Fastest-growing African country for millionaires
Mozambique is expected to be the fastest-growing African market for individuals with a net worth of US$1 million or more over the next ten years, followed by Ivory Coast and Zambia, according to the Africa 2015 Wealth Report.
South Africa is home to the most people in Africa worth US$1 million or more and despite the turmoil, Egypt ranks second on the list, the report said.
At the end of 2014, Africa had about 161 000 high net worth individuals (HNWIs) living on the continent with a combined wealth of US$660 billion, according to the report. That averages out to about US$4,1 million each.
The number of high net worth Africans increased by 145% from 2000 to 2014, while the number of millionaires worldwide increased by 73% in the same period.
Over the next ten years, the number of African millionaires is expected to increase from 161 000 to about 234 000 – a 41% increase.
Source: Afk Insider, 5 May 2015
Pharmaceutical industry welcomes 2015/16 national health budget
The Innovative Pharmaceutical Association South Africa (IPASA) says the pharmaceutical industry can play a vital role in contributing to government’s goal of increasing life expectancy to 70 years by 2030 through the development of new medicines, as well as partnering with government to ensure medicines reach patients more efficiently.
This is after the Minister of Health, Dr Aaron Motsoaledi, presented his department’s R36,46 billion budget for 2015/16 to Parliament in Cape Town in May.
The Minister highlighted the dangers of an impending outbreak of antibiotic resistance that could hamper disease control efforts on a national scale. IPASA CEO Dr Konji Sebati said IPASA would continue to collaborate with government in awareness campaigns around infection control in health facilities and communities, as well as to step up the development of new antibiotics.
In 2009, the department introduced two new vaccines in the routine immunisation programme: the pneumococcal conjugate vaccine and the rotavirus vaccine. Minister Motsoaledi said these had been overwhelmingly successful, with the National Institute of Communicable Diseases (NICD) finding a 70% decline in invasive pneumococcal disease in children under the age of five, the second biggest cause of death of children under five years old in South Africa.
Source: IPASA, 11 May 2015
Preserve our most vital resource
Three billion people will join the global consumer class over the next two decades, accelerating the degradation of natural resources and escalating competition for them. Nowhere is this growing imbalance playing out more acutely than the water sector. Already, scarcity is so pronounced that we cannot reach many of our desired economic, social,
and environmental goals. If we continue business as usual, global demand for water will exceed viable resources by 40% by 2030.
Source: McKinsey & Company, Rethinking the water cycle, May 2015
Impacts on social progress analysed
South Africa was the second-best performer among the so-called BRICS nations – Brazil, Russia, India, China and South Africa – in terms of converting foreign direct investment (FDI) into social progress, according to a new Deloitte report titled Foreign direct investment and inclusive growth: the impacts on social progress.
A social progress index (SPI) score of 63 puts South Africa behind Brazil, the top-performing BRICS nation with an SPI of 70, but ahead of Russia (60,8), China (58,7) and India (50,2), based on Deloitte’s findings in the report, which provides a holistic measurement of FDI’s impact beyond gross domestic product (GDP) for 132 countries. The BRICS countries are among the top 30 recipients of gross FDI but lag on social progress measures such as nutrition and basic healthcare; water and sanitation; personal safety; access to basic knowledge; ecosystem sustainability; tolerance and inclusion; and access to advanced education.
South Africa performed best in areas such as access to basic knowledge (92,85); nutrition and basic medical care (75,9); personal rights (74,94); personal freedom and choice (70,82); and access to information and communication (70,52). The country did moderately in terms of water and sanitation (69,8); shelter (64,2); and health and wellness (62,36) but significantly underperformed when it came to ecosystem sustainability (44,21); access to advanced education (40,66); and personal safety (30,9).
Source: Deloitte, Foreign direct investment and inclusive growth: the impacts on social progress, http://www2.deloitte.com/global/en/pages/about-deloitte/articles/fdi-and-inclusive-growth.html
Sparking creativity in teams
Although creativity is often considered a trait of the privileged few, any individual or team can become more creative – better able to generate the breakthroughs that stimulate growth and performance. In fact, our experience with hundreds of corporate teams, ranging from experienced C-level executives to entry-level customer service reps, suggests that companies can use relatively simple techniques to boost the creative output of employees at any level.
The key is to focus on perception, which leading neuroscientists, such as Emory University’s Gregory Berns, find is intrinsically linked to creativity in the human brain. To perceive things differently, Berns maintains, we must bombard our brains with things it has never encountered. This kind of novelty is vital because the brain has evolved for efficiency and routinely takes perceptual shortcuts to save energy; perceiving information in the usual way requires little of it. Only by forcing our brains to recategorise information and move beyond our habitual thinking patterns can we begin to imagine truly novel alternatives.
Source: McKinsey & Company, Sparking creativity in teams: an executive’s guide, April 2011
Habits of the wealthy
The world’s richest people come from a variety of backgrounds. According to researcher Thomas Corley, certain traits are common among them.
Maintain a to-do list:
Wake up 3+ hours before work:
Listen to audio books during commute to work:
Network 5+ hours or more each month:
Read 30+ minutes or more every day:
Love to read:
Exercise aerobically four days a week:
Watch one hour or less of TV every day:
Professor Wiseman Nkuhlu re-appointed
Professor Wiseman Nkuhlu CA(SA) has been re-appointed as a trustee of the IFRS Foundation for a second three-year term commencing 1 January 2016.
IFRS for SMEs amended
The amendments are effective for annual periods beginning on or after 1 January 2017. Earlier application is permitted provided all amendments are applied at the same time.
Download the 2015 amendments to the IFRS for SMEs, the project summary and feedback statement, and the IASB press release from the IASB website.
SAICA will be hosting a seminar on these amendments in September and October 2015. Reserve your seat via the SAICA website.
SAICA circulars withdrawn
Circular 4/2006, Afrikaans Translation – Illustrative Financial Statements, and Omsendbrief 4/2006, Afrikaanse Vertaling – Illustrerende Voorbeeld van Finansiële State, were initially published to assist members that issue financial statements in Afrikaans but are now outdated.
Circular 3/2011, Impact of the Dividends Tax on deferred tax assets arising from unutilised Secondary Tax on Companies (STC) credits, is no longer relevant since any unutilised STC credits from 1 April 2015 are deemed to be nil.
Proposed changes to the Conceptual Framework published
The objective of the project is to improve financial reporting by providing a more complete, clear and updated set of concepts.
Download ED 355, Conceptual Framework for Financial Reporting, and ED 356, Updating References to the Conceptual Framework – Proposed Amendments to IFRS 2, IFRS 3, IFRS 4, IFRS 6, IAS 1, IAS 8, IAS 34, SIC-27 and SIC-32, including the Snapshot and IASB press releases from the SAICA website.
Comments on ED 355 and ED 356 can be submitted to SAICA by 31 August 2015.
IAASB auditor reporting toolkit
On 15 January 2015, the IAASB released its new and revised auditor reporting standards, designed to significantly enhance auditor’s reports for investors and other users of financial statements. The new auditor reporting standards are widely recognised as the most significant development in auditing in recent history. These standards will be effective for audits of financial statements for periods ending on or after 15 December 2016.
Subsequent to the release of the new and revised auditor reporting standards, the IAASB has issued the auditor reporting toolkit under a dedicated link, The new auditor’s report, on its website. The auditor reporting toolkit includes access to resources aimed at promoting awareness, understanding, and effective implementation of the auditor reporting requirements.
As at 1 June 2015 the following resources are available on the dedicated IAASB web page for the new auditor’s report:
- Auditor reporting fact sheet
- Press release
- Slide presentation in support of the IAASB’s new and revised auditor reporting standards
- At a glance
- Basis for conclusions
- Auditor reporting project history
- Auditor reporting – key audit matters
- Auditor reporting – illustrative key audit matters
- Auditor reporting on going concern
The new and revised auditor reporting standards and the auditor reporting toolkit can be downloaded from the IAASB website (www.iaasb.org).
Debit loans to shareholders
Secondary Tax on Companies (STC) was finally put to bed on 30 March 2015 when the STC credit mechanism for dividends tax purposes came to an end. However, the tax liabilities that resulted or should have resulted while STC still applied is not yet complete and the auditing of historical transactions subject to STC by SARS will probably commence in earnest to close this chapter of the Income Tax Act.
In general, debit loans to shareholders or their connected persons constituted a deemed dividend under STC in section 64C with the capital amount of the loan being treated as the dividend paid and any repayment deemed to be a dividend received for STC credit purposes. In the recent case of ABC (Pty) Ltd v CSARS 13512 (30 March 2015) the matter was again raised as to whether section 64C did apply to a debit loan to shareholders or its connected persons, when loans where acquired by the taxpayer on the reciprocal basis that it had to be made available for this purposes. The taxpayer submitted that the outgoing loans were not dividends at all as it did not represent a distribution of profits, but that the appellant merely acted as a conduit for the loans. This principle was cited from the judgment in CSARS v Airworld CC and another  2 All SA 593 (SCA). The court supported this position as unassailable and stated that: ‘The general principle underlying STC on dividends is for the State to share in the profits of a company. It is for this purpose that STC was introduced on dividends as well as deemed dividends. In the present case dividends do not arise. Nor do deemed dividends arise.’
This should have been the end of the matter, but the court further upheld the taxpayer’s argument that, in any event, consideration for the loans provided was given in the form of the reciprocal obligation for the loans incurred. The court therefore concluded that the taxpayer did qualify for the exclusion in section 64(4)(bA).