Dear Members,

Good luck to the remaining teams who are still play in the 2010 SWC!!

 Daily Indicators

Note: Data at close of previous trading day.

SACCI

Water rebate brings relief for cash-strapped householders in George

Cash strapped residents in George were given an unexpected bonus this month after receiving rebates with respect to  emergency water tariffs introduced late last year.

Until the drought-related emergency water tariffs were introduced, the first 6 k/litres of water were free for all consumers. But after the George Municipal area was declared a local disaster area last year, and in terms of Section 55 of the Disaster Management Act, Act 57, 2002, a council resolution was passed to increase tariffs and abolish the free 6 k/l of water.

Domestic and industrial consumers were charged R7.30 k/l for usage from 0 – 15k/l, with domestic consumers being urged to keep within the 15k/l per month limit and save water.

Rebates are in respect of charges for the first 6 k/l charged during the February and March 2010 billing cycles. This decision was made after a council resolution was passed in February, with the reintroduction of the free 6 k/l being implemented from April 2010.

This adjustment is only for domestic households and does not include businesses. Emergency tariffs and water restrictions are still in place and will only be rectified once the level of the Garden Route Dam reaches 60 per cent.

The Gremlin

SA business confidence rises in June.

Business confidence as measured by the South African Chamber of Commerce and Industry (SACCI) ticked up to 84.8 in June from 82.0 the prior month. The June figure marks the highest level of confidence in the index since September 2009 and remains above its long-term average of 81.3. On a m/m basis, 6 of the 13 sub-indices making up the headline figure contributed positively to index in June, driven through improved levels of imports and exports, lower inflation, moderate gains in private sector borrowing and a weaker ZAR. Only 4 sub-indices (retail, construction, share prices and real financing costs) had a negative impact on the headline figure, while manufacturing, vehicle sales and precious metals prices had a neutral impact.

While the rise in business confidence is indicative of an improving economic climate, we believe that the index is unlikely to rise to significantly higher levels from this point, particularly given our expectation for the strong headline growth enjoyed in many key indicators making up the index to show a somewhat slower pace of recovery in the second half of the year. Nonetheless, our baseline view that the SA and global economic recoveries should proceed in 2010 remain supportive of the general business climate in South Africa in 2010.

Absa house prices continue to show robust growth.

According to Absa’s latest house price index, the average nominal value of small, medium and large houses for which Absa approved mortgage finance increased by a weighted 14.8% y/y in June from 14.7% the prior month. Not only does the June house price growth mark the highest y/y growth in the index since August 2007, but in level terms, house prices continue to hit record highs. That said, the 3m/3m momentum in house price growth indicates to us that price growth in SA’s housing market seems to be nearing its upper turning point. While the expected low interest rate environment for an extended period should remain supportive of house price growth for the remainder of the year, fading base effects from last year’s recovery in property prices in H2 09 should see headline house price growth moderate in the latter half of the year.

ABSA

Launch of Tax Season 2010 – Take Note

Pretoria, 1 July 2010 – marks the start of the 2010 Tax Season for millions of South Africa’s taxpayers.

Taxpayers can request and submit their income tax returns to the South African Revenue Service (SARS). As in previous years, taxpayers will again have the option to file their returns electronically via eFiling or at SARS branches, or manually via the post and drop boxes at their local SARS branch.

SARS has already posted Income Tax Return Request (ITRR) forms which allow taxpayers who wish to file manually to order a customised tax return from SARS. The tax return will contain only those income and deduction sections relevant to the taxpayer.

The more than 90% of taxpayers who submitted electronically via eFiling or by visiting a SARS branch last year do not need to request a return. They can simply obtain their customised return on their eFiling profile or visit a branch with all their relevant supporting documents and SARS staff will assist them with requesting and filing their returns.

Taxpayers who earn taxable income of below R120 000 a year from a single employer and who have no further income or deductions to declare besides those identified on their IRP5, are not required to submit an income tax return.

This year, SARS has introduced a range of service and enforcement enhancements as part of its continuous improvements to make it as easy as possible for taxpayers to meet their obligations and as hard as possible for anyone who tries to avoid their responsibilities.

Among the improvements are:

A. E-case tracking: Improvements to our case tracking system will significantly enhance the ability of our contact centre and branch staff to not only track a case but to see a full history of interaction over a case to better inform taxpayers and to better help with resolving their queries first time. And taxpayers themselves will also have a better view of progress of their returns via eFiling where they can get the same information in real time that our call centre agents have access to.

B. Electronic signatures: In the past when taxpayers visited a branch to have their returns captured electronically, we printed two copies of the final return – one for the taxpayer’s record and one to be signed by the taxpayer for our records. These were then scanned by SARS for safekeeping. This year we have introduced electronic signature pads which allow the taxpayer to sign their electronic returns. This both enhances the security of the system and saves SARS and the environment from having to print over 1 million copies of income tax returns of at least two pages. That’s a lot of trees saved!

C. Electronic filing enhancements: We have further enhanced the speed by which income tax returns are generated on eFiling and our branch systems by converting to Adobe Flash Player which massively reduces the time taken to request a return or to retrieve a saved return. eFilers simply need to download the latest version of Adobe Flash Player free from the eFiling website and then select this as the preferred option for downloading their return. The returns in Adobe Reader still remain available for those who do not want to use the latest Flash software.

D. A new simplified IRP6 provisional return: We have made significant changes to the provisional tax system this year including simplifying the IRP6 provisional returns. These are now dynamic returns which come pre-populated with taxpayer information and key tax information including the basic amount from the prior year and relevant rebates. Provisional taxpayers only need to complete 5 fields and the return calculates automatically the provisional amount to be paid.

E. Reducing the number of IRP6 provisional returns to be submitted: Twice a year SARS issues over 1 million IRP6 provisional returns which are either not submitted at all or are sent back with a zero provisional liability. From this year SARS will no longer be issuing IRP6 provisional returns. Instead, those who are liable to submit an IRP6 provisional return must request one either via eFiling, the contact centre or their nearest SARS branch. And you don’t need to submit a return if you have no provisional income to declare – even if you are registered for provisional tax. There is a proviso, however, and that is that the responsibility and obligation for submitting provisional returns rests with the taxpayer. At the end of the year when you submit your ITR12 return SARS will see on the basis of what you declared whether you were liable to submit provisional returns and if you were liable and failed to do so you will find yourself facing penalties and interest charges.

F. Statement of Account for Provisional Taxpayers: Following the big success of the introduction of a Statement of Account for non-provisional taxpayers last year, this year we are extending this facility to provisional taxpayers to give them a view of all their recent transactions with SARS and a balance of payment.

Deadlines for submission

The following deadlines will apply to Tax Season 2010:

Taxpayer Assistance

As always, SARS staff in our Contact Centre and our branches around the country will be on hand to assist taxpayers with their obligations. Last year we helped over 1 million taxpayers submit their returns.

Taxpayers visiting branches (open between 8am and 4pm weekdays) must ensure that they have all their relevant supporting documents with them so that we can complete their income tax returns on their behalf. These include proof of ID, their employee tax certificates [IRP5/IT3(a)], medical aid, retirement annuity and pension certificates, details of business travel expenses, lump sum certificates and banking particulars.

Reserve Bank Governor warns about double-dip recession

Reserve Bank Governor, Gill Marcus, yesterday warned about a double-dip recession and its implications for South Africa.  “The reality is that we probably never really emerged from the crisis, which is now entering its next phase”, she said. Marcus further added that economic growth was expected to reach around 3% in 2010 after last year's recession but the recovery, which started in the third quarter of 2009, remained fragile owing to developments in Europe and to weak demand.

She explained that Europe accounted for about one third of South Africa’s manufactured exports and said that the slowdown in the Euro zone would unfortunately not be inconsequential.  "The (local) recovery is taking place but it is hesitant, fragile and uneven. Sustainability will be dependent on global recovery in general and Europe in particular," she said, noting the country's Purchasing Managers' Index suggested private sector activity faltered in June. South Africa would lag other emerging markets, and that employment creation - after the recession shed about one-million jobs - would likely be slow.

In reaction to her views and based on recent data having pointed to stuttering growth, some analysts are now pencilling in another 50 basis-point cut. “The speech by Marcus ... significantly increases the risk of further monetary easing at the July MPC meeting,” said Razia Khan, head of Africa research at Standard Chartered.

Regarding the Governor’s warning on a possible double-dip recession, the AHI wishes to add that such fears are certainly not unfounded but, that the opposite side of the coin is that South Africa was relatively well protected from the first round of the global economic crisis and it may buck the trend again

Chamber Greetings,

Colleen Till