out more about what the client is talking about, which makes you understand the problem much better. If you develop what you think is exciting advice while the client is still talking, hold back your excitement. Allow them to finish and then provide this advice as a question. For example, ‘Mrs Client, have you considered talking to your landlord about a payment holiday?’ If she had not thought about this, she is going to appreciate your genial idea. If she had already thought about it, she is going to think you are as smart as she is.

Being responsive means responding to your clients more quickly. Some clients need responses and they need them now. It is better to respond to a client and say, ‘Hey, I have seen your text regarding project X. Can we schedule a call to discuss this?’ This is better than ignoring them, because their response will give you an indication of how urgent this matter is.

CONVENIENCE

Be where your client needs you and communicate with them at their comfort. Do not start a meeting on Zoom only to find out that your client does not have Zoom or does not like using the platform. Rather get in touch with the client and say, ‘Hey Mrs Client, I have scheduled a meeting with you for Thursday at 10:00 via Zoom. Does this work for you?’

SITUATIONAL AWARENESS

In his book Virus-proof your small business: 50 ways to survive the COVID-19 crisis Douglas Kruger introduced me to the term ‘situational awareness’ used by, for example, the Israel Defence Force (IDF). Kruger explains: ‘Each day, regardless of what transpired, regardless of fatigue, regardless of any other factor, the IDF assembles their people to do an intensive debrief of that day’s performance. They discuss what worked, what didn’t and how to do better tomorrow.

I want us to consider this concept in the context of a forward-looking accountant. Are you taking time with your team to:

• Discuss each meeting you have had with a client in order to see where you can do better in the next meeting?
• Discuss what is likely to go wrong in the week/month or year and take measures to mitigate the risks? This can be in relation to your own business and your relationship or interaction with your clients.
• Having a conversation with your clients about where you can improve?
• Following up on advice you have given to your clients to see how your clients have implemented it? This is important, and to take a quote from Matt Brown’s book Your inner game: 12 principles for high impact entrepreneurs: a CEO when asked if he had implemented anything of the plan recommended to him said, ‘Nothing, Tom. But remember, when you left people had to go back to their jobs.’

You can add your own things to this list, but the important thing is that you take stock of what is happening or likely to happen around you and your clients and take proactive steps to deal with these things.

AUTHOR │Lazarus Kaseke CA(SA), CEO, Eva Financial Solutions

This article first appeared on accountancysa.org.za