Surviving the disaster of job loss

As COVID-19 has ravaged the economy and stripped it bare of tens of thousands of jobs, there is a real threat to the livelihoods of many ordinary working South Africans. As happens during a time of economic recession, some businesses are unable to pay full salaries, have to scale down and have to let workers go in order to survive the results of stunted economic activity in their industry.

Job loss is never easy. When found in such a precarious position, one difficulty is knowing where one might find the resources to stay afloat and get ready to re-enter the job market. In any case, it is advisable to speak to a registered financial advisor regarding your best course of action as your circumstances require.

Below is an incomplete catalogue of the financial sources that you might be able to utilise during this time:

The Unemployment Insurance Fund (UIF) is specifically set up to aid in these kinds of situations, subject to a few conditions being met. If you had been formally employed, you will probably be a regular contributor to the fund (All employers are required by Labor Law to register themselves and their staff with the UIF and pay their monthly contributions). Apart from the UIF, there are other sources of funds you might consider accessing so that your financial difficulty doesn’t cause irreparable damage.

One of the first considerations when looking for funds is to see where money is still owed to you, and collect any outstanding funds. A common mistake that people make (not only those who are struggling financially) is to wave any money owed to them for the sake of avoiding conflict. While it may lead to some slightly awkward conversations, the place to start is with immediate family and friends. Not only are your family and friends people with whom you have an established rapport, but they are probably the ones most willing to want to help you out of your situation.
You might, however, have available funds or assets that you could free up. Start where that your money and assets act as a surplus to your needs. If you have money in an emergency fund – great, you’ve already planned well for a situation like this.

You might have funds in a savings account that has not been allocated towards a specific purpose and that might be something to consider, although some of these accounts may have a notice period with an exorbitant penalty fee for early withdrawal.

Medical aid saving accounts, although technically being an accessible source of funds, often requires two things – that you resign as a member of the scheme, and wait out the four-month period in which you can still make claims to your medical aid. Not only do you lose your long-term coverage in case of a health emergency, but you will also have to pay a late-joiner fee when joining again and you won’t be able to access the money with immediate effect.

One should be careful of taking out any loans in a time of unemployment or financial distress. Even though a loan might help you get back on your feet, it might be something that will weigh you down for a long time to come.

A vital rule to abide by is not to use funds from a credit facility in order to pay off debt. If you use credit to pay off credit, you’ll be accumulating two sets of interests on the money owed, which leaves you extremely vulnerable.

Lastly, accessing pension funds and other long-term investments should be your last consideration. Any funds that might affect your retirement or the futures of your dependents should, as far as possible, stay untouched. Re-accumulating the wealth necessary for retirement, as well as recuperating the value lost on the interest you would have received, is extremely difficult.

While there are a lot of options to consider when you do find yourself in a tricky financial situation, there are definitely some avenues that will work better for you than others. Knowing exactly what to do requires concentrated research. For this reason, consulting with a financial advisor can ease the process and set you in the right direction to get out with minimal damage.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your adviser for specific and detailed advice. Errors and omissions excepted (E&OE).

Rescission of judgments by SARS: Barnard Labuschagne Inc v SARS

The judgment deals with an application for rescission of a judgment by Barnard Labuschagne (Applicant), where SARS took judgment under the provisions of chapter 11 of the Tax Administration Act (TAA).

SARS filed a certified statement in terms of Section 172 of the TAA with the Registrar of the Court, setting out an amount of liquid debt due by the Applicant in respect of PAYE, VAT, UIF and SDL, and payable to SARS.

The Applicant is a law practice in the Western Cape and brought an application to rescind, based on various contentions. Over an extended time, the Applicant had various issues with incorrect allocations of taxes paid to the correct accounts. The dispute occurred over the years, and it was evident that the Applicant left this dispute unresolved. This occurred various times between 2009 and 2017. SARS had issued penalties and raised interest, and threatened judgment on various occasions. SARS even went as far as to make employees available to the Applicant, to allocate funds correctly. SARS eventually applied for judgment, based on a tax debt owed by the Applicant from the Applicant’s self-assessment.

The Applicant refused to object to the assessment, as it contended that SARS had not issued an objectionable assessment, and stressed that it was entitled to bring these proceedings, in terms of section 105 of the TAA, for a rescission of the judgment granted in terms of section 172 and 174 of the TAA. The Applicant further tested the constitutionality of the sections, if the Court did not find agreement with the Applicant, as these sections would then infringe his Constitutional rights to approach a court for relief when a judgment is granted. SARS countered this, stating that the judgment in terms of these sections was not judicially granted, as it lacks determining characters of judicially issued judgments.

In its judgment, the Court refuted the Applicant’s constitutionality arguments, stating that they held no weight. The High Court further confirmed that there must be a civil judgment in existence and that sections 172 and 174 constitute law enforcement mechanisms. These statements can be filed irrespective of whether an objection or appeal is in play, or an amount has been suspended. The benefit to the Applicant. Though. is that it is not a formal civil judgment and cannot be accorded the status of such.

In finality, the Court found that as this is not a civil judgment ordered by a court, one could not follow this route to have the judgment rescinded and as a result dismissed the application for rescission of judgment, and declared that the relevant provisions are not unconstitutional.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)