Comentary provided by Sage Pastel Payroll & HR

 

Finance Minister Pravin Gordhan delivered no surprises in his Budget Speech on 26 February, favouring consistency and steadiness over change and fireworks ahead of the national election on 7 May. His Budget Speech once again put job creation, infrastructure development, social spending and education right on top of the nation’s list of priorities.

 

Taxpayers will benefit from R9,25 billion in personal income tax relief in the new tax year, though this relief hardly caters for the effects of inflation, says Madelein van der Watt, Development Manager at Sage Pastel Payroll & HR. 40% of the tax relief was allocated to those who earn up to R250,000 per annum, meaning individuals earning more than R250,000 per annum will receive a little less of the allocated tax relief pool.

 

Personal income tax brackets and rebates

Personal income tax brackets and rebates have been slightly adjusted. The amount an individual can earn before being required to pay income tax has been increased for the 2014/15 tax year:

• Increase from R67,111 to R70, 700 for individuals below the age of 65
• Increase from R104,611 to R110, 200 for individuals between the ages of 65 to below 75
• Increase from R117,111 to R123, 350 for individuals over 75 years

 

Individuals aged 65 and older will pay less tax due to an increase in the secondary rebate. The tertiary rebate for individuals aged 75 or older has also been increased which means less tax payable by the elderly from 01 March 2014.

The annual tax rebates for individuals have been increased as follows:

• Under the age of 65 increased from R12,080 to R12, 726
• Aged 65 to 75 increased from R6,750 to R7, 110
• Aged 75 and older increased from R2,250 to R2, 367

 

Though some commentators had speculated that high earners would need to pay higher income tax, the Minister left income tax rates untouched, says Van der Watt. The lowest tax bracket remains at a tax rate of 18% (annual taxable income up to R174, 550) and the highest tax bracket remains taxable at 40% (annual taxable income of more than R673, 100).

Taxpayers breathed a collective sigh of relief on Wednesday, as Finance Minister, Pravin Gordhan, took to the podium in parliament to allay fears of a tax hike. The government’s proposed R7 billion personal income tax relief initiative was one of the few surprises of a relatively conservative Budget Speech, which addressed a number of broader issues such as government spending and infrastructure development.

 

Yet whilst the adjustment of income tax brackets will see some consumers pocketing marginally more come month-end, increased fuel levies and rises in sin taxes look set to make 2013 a costly year for many South Africans.

 

According to Carel Steenkamp, Director of C2M Chartered Accountants, taxpayers should exercise caution when budgeting for the upcoming financial year.

 

“While many consumers will end up paying a smaller percentage of their monthly salaries to the tax man, there are a number of other factors that are likely to put an even greater strain on disposable income levels,” explains Steenkamp. “For instance, while individuals earning R200,000 per annum will owe R1,032 less in taxes over the course of the year, they’ll need to take into consideration the impact of a significant increase in fuel levies and a raise in so-called ‘sin taxes’ of between 5.5 and 10%.”

 

The general fuel levy will rise by 15% on 03 April to R2.13/l. This, combined with an 8c/l Road Accident Fund levy, rising oil costs and a weakening Rand, could end up having an enormous impact on consumers’ expenses.

 

“The rapidly increasing price of fuel is likely to hit consumers’ pockets hard, and will severely diminish the impact of any proposed income tax relief,” says Steenkamp. “Additional taxation on alcohol and cigarettes, as well as rising electricity costs, will further contract these income tax gains, meaning that consumers are in fact likely to experience greater financial strain over the course of the upcoming financial year.”

 

Another significant development addressed in Minister Gordhan’s speech is a new tax set to be applied to trusts, which could severely curtail the benefits currently enjoyed by trustees and beneficiaries.

 

According to Carel Bester, Director of the C2M Group, it is now even more important for trust owners to ensure that their trust deeds are up to date, and that they follow correct procedural guidelines.

 

“Under the new proposed trust tax initiative, any beneficiary distributions that are claimed as deductible in the trust will be taxed as ordinary revenue in the hands of the beneficiary,” explains Bester. “What this means is that any type of distributed income stream from which beneficiaries previously derived benefit will now fall away, and be subject to current income tax legislation.”

 

“Trusts, which are often used to protect and manage assets, will now find themselves under increased scrutiny, and the onus is on trust owners to ensure that they follow protocol, something that includes holding annual meetings with all trustees present,” continues Bester. “Trust owners and beneficiaries would be well advised to consult with a financial advisor in order to ensure compliance.”

The majority of South Africa’s graduate professionals are concerned about the low level of savings among consumers and support the idea of some form of compulsory preservation vehicle to foster a greater savings culture, according to a survey conducted by .

With deterioration in the state of the public finances expected in the year ahead, Zweli Mabhoza, Head of Tax Services at SizweNtsalubaGobodo, South Africa’s largest black-owned audit firm, believes Finance Minister, Pravin Gordhan, will be looking to rein in expenditure while placating the electorate ahead of next year’s elections following his 2013/2014 budget speech presentation due to take place on 27 February.

 

“It seems the Minister is running out of options to balance the books and it’s possible that despite his best intentions, we may have to settle for a higher budget deficit. He’s definitely going to try and extract more efficiency out of the management of public funds so I wouldn’t be surprised to see him attempt to link spending with some kind of more tangible output,” says Mabhoza.

 

As part of his mandate to try and stimulate the economy, Mabhoza expects there might be some revisions to the tax regime for small and medium enterprises. “Although measures such as Turnover tax have been introduced to simplify tax compliance and stimulate economic activity in the small company space, it has not been as successful as the Minister would have liked.

 

“This is largely due to small businesses running losses, or crossing the revenue threshold temporarily being disqualified from Turnover tax. However, government will most certainly continue to display its commitment to stimulating the sector as over the longer-term, it is this sector that will create the most jobs within the local economy,” he comments.

 

Other notable subjects Mabhoza expects to be addressed in this year’s budget include how government intends to finance the National Health Insurance programme. “By creating a programme that could potentially introduce an open-ended liability that could run into  billions of Rands over the next few decades, investors buying our government bonds are more than a little interested in when they plan to introduce this and how it is going to be financed” adds Mabhoza.

 

In addition Mabhoza believes there is scope for the Minister to clarify how the carbon tax might be imposed. “First mentioned in the 2008/09 Budget speech, National Treasury last year indicated that a carbon tax of R120/ton of carbon dioxide equivalent would come into effect from the 2013/14 tax year.

 

However, it is doubtful how much this tax could raise for the fiscus, considering that Eskom, the biggest emitter of carbon dioxide,  is definitely in no position to accept this obligation at present. It seems the pressure to deliver more for less is very much on the shoulders of the Finance Minister in 2013,” he concludes.

There’s good news and bad news for citizens frustrated by their interactions with government call centres: major change is happening, but it will take time.

 

Government-run contact centres get a lot of bad publicity. Some of it is deserved, but some of the bad press is purely because bad news sells.

 

In my capacity as a consultant and business partner for the public sector, I have encountered and partnered with many government contact centres.  The good news for citizens is that after a lull of several years, we are now seeing a growing interest from government departments in creating and running contact centres that will meet world standards.  

 

Elingo has worked with departments which already have in place gold standard contact centres that serve as a benchmark for the private sector. Admittedly, these are few and far between at the moment. Many departments are still beginning their contact centre journey.

 

We feel there is reason for optimism about South Africa’s contact centre future. Plans are afoot to implement top class contact centres, which will mean government efficiencies will improve, and much-needed jobs will be created. 

 

Moving forward, we will see a great deal of spend from government on new or upgraded contact centres. Currently, we are seeing a gradual increase in this spend compared to a year ago. But while the willingness is there, there are major stumbling blocks to be overcome first.  Seeing results will take time.

 

Changing mindsets

The key to improving government contact centres is, firstly, changing mindsets.  Until very recently, many government departments had the misconception that implementing a contact centre simply involved placing phones on desks.

 

There was little understanding of the supporting high-level systems needed to run the backend, or the fact that staff costs and training constitutes a major proportion of the cost of a contact centre.  Many were not aware that up to 60% and could be more of the total cost of a contact centre is due to the human element – salaries and training of agents, supervisors and managers. When you roll out a contact centre, you’re in effect creating a new company. This requires proper investment and planning.

 

We are now seeing government organisations beginning to understand that they need to spend money on getting their contact centres – both on suppliers, and internally,  training staff and getting the right systems in place. 

 

Union hurdles

Along with staffing as a major factor to consider in contact centre planning and management; government contact centres also face a significant hurdle in the form of workers’ unions.  The impact of union action on the running of a contact centre can be significant – and sometimes detrimental.

 

It would not be unheard of for a contact centre to be forced to promote all of its agents in order to secure them salary increases; only to find itself facing a union’s insistence that the agents should no longer have to answer calls because they are now all designated supervisors, leaving the contact centre unable to function at all.

 

Navigating the union minefield can significantly impact on the running of government contact centres.  Negotiations over salaries and promotions can take months and becomes a problem that impacts on both costs and operations.  So the process of managing government contact centre staff needs to be carefully planned, possibly with solutions in place such as a call escalation path and a pool of skilled or specialist agents.

 

Tied up in red tape

Another factor hampering rapid change is the fact that government departments have to follow numerous protocols and guidelines. Unlike the private sector, government departments cannot simply allocate budget and start implementing a new project.

 

Budget approval can take years.  Once the budget has been applied for and approved, the process of selecting a supplier is also a complex one. There are requests for proposals to be issued and a lengthy tender process to be followed. 

 

Promising future

In its favour, the government has access to some of the important basics needed for efficient contact centres. It can requisition all the telecommunications infrastructure, facilities and land it requires.

 

The necessary budget is also available – albeit slow to approve.

 

The same departments that once showed little understanding of the importance of an effective contact centre or what was needed to implement one are now making a concerted effort to put in place the plans to make it happen. They have more realistic expectations now, and are planning ahead for projects that will be implemented 18 months or two years down the line. Those departments that have had their fingers burnt by suppliers who just ‘drop and run’ are now turning to consultants like Elingo for advice on preparing to implement change. Already, there are showcase installations that are shining examples of what a contact centre should be.

 

This is good news for people who have called emergency services and received no answers.  Change is coming. But it cannot happen overnight.

 

How outdated budgeting and forecasting methods are affecting the corporate bottom line

I’ve lost count of the number of companies I’ve seen where a central office, usually the accounts department, dictates to another group of employees what their budget should be – and then acts all surprised when reality at the end of the year doesn’t match their expectations.

Sales people are burdened with targets, with no consideration of their unique circumstances or input, despite the fact that the people in the field in each region have the best “feel” for what may happen in their territory over the next year – which of their big customers are losing market share, which competitors may enter the area, whether the year is going to be tough or prosperous. Providing your team with a budget with a 10% increase slapped onto last year’s sales target is not only unfair, but also unrealistic.

A budget is one of the most important decision-making tools in any business, providing guidelines that steer the future of your enterprise. It goes without saying that if your budget is slowing down your business, it may be time to invest in specialist tools to make things faster and easier. There are three clear signs that you should be considering this investment.

With the average life expectancy of women being higher than men, a global increase in dread disease, and the fact that over the last decade more women are entering the workplace to become the main breadwinners for their families, it is becoming increasingly important that women begin to take financial planning seriously.
Despite strides forward in education, women are often not as confident when it comes to their financial matters as men, which is mainly a result of social conditioning. But times are changing, and women need to understand their unique financial needs in order to provide for themselves and their loved ones.
In order to take control of their personal financial situations, there are some vital steps women need to consider.

1. Start a budget

The most important aspect of sound financial planning and preparedness is to create an accurate budget that reflects expenses and financial needs, while also ensuring the budget is actually followed.
To draw up a budget, monthly expenses such as housing costs, utilities, groceries, car payments, gasoline, insurance and entertainment must be recorded. These expenses must then be subtracted from one's disposable income. This will give a good indication of what is left over to divide according to what can be saved and what can go towards discretionary spending. It is also a good idea to pay off any debt as soon as possible in order to avoid unwanted interest costs.

2. Avoid the urge to splurge

When presented with a month-end sale or a good bargain sometimes it can be so hard to resist. However, it is important to take a step back, look at the broader picture and question whether the purchase is a necessity or a nice-to-have.
Learning to identify and ultimately avoid unnecessary expenditures can significantly boost a woman's financial position – especially if there are other more urgent expenses that need to be considered. A good question to ask is whether the purchase requires money to be borrowed or whether it will need to be placed on a credit card - if this is the case it is probably better to avoid the extra debt.
When it comes to purchasing larger items like a big holiday or a car, these costs should be incorporated into the budget in order to start saving over a longer period of time to ensure the cost does not overwhelm one's finances.

3. Insurance considerations

Bearing in mind that 1 in every 8 women will contract breast cancer - according to the World Health Organisation - and ten in every 1 000 professional women will become disabled in their lifetime - according to the Actuarial Society of South Africa, it is crucial that all women take out essential insurance cover including medical aid, critical illness cover, life insurance and income protection.
The importance of sufficient insurance cover to protect against financial implications of serious injury, disability or dread disease cannot be stressed enough. Should a woman fall ill or become disabled and is unable to work she needs to have a plan in place that can assist her - or her dependents - to pay for their monthly expenses.
Depending on the package, medical aid is essential to pay for any medical expenses such as visits to the doctor, hospitalisation or treatment in the event of health deterioration. Critical illness cover can assist with additional costs that are not typically covered by medical aid. This can include home nursing care, family counselling or alterations to a home for physical impairments.
Life insurance will ensure that dependents are financially covered in the event of an untimely death and can also assist to pay for additional medical, legal and funeral costs. Lump sum disability and income protection policies are also important as women may contribute significantly to the total family income. Should a woman become unable to perform her occupation due to injury, or illness, whether temporary or permanent, it assists by replacing lost income, until she can return to work.
Short term insurance needs, such as car and home insurance, are also important. Should a woman become involved in a motor vehicle accident or her home is ruined after a fire or flood and there is no insurance in place, it can be devastating to her financial situation. It is vital to ensure these unforeseen costs are also covered.

4. Planning for retirement

Many women mistakenly believe that when they get married their partner will provide for them. However, this is not the case as one never knows what will happen in the long run - they could become divorced or their partner could lose everything. A financial plan does not involve relying on others for financial support; women need to secure their own future.
It is crucial to begin planning for retirement as soon as possible because saving from a young age ensures a more comfortable retirement. It is important remember that financial security is not only about achieving short-term goals but also ensuring financial security in the long run too. It is best to consult a financial advisor to select the most appropriate retirement plan before it is too late.
Bearing the above financial aspects in mind will better assist women to ensure a solid and secure financial situation now and in the long run. Learning to take control and understand their own finances will greatly assist women in shaping their own financial future and realising their goals.

In the event industry, the task of budgeting is perhaps the most important feature in ensuring the success of the event and the business as a whole. Without it, there is no way to manage all the expenses and avoid the hidden costs which invariably creep in. Allocating sufficient funds for each aspect of the event will ensure that the client’s expectations are met.

A budget is a forecast of expenditures, so it is particularly essential to plan carefully and prioritise what needs to be accomplished. I am adamant about all service providers attending the first meeting.

The creative team usually come up with a fantastic concept which is sold to the client because of the “wow” factor, but the technical team has the task to make the dream come true. The technical equipment and the expertise behind it are the core and foundation of any event. Many clients understand the importance of the technical aspect, but nevertheless would rather take money from the technical budget to add to other event elements, such as décor. Technical budgets have to be taken seriously and cannot be overlooked. The budget needs to be discussed extensively, because if it is tight, then alternative solutions can be suggested to suit the expenditure. A cost constraint should be established before a project is carried out. This will avoid disappointment on the part of the client.

Sticking to a strict budget also encourages the event planner to consider possible problems before they arise, so that there is a viable solution, should they occur. A thorough consultation with the technical team is vital, so that the client has an understanding of the costs that will be incurred in order to achieve the desired concept.

Technical excellence cannot be questioned after an event if the budget is cut back halfway through a project. An event can only run smoothly once the funds have been allocated properly and the goals are being met.Most technical companies give the clients great discounts and add in many extras, but clients need to be fair and realistic as to how far a technical budget can stretch.

The budget should also include catering costs, decor, entertainment and artists’ fees, printing charges, gifts, activities expenses and possibly transportation charges.

The first decision to be made is finding the right venue for the concept proposed, which ultimately contributes to the success of any event. A significant portion of the expense will be spent on venue, so it is important to establish what the rental fee includes and whether there are any unseen costs. Most venues do provide basic facilities such as parking or security, but it is imperative to check on the technical aspects, depending on the needs required for a particular event. Overspending on the venue is a common problem and usually leads to budget cuts elsewhere, which might compromise the end result. Finding the correct balance should be the primary goal.

At Strike Productions we accompany our clients to the venue to ensure that the choice suits the concept realistically and within the budget. This will give the planner a better understanding of the venue rather than looking at a brochure.

Depending on the size of the event, it is ideal to have a contingency fund as part of the budget, as despite careful planning, there could be costs that exceed the initial projected plans. Budgeting for hidden costs is wise, because if any emergencies arise, they will have been catered for.

Concluding advice is:

If the client has huge expectations but hasn’t got the budget to match them, then the best thing to do is to re-visit the goals and suggest alternatives that ensure a feasible expense in addition to producing a successful, rewarding and stress-free project.

What is success? And how does one go about achieving it? According to the Oxford Dictionary, the answer is simply “the accomplishment of an aim or purpose”.

That is all good and well, but how do you go about defining the success of your projects, and are there any limitations or constraints in your way to achieving success? Is it as simple as saying that a project completed within the designated timeline, budget and scope is successful? Definitely, but there are still some gray areas that require closer exploration: defining the playing field and the rules of the game.

We are all aware that there are tolerance levels around those three factors, agreed up front with the client, that still allow for successfully completed projects. It is also vital to remember that any failures can be turned into success, either for your current project or for future ones.

Before defining the tolerance levels and boundaries, it is vital to document each constraint and the work pertaining to that section.

What are the project constraints?

Every project has constraints and limitations which could be budget limits, deadlines or specific business requirements. To define these, the correct individuals must ask and answer the correct questions.

• SCOPE: What is the scope of the project? Are there any portions of the scope not critical to the completion of the project? Can certain parts of the scope be completed after the deadline?
• COST: Is there a fixed budget that cannot be exceeded? Does the client have fixed quarterly or annual budgets that are the limit of their project expenses? How much? Who approves? What is the budget approval process?
• TIME: What is the project duration? What drives the deadline? Is there social media or some form of advertisement happening at a specific date that enforces this deadline?

*Note: It is extremely important that all of these are approved and signed off by the client. It will ensure the safety of all parties and assist with keeping a healthy relationship.

Getting these answers from your team and from the client could be a continuous tug of war while you decipher all the jargon. Not to mention the continuous babble of individuals trying to provide answers to your questions, but ending up trying to sound smart rather than addressing your issues. Do not be part of this overzealous corporate gaggle when the question requires a simple answer in simple terms.

Defining the tolerance levels.

The triple constraint triangle is an awesome way to define your tolerance levels by measuring the importance of the constraints that you have defined.

Each leg of the triangle defines a constraint that directly affects the other legs. All three legs affect the quality of the product provided.

If the Scope and Cost have the least amount of tolerance the Time constraint would have the most. This is valid for the other iterations for example if Time and Scope have the least room to be adjusted it will affect the Cost of the project.

Multiple pre defined boundaries can be defined for each leg – for example, tolerance percentages on time and budget or specific portions of the scope that aren’t a priority for completion. These boundaries need to be properly documented and agreed to by all stakeholders.

To over-simplify the triple constraint triangle and to quickly work out which area allows for the most tolerance within your project, the following could be used:

If the project needs to be high quality (Good) and done within a short time period (Fast) it will most likely come with a high price tag (NOT Cheap). The higher the quality of the product and speed, the higher the cost will be.

This works for all the other variations of the triangle: for example, low cost and high speed products will most likely lack in quality, and high quality products for a low price will take a longer period of time.

To summarise this, an increase of two sections of the triangle might lead to a negative effect of the third.

What do we get from all of this?

From the above information, one can deduce that it is vital to identify the project constraints and the associated tolerance levels.

The success of a project can thus be defined by the following sentence; complete the project within the designated timeline, budget and scope without exceeding the approved tolerance levels of each and adhering to the agreed quality levels.

A mouth full jargon, but true.