Obstacles do not block the path, they are the path

Honeycomb BEE Ratings has been a SANAS Accredited BEE verification agency since 2007.

Steps in verification process

Our process is effective and simple

BEE RATINGS A formal introductory meeting will be conducted in order to ascertain the B-BBEE needs of your company and if it is possible to achieve them. Once you are satisfied with the information provided to you, we will then establish which of our verification teams will be best suited for the verification of your company.

STEPS IN A VERIFICATION PROCESS

OUR PROCESS IS EFFECTIVE AND SIMPLE

ON SITE DOCUMENT VERIFICATION

PRE-RATING ASSESSMENT A broad-based rating is an in-depth process and an on-site verification of the evidence submitted for each one of the elements is required in order to achieve the maximum amount of points possible. The end result of this process is a B-BBEE verification certificate issued by Honeycomb that can them also be used by the measured entity when tendering for government business or for other procurement purposes.

A pre-rating assessment is conducted on all of the evidence provided by you and is verified by Honeycomb through an on-site verification. The result of this evaluation is a B-BBEE scorecard, indicating the points received for each element as well as the B-BBEE contribution status.

FINALISE PRODUCT A preliminary report will be provided to you based on the information verified at the on-site verification. Once you have accepted the preliminary report, the B-BBEE verification certificate and final report will be sent to you. Should there be any queries, a meeting will be scheduled for resolution.

We are motivated by obtaining a scorecard that will accurately reflect our clients and their business commitment to transformation.

Honeycomb BEE Ratings is an independent, nationally based SANAS accredited verification agency which conducts professional and impartial verifications of all enterprises, across all sectors, countrywide.

Deirdre Mitchell Managing Director

Kyle Mitchell Operations Director

Zunaid Vallee Technical Director

Honeycomb's directors and staff are some of the most successful, qualified, and enthusiastic people in the B-BBEE industry, with extensive knowledge of B-BBEE legislation and the Mining Charter.

Our vision is to promote the empowerment of people and businesses. Honeycomb is committed to fostering long-term relationships with all stakeholders.

We believe in the universal values of honesty, integrity, nondiscrimination and reliability for each and every decision taken by Honeycomb, relative to each and every BEE verification process and retain authority over all such decisions.

HEAD OFFICE

0861 HONEYCONE 466 392 662 info@honeycomb-bee.co.za

27 14th Avenue Northmead, Benoni,1501

No dodging the tax bill

on cryptocurrency transactions

SARS is tightening tax collection on cryptocurrency transactions, which makes it important to distinguish between events that will trigger income tax rates or CGT rates.

By Joon Chong and Lumen Moolman, Webber Wentzel

Have you sold your cryptocurrencies (crypto); exchanged one crypto for another crypto; purchased goods and services using crypto; mined or forked for crypto; received staking rewards in crypto, then sold your staking rewards; received air-drops of crypto, or used crypto as collateral for loans? If you answered yes to any of these questions, remember your taxes!

The South African Revenue Service (SARS) is increasingly auditing taxpayers’ crypto holdings and trading activities. It has also requested information from certain South African crypto exchanges, including Luno, about users on the platform and their transactions.

SARS has not issued an interpretation note on the tax implications of crypto assets. Crypto is defined as a 'financial instrument' in the Income Tax Act 58 of 1962 (ITA), as opposed to 'currency' which would have excluded crypto gains from the ambit of capital gains tax (CGT). This means that the intention of the taxpayer, supported by objective factors such as length of holding and frequency of trades, would determine whether the crypto gains are revenue (taxed at a maximum of 45%) or capital in nature (taxed at a maximum of 18%).

Disposal of crypto

The disposal of crypto as a financial instrument is a taxable event. It may, however, be difficult for taxpayers to prove that their crypto investment gains fall within the CGT net, as there are no capital deeming rules in the ITA for crypto, such as the three-year rule for equity shares. In determining the intention of the disposal, SARS may be guided by cases involving the disposal of Krugerrands. In ITC 1525, the taxpayer held Krugerrands for 12 years and the purchase was made with the intention to provide funds for a rainy day. The Krugerrands were sold to inject capital into a new business. In ITC 1526, the taxpayer held Krugerrands from eight months to nine years. They were purchased to provide a store of wealth for the taxpayer's children and protection from inflation. They were sold for various reasons, including to make improvements on and purchase properties. The Tax Court held in both these cases that the Krugerrands were held on revenue account and subject to income tax rates. It may thus be practical to use different wallets for trading cryptos and holding cryptos for long-term gains.

Barter transactions

The gain when one crypto (A) is exchanged for another (B) is the difference between the market value of B and the acquisition cost of A. If A was held or acquired on revenue account, the difference will be taxed as income (45%). Alternatively, if held on capital account, the difference will be subject to CGT (18%). It can be difficult to determine the market

value and acquisition cost of crypto in ZAR. We suggest that the spot rate should be used for the transactions. Schedules of rates and transactions should be compiled on the calculated gains or losses on the tax return.

The same principles would apply where the taxpayer has purchased goods or services with crypto. The difference between the market value of the goods or services and the acquisition cost of the crypto would be subject to income tax (45%) or CGT (18%), depending on whether the crypto was held on revenue or capital account.

Assessed losses from trading in crypto may be ring-fenced. It might not be possible to offset these losses against any other income of the taxpayer if the taxable income and losses of that taxpayer (adding back assessed losses from the current and prior year) are more than R1 577 300 for the 2021 tax year. There are, however, exceptions to this rule (Section 20A (2) (b) (ix)).

Staking, mining, forking & airdrops

If a taxpayer derived crypto from mining or forking, then the gains would be subject to income tax (45%), since they are derived from conducting a trade. If the taxpayer's intention was to hold the crypto as a long-term investment, then they will be subject to CGT (18%) on any gains. Staking rewards are also taxed at income tax rates, and are, for now, unlikely to meet the definition of 'interest' in the ITA. This means that the annual interest exemption for individuals cannot be set off against staking rewards.

Further complexities arise when staking rewards are sold. For example, assume a taxpayer received staking rewards with a market value of 80 at the time of receipt. That 80 would be subject to income tax as it is akin to interest (without the annual interest exemption). Assume next that the staking reward is sold for 450 after five years. The difference between 450 and 80 is the gain on the disposal. This gain may be taxed at CGT rates (18%), not income tax rates (45%), again depending on the intention of the taxpayer at disposal.

If the taxpayer receives new crypto through airdrops on existing crypto held, this is akin to a distribution of new financial instruments based on existing financial instruments held. Once again, the taxpayer’s intention in holding the existing crypto, frequency of trading, how long they were held, etc, would be taken into account to determine whether the new airdropped crypto would be held on revenue or capital account. If held on revenue account, the market value of the new airdropped crypto would be subject to income tax (45%), and if on capital account, CGT (18%). It is irrelevant that the value of the crypto airdropped was not converted to ZAR. Income is subject to tax when received or accrued, and there is accrual when there is an unconditional entitlement to the crypto income.

Joon Chong, Webber Wentzel HR

Lumen Moolman Crypto used as collateral

In our view, when crypto is used as collateral for a loan, there is no disposal of the crypto and no taxing event. Where the taxpayer is the lender and receives interest in crypto, then the market value of the crypto would be subject to income tax (45%). In this situation, we would argue that the annual interest exemption should apply.

We recommend that taxpayers seek advice to ensure that their crypto gains are reported correctly in their tax returns. The volatility and high-risk nature of this asset class should not be compounded by an unexpected tax bill! 

BCX as a key Cloud Enabler

Why is cloud still considered an enabler across sector, industry and market? Surely, it’s been supplanted by now?

Cloud has been around for a while. Most technologies this long in the tooth have been long since supplanted and replaced and rebooted by now, with the possible exception of the mainframe. Does this mean that it has lost its relevance?

The answer is – cloud has never been more important as a business enabler than it is right now, today. According to Frans Basson, Chief: Cloud Platform Solutions at BCX, cloud has become far more ubiquitous and essential than ever before, providing increasingly intelligent and innovative solutions to increasingly complex and challenging business questions.

“Cloud remains a powerful business enabler that helps the organisation and its people to thrive, not just survive, in uncertain times,” Basson adds. “It’s soft landing when the unexpected hits, providing the agility, flex and pivot capability that the business needs to clamber the obstacles and keep on going.”

“This multi-cloud, hybrid cloud approach has been triggered by the rapid digital moves made in 2020, and the organisation’s need to leverage existing tech with futureproof tech to ensure stability in times of crisis,” says Basson. “Today, that panicked move is being cemented by intelligent investment into solutions that can offer the business more depth and allow them to transform, and move to a digital-first organisation, incrementally and within budgets. According to Accenture, cloud is still a top C-suite item on the agenda as it allows them to take a more holistic approach to end-toend digital transformation, giving them the capabilities required to move rapidly, at scale. Google expanded on cloud’s potential in an article published towards the end of 2020 that unpacked how cloud computing has evolved and the value of a multi-cloud strategy.

This, as the article and experts suggest, is the new world of cloud, where hybrid and multi-cloud create compute that’s not just agile, but bendy – fitting into new situations and adapting to new demands on demand. This view is shared by Gartner who pointed out in late 2020, that around 75% of midsized to large companies were likely to adopt this strategy in 2021. Gartner attributes this move to the ability to tug on the different best-ofbreed technology threads to weave a cloud tapestry that’s as unique as the busness. Another factor driving the ubiquity of cloud today is the ongoing R&D done by the hyperscale leaders of AWS, Microsoft and Google. These organisations have long since recognised that their value lies in reducing the pressures on the business by enhancing and streamlining business processes. To this end, the solutions they offer are consistently changing and adapting to market needs and providing the enterprise with access to features that would be prohibitive if managed or implemented in-house. changing and adapting to market needs and providing the enterprise with access to features that would be prohibitive if managed or implemented in-house.

“With the right platforms, consumption models and applications in place, the organisation can transform connectivity and productivity,” he adds. “This is a proven metric – research undertaken by Accenture in their Cloud Outcomes report found that 37% of companies had achieved their expected cloud outcomes while 45% are very satisfied with what they’ve achieved. Cloud delivers measurable value, and this is one of the main reasons it remains such a key enabler today.” Those who adopt cloud are seeing real benefits and these are now being boosted by the evolution of other technologies that were once defined as emergent, but are, today, highly capable and relevant. Artificial intelligence (AI), the Internet of Things (IoT), machine learning, automation – these solutions leverage cloud and connectivity to create ecosystems if intelligent intent that can utterly transform business if constructively applied.

“Whole new worlds are opening up in CRM, business intelligence, supply chain management, data management, ERP and more,” concludes Basson. “By working collaboratively with experienced third-party service providers, companies can unpack value at every cloud turn. They can uncork that virtual bottle and enjoy the benefits that it brings to boardroom table, employe productivity, and long-term sustainability.”

Cloud may be considered old by echnology standards, but in this case that stands for ‘wise’ not ‘disposable’. This is one technology that’s defined less by how long it’s been in the market and more by how it’s used and implemented, and by the thinking that defines its potential.

About BCX

At BCX, we pride ourselves in being one of South Africa’s leading ICT and telecommunication partners to large corporates, public sector and enterprises. We were established through a fusion between one of South Africa’s foremost experts in ICT and a leader in telecommunications infrastructure.

BCX Head Office, 1021 Lenchen Avenue North, Centurion 0157