NEW GUIDELINES ON PROVING INCOME WHEN APPLYING FOR CREDIT

During March 2018, the High Court made an important ruling that has affected the requirements of proof of income when applying for credit in South Africa.

The court case involved retailers Foshini and Mr Price taking the Minister of Trade and Industry and the National Credit Regulator to High Court, arguing that the provisions of regulation 23A(4) (promulgated by the Minister of Trade and Industry) were unreasonable and discriminated against lower-income or less privileged members of society.

The court ordered that the said regulation, read together with section 171(1) of the National Credit Act 34 of 2005, be set aside. The effect of the judgement was that there is no longer a requirement for documentation in any particular form to be collected to prove income when applying for credit, although the credit applicant is still required to provide authentic documentation, for example ID books, to the credit provider.

In reaching its judgement, the court used the example of a flower seller who did not have a bank account and would face an insurmountable obstacle in obtaining credit even in a relatively small amount, even if the flower seller was earning a reasonable monthly income. The court therefore held that such a scenario would frustrate the aim of the National Credit Act which is “to promote the development of a credit market that is accessible to all South Africans and in particular to those which have historically been unable to access credit under sustainable market conditions”.

Following the said case, the Department of Trade and Industry has recently published new guidelines for the assessment of gross and discretionary incomes when applying for credit.

A credit provider is still required to conduct an affordability assessment to calculate the applicant’s discretionary income, to take steps to ensure that the applicant can afford the monthly instalments and to us the minimum expense norms table to break down an applicant’s monthly gross income when calculating the applicant’s existing financial obligations.

However, the new guidelines distinguish between applicants who are formally employed versus those that are self-employed or employed in the informal sector.

Formally employed applicants will still prove their gross income by way of payslips and bank slips whilst self-employed or informally employed applicants will need to provide alternative proof of income to satisfy the affordability assessment.

For quality guidance on your legal matters, contact Goldberg & de Villiers Inc. on (041) – 501 9800.

5 Things to look out for in your insurance contract

You are involved in a motor vehicle accident and you claim from your insurers. You have been a loyal member for years and the accident was not your fault. Your insurers value you, are eager to compensate you for your loss and help you in this time of need.

Sadly, this is not always the experience of those of us who have had the misfortune of putting in a claim to our insurance providers.

Here are 5 of the most common, and easily avoidable, reasons why our insurance claims are rejected:

  1. You forget to advise your insurance provider of your change of address: At Goldberg & de Villiers, this is the most common reason we find insurance providers repudiating insurance claims. Most policies have a clause which requires the policy holder to notify his/her insurance provider of a change of address, failing which the cover will lapse in the event of an accident. All too often we find claimants moving house, and forgetting to notify their insurance provider of the change. When the insurance provider finds out, and you put in a claim, the claim is repudiated and there is nothing you can do about it.
  2. The driver at the time of the accident did not have valid licence: It should go without saying that if the driver at the time of the accident does not hold a valid driver’s licence, or a valid learner’s licence while being accompanied by a licenced driver, any subsequent claim would most likely be rejected.
  3. Unroadworthy vehicle: Make sure that your vehicle is still roadworthy. Check things such as your tyre tred, windscreen wipers and brake lights.
  4. Drunk driving: It cannot be stressed enough that driving under the influence of alcohol is dangerous, illegal and should lead to any insurance claim you put in being rejected immediately.
  5. The driver is not the  ‘regular driver ‘as envisaged in the policy: Some policies have a ‘regular driver’ clause, and if it is discovered that the driver at the time of the accident was not the ‘regular driver’, the claim could be rejected.

By avoiding these common pitfalls, you will go a long way to avoiding that dreaded rejection letter.

If you have any legal insurance related queries, please contact the professional legal team at Goldberg & de Villiers Inc on 041 501 9800.  Passionate Legal Minds. Real solutions.

Garnishee Orders: A 7 Point Practical Guide to New Rules for Lenders, Debtors and Employers

How does the Constitutional Court’s new ruling on garnishee orders (more properly referred to as EAOs or Emoluments Attachment Orders) affect you?

Here is a practical summary of what the changes to the law mean to lenders, debtors and employers;  at least until proposed new legislation (reportedly soon to be tabled in parliament) replaces them:

Who can issue EAOs?

EAOs are court orders obliging a debtor’s employer to deduct amounts from his/her earnings and pay them over to the creditor. In the past, clerks of the court were able to issue them –  a process which led to allegations of rubber- stamping in some local courts.

Judicial oversight:

Now, a magistrate must decide whether or not to grant an EAO after considering two factors:

  1. Is it “just and equitable” for an EAO to be granted?
  2. Is the amount “appropriate?” The court will have to decide here what the debtor can afford to pay.

Note that existing requirements including a 10 day registered-post warning to pay the debt, and proof that the debtor consented in writing to the issue of an order, remain in place.

Which court?

Where the NCA (National Credit Act) applies – which it will in most such cases – creditors can no longer choose courts far away from debtors. Only a court where the debtor lives or works will have jurisdiction, making it much easier for him/her to be heard in court.

Existing orders:

The changes are not retrospective and apply only from 13 September 2016, the date of the judgment. Therefore existing EAOs are valid, and payments already made to creditors under them are not affected.

Lenders:

Be even more careful than before when lending money to make sure that your debtors can pay you back. Incautious lenders will find that even loans not falling foul of the NCA’s reckless lending provisions will now be more difficult to recover.

Debtors:

If you have an existing EAO against your salary or wages, you can still challenge it in court on an individual basis.

Employers:

As said above, existing orders are still valid and must be complied with unless individually set aside –  take advice in any doubt.

For more information contact Tracey Mouton at Goldberg & de Villiers Inc on 041 501 9800 or email traceym@goldlaw.co.za.

 

THINKING OF THAT ISLAND WEDDING?

It might seem like a romantic idea to get married on a tropical island, but the parties must be aware of the legal consequences of a marriage concluded outside South Africa.

The question whether the couple is legally married depends on whether the marriage procedures of the foreign country were followed correctly.

The patrimonial consequences of the marriage however will be determined by the law of the country where the husband was domiciled at the time of conclusion of the marriage.

In terms of South African law, more specifically the Matrimonial Property Act 88 of 1984, where the husband to a marriage is domiciled in South Africa, at time of conclusion of the marriage, such marriage is one of in community of property, in the absence of the execution of a valid Antenuptial Contract.

A person’s domicile is a particular country where he/she intends to settle or is settled indefinitely.

In the case of Frankel’s Estate and Another v The Master and Another (1950) All SA 347A, the court held as follows:

“The conclusion at which I arrive is that the matrimonial regime is governed by the law of the husband’s domicile at the time of the marriage, and that it is not governed by the law of another domicile which he then intends to acquire immediately or within a reasonable time after his marriage.”

It is therefore important to consider the legal consequences of a marriage concluded outside South Africa and to speak to your attorney before you tie the knot.

Contact one of the notaries at Goldberg & de Villliers Inc on 041 501 9800 /  Tracey Watson-Gill (twg@goldlaw.co.za), Cindy Jonker (cindy@goldlaw.co.za) and Sandy Scholtz (sandy@goldlaw.co.za) for further assistance.

TAX IMPLICATIONS OF MAKING DONATIONS

In South Africa we are subject to donations tax.

Donations tax is tax payable at a flat rate on the value of property disposed of by donation (Sections 54 and 64 of the Income Tax Act, 1962).  Donations tax is levied at a flat rate of 20% on the value of the property donated.  However, the amount of the donation that exceeds R30 000 000.00 (Thirty Million Rand) is taxed at a rate of 25%.

A donation is widely defined and includes property disposed of for an inadequate consideration (Section 58).

Section 56(1) contains a list of exempt donations which include amongst others, donations between spouses and donations to approved public benefit organizations.

Natural persons receive an annual donations tax exemption of R100 000.00 (One Hundred Thousand Rand) while all other donors pay donations tax on any donations exceeding R10 000.00 (Ten Thousand Rand) during any year of assessment.

Donations tax applies to any individual, company or trust that is a resident as defined in Section 1 of the Income Tax Act, 1962.

Non-residents are not liable for donations tax.

The person making the donation (donor) is liable for the tax but if the donor fails to pay the tax within the set period, the donor and donee are jointly and severally liable for the tax (Section 59).

Public companies and public benefit organizations, amongst others, are exempt from donations tax (Section 56(1) (h) and (n)).

Donations tax must be paid by the end of the month following the month during which the donation takes effect or such longer period as SARS may allow (Section 60(1)).

If you have any further queries in the this regard, contact Adri Ludorf  at Goldberg & de Villiers Inc,  Property Law and Conveyancing Department at 041-501 9810 or adri@goldlaw.co.za

EXISTING BOND OVER A HOME YOU ARE SELLING

When a property is sold it is usually the purchaser who is liable for the cost of transfer. However if the seller has an existing bond over the property that is being sold, the seller is liable for the costs of cancelling such bond. The bond cancellation is a separate transaction but is linked to the property transfer.

The bond cancellation fee is payable to the conveyancing attorney instructed by the seller’s bank to attend to cancellation of the existing bond. It is necessary to register the cancellation of a bond even if the bond has a nil balance.

For more information and professional legal advice, contact Goldberg & de Villiers Inc on 041 501 9800.

 

WHAT EXACTLY IS MY DOMICILIUM CITANDI ET EXECUTANDI?

When completing a form or signing a contract one often comes across a clause that refers to a Domicilium Citandi et Executandi.

Domicilium Citandi et Executandi is a Latin term which can be construed as meaning the address nominated by a party, in a legal contract, at which he or she elects to receive all legal notices and documents.

Choosing a Domicilium address has specific legal consequences such as:

  • The party who elected the Domicilium address should be ready to receive any legal notice that is delivered to that address.
  • If a change in address occurs, a party should notify the other contracting party, preferably in writing, of such a change in address.
  • Delivery of a legal notice or document to the Domicilium address chosen by a party to a contract will be considered sufficient for the purposes of legal action and such party would be deemed to have received the legal notice or document.

It is therefore important to choose your Domicilium address wisely.

In general, it is our advice that you select a Domicilium address at which you permanently reside or if you choose an address where you are not permanently residing, for example a property which is being leased out, that you request the tenant to inform you of the receipt of any legal notice or document as soon as possible.

We understand that legal terminology can be overwhelming.  Please do not hesitate to contact the  Property Law and Conveyancing Department at Goldberg & de Villiers on 041-501 9810 or adri@goldlaw.co.za for advice.

 

NEW PRESCRIBED RATE OF INTEREST

The prescribed rate of interest has dropped from 10.25% to 10% a year, effective from 1 May 2018.

In accordance with the provisions of the Prescribed Rate of Interest Act, the interest on debts is calculated at the repo rate plus 3.5%, unless a different rate is prescribed by law, trade custom or agreement between the parties. Thus, parties can agree to a different rate of interest, but would need to be mindful of other applicable legislation which may place limitations in this regard.

Be sure to check that the correct interest rate is being applied to your transaction and, if in doubt, contact Goldberg & de Villiers for expert legal guidance on 041 – 501 9800.

 

 

BITCOIN AND THE LAW – IS IT LEGAL, WHAT ABOUT TAX, AND CAN YOU LEAVE IT TO YOUR HEIRS?

      

Have you joined, or been tempted to join in, the “Bitcoin frenzy”? If so, read on.

Bitcoin and Ethereum are probably the best known of the cryptocurrencies, but (as at 10 April 2018) there were over 1,565 of them, and that number is growing.

Whether Bitcoin and its cousins are good investments is a matter for you and your financial advisers to puzzle over but let’s have a look at a few legal aspects –

Expect grey areas and big changes

Governments, Tax Authorities, and Central Banks around the world are struggling to get to grips with cryptocurrencies and how to treat them. Some countries allow them; some have banned or restricted them. Expect ongoing uncertainty and a lot of future change in these official positions, including attempts to regulate alternative currencies in general.

Are cryptocurrencies legal?

The short answer seems to be yes, there’s nothing to stop you buying, holding, using or selling them. The Reserve Bank’s official position is that they can be traded and used as “a medium of exchange, a unit of account and/or a store of value”, but they aren’t “legal tender” (“bank notes and coins in RSA which can be legally offered in payment of an obligation and that a creditor is obliged to accept”). What that means is that Joe Plumber is free to accept payment from you in Bitcoin if he wants to. He just can’t insist on it, nor can you.

SARS’ view (see “Income Tax and VAT” below) is probably going to be your greater area of concern for the moment.

What if you need help from a court?

The Reserve Bank warns that you acquire cryptocurrencies at your own risk and that you “have no recourse to South African authorities”.

What that means in practice remains to be seen (would SAPS really refuse to investigate a theft of Bitcoin?), and whilst there is no precedent to confirm that our courts will indeed help you if you have to sue over, for example, a Bitcoin transaction gone wrong, the majority view seems to be that they will.

Must you pay Income Tax and register for VAT?

From the horse’s mouth so to speak, this is some of what SARS says (all highlighting is ours) –

  • It will “continue to apply normal income tax rules to cryptocurrencies and will expect affected taxpayers to declare cryptocurrency gains or losses as part of their taxable income.”
  • “The onus is on taxpayers to declare all cryptocurrency-related taxable income in the tax year in which it is received or accrued. Failure to do so could result in interest and penalties.”
  • “…cryptocurrencies are not regarded by SARS as a currency for income tax purposes or Capital Gains Tax (CGT). Instead, cryptocurrencies are regarded by SARS as assets of an intangible nature.”
  • “Determination of whether an accrual or receipt is revenue or capital in nature is tested under existing jurisprudence (of which there is no shortage).”
  • “Taxpayers are also entitled to claim expenses associated with cryptocurrency accruals or receipts, provided such expenditure is incurred in the production of the taxpayer’s income and for purposes of trade. Base cost adjustments can also be made if falling within the CGT paradigm.”
  • “…VAT treatment of cryptocurrencies will be reviewed. Pending policy clarity in this regard, SARS will not require VAT registration as a vendor for purposes of the supply of cryptocurrencies.”

There’s more, and you don’t want to take any chances here, so consult an expert in need.

The Endgame: Leaving Bitcoin in your Will

Your cryptocurrency holdings are assets in your estate and you will want your heirs to get them. Your executor must deal with them together with all your other assets (both physical and digital).

Remember however that your holdings will be lost forever if your heirs/executors don’t know about them or can’t access your digital cryptocurrency wallet. They will need all your digital keys – both “public” (wallet address) and “private”.

In whatever manner you plan to leave your heirs/executor a record of these keys on your death, avoid disaster with these tips –

  1. Do it now – no one knows when they’ll die.
  2. Do it securely – anyone with your private key can clear your wallet out, and criminals know that.

Credit: LawDotnews

For more information, contact the professional legal team at Goldberg & de Villiers on 041 501 9800.

LANDLORD V TENANT: CONSIDER THE TRIBUNAL DISPUTE RESOLUTION OPTION

 

“Agree, for the law is costly” (Marcus Tullius Cicero, Roman lawyer and statesman)

We all know how easy it is for misunderstandings and disputes to arise between landlords and tenants, and whilst most can be resolved with a bit of open communication and negotiation, sometimes independent intervention is needed.

Enter the Rental Housing Tribunal, which uses the Rental Housing Act to “speedily resolve” landlord/tenant disputes, to balance the rights of both sides and to protect them both from “unfair practices and exploitation”.

Note that this applies only to residential housing, not to commercial or industrial leases.

What’s the cost and how does it work?

It’s free, and to get going you lodge a complaint with your local Tribunal. An impartial mediator is then appointed to help you settle the dispute and reach an agreement. If that fails a formal hearing is held and a ruling issued. Either side can take the ruling (which is binding and must be complied with on pain of criminal prosecution) on review to the High Court.

You can if you like draw up your own complaint and represent yourself in the hearings, but – particularly if there’s a lot at stake – taking legal advice upfront is far safer.

Because the Tribunal cannot order eviction (only a court can do so) and needs time to resolve complaints, landlords faced with a non-paying tenant will usually go straight to court.

For most disputes however, both landlords and tenants should seriously consider following the quick, cheap and easy Tribunal route.

Prevention being better than cure…

Of course first prize is as always to avoid disputes altogether.  Start off with a properly-worded, clear and comprehensive lease. Make sure you comply with Rental Housing Act basics like joint inspections for damage, investment and refund of deposits, avoiding unfair practices and so on.

Ask your lawyer for assistance here – blindly using a generic lease without taking advice is a recipe for disaster.

For assistance, contact the professional team at Goldberg & de Villiers Inc on 041 501 9800.

Credit:LawDotNews.