ACCOUNTING
IFRS for SMEs training module on Other Financial Instruments Issues
This module covers Section 12 of the IFRS for SMEs which specifies the accounting for more complex financial instruments and transactions. Access it via e-IFRS on the SAICA website.
Accounting for investment properties under development or construction
The IASB proposes to amend IAS 40 – Investment Property, to clarify the guidance on transfers to, or from, investment properties.
The deadline to submit comments to the IASB is 18 March 2016. ED 366, Transfers of Investment Property: Proposed Amendment to IAS 40, and the IASB press release can be downloaded from the SAICA website.
Draft Guidance to assist management in applying the concept of materiality
This draft non-mandatory guidance in the form of a draft Practice Statement on Application of Materiality to Financial Statements is intended to assist management in the following three main areas:
- Understanding the characteristics of materiality
- How to apply the concept of materiality when making decisions about presenting and disclosing information in the financial statements, and
- How to assess whether omissions and misstatements of information are material to the financial statements
The deadline to submit comments to the IASB is 26 February 2016.
The exposure draft, IASB Snapshot and the IASB press release can be downloaded from the SAICA website.
Three IFRSs to be amended
The IASB is proposing to amend IFRS 1, First-time Adoption of International Financial Reporting Standards; IFRS 12, Disclosure of Interests in Other Entities; and IAS 28, Investments in Associates and Joint Ventures, under its Annual Improvements project.
The deadline to submit comments to the IASB is 17 February 2016. ED 367, Annual Improvements to IFRSs 2014 – 2016 Cycle, and the IASB press release can be downloaded from the SAICA website.
ASSURANCE
IRBA adopts Revised ISAs
The IRBA board has approved for adoption, issue and prescription by registered auditors, Addressing Disclosures in the Audit of Financial Statements ‒ Revised ISAs and Related Conforming Amendments. These standards are effective for audits of financial statements for periods ending on or after 15 December 2016. Visit the IRBA website for more details.
TAX
Retirement reform – with effect from 1 March 2016
Due to disparity in the treatment of retirement funds – in terms of tax deductibility of contributions, fringe benefits tax on employer contributions, and the form of payment on retirement – a decision was made to reform the retirement industry to achieve better parity and fairness and to encourage savings. Historically, provident fund members were able to withdraw all their savings on retirement, whereas pension and retirement annuity fund members were entitled to only a portion of their savings as a lump sum, with the rest being paid in annuities.
There has been much uncertainty since the initial proposals were made. After numerous changes in the effective date, consultation with Nedlac, industry bodies and professional organisations, final agreement appears to have been reached with the legislation having been made effective from 1 March 2016.
From a tax perspective, the reforms propose the following:
- All employer contributions to retirement funds, on behalf of members, will be taxable in the hands of the member.
- The tax deduction per annum will be available in respect of contributions to all retirement funds, limited to the lesser of 27,5% of the greater of taxable income or remuneration, or R350 000.
- Compelled annuitisation for retirement funds exceeding R247 500.
To address the fact that provident fund members are the most impacted by the compelled annuitisation, the following concessions apply:
- Members who are 55 years and older on 1 March 2016 will be able to withdraw all their savings as a lump sum on retirement.
- For members under 55 years on 1 March 2016, all retirement savings accumulated as at that date may be withdrawn as a lump sum on retirement. With respect to contributions made after 1 March 2016, these members will only be required to annuitise if the total of the accumulated savings relating to the post 1 March 2016 contributions are R247 500 or less on retirement.
