Repair Damaged Ceiling Onus on Body Corporate or Owner

By Donovan Schreuder on Mon, 16 Aug 2010 at 14:57
Hi.
My wife and I have been living overseas and returned to SA in July 2010.
My wife owns a flat and there was damage to the roof in December 2009. A special levy was paid in respect of the repairs needed to the roof. On returning we inspected the flat and noted there was water damage to the ceiling, which was caused as a result of the damage to the roof. We spoke to the chairlady of the BC, whose unit is adjacent to ours and she stated that she and our neighbour had had the repairs covered by the BC's insurance policy and that we needed to get a quote and submit it to the BC. We actioned this and upon submitting this the BC has stated that we need to pay in full for the repairs as they have now changed insurers and the tenant should have made them aware of the need for repair.

Now, I do not believe that it is fair for the two units on either side of ours (who are owned by members of the BC) to be repaired and for ours not to be. The tenant is a young African lady and would not have been aware of what to do, the BC was in full knowledge that we were not located in SA and never mentioned any issues in other correspondence with us regarding damage to any units in respect of the damaged roof.

Am I mistaken? I would appreciate any advice in this respect.

Replies

Mike Addison replied on Tue, 17 Aug 2010 at 08:02

Hi Donavan
It would seem that the insurer at the time agreed to pay for resulting damage (will have to have been sudden damage/one event). Since the roof damage is being paid by way of special levy, it can be assumed that the roof needed maintenance repair ie lack of maintenance was probably the actual cause of the damage.
It is reasonable that the insurer cannot be expected to pick up a tab months down the line, no matter who the insurer is, old or new. I feel that the owner should take responsibility for damage ie any damage for an insurance claim (usually a condition of the policy) must be reported within 30 days and if tenanted, I feel that the owner or his/her agent should regularly inspect the premises or alternatively, hold their tenant responsible.
If there was damage, and reported immediately, and the insurer would not pay for reasons of say it being maintenance related, then you would look to the body corporate to reimburse you if your loss is result of the bcorps negligence in not keeping the roof in a good state of repair. (Also debatable - lets leave that argument for the legal experts).
In your case, I think 8 months after the event might be pushing it ie can you reasobaly expect the bcorp to come to the party when the damage was not reported within a reasobale time? My view is that 30 days or so is a reasonable time, especially if tenanted.
This is purely my opinion and not directly an insurance question, however, this sort of scenario is so common - we deal with these matters / debates almost daily.
Mike Addison

Please contact Willie van Wyk on 0861101220 for any advice and quotes on Sectional Title Insurance or visit our website on www.bestsure.co.za

Retirement will cost you lots - survey

The cost of retirement is far greater than most pensioners believed at retirement it would be. Only 40 percent of pensioners now believe they saved enough for retirement.

But the message is getting through to retirement fund members - 75 percent of active members now believe they need to start saving for retirement at age 20, although 19.4 percent are of the opinion that it can be left until age 30.

However, only half of active members say they are on track for a financially secure retirement.

These are two findings of the Sanlam Employee Benefits Benchmark annual retirement survey.

For the 2010 survey Sanlam included extensive research on the attitudes and experience of both active retirement fund members and pensioners.

The pensioners surveyed have a message for those people still saving for retirement: you must start checking whether you are saving enough money for retirement more than 20 years before you retire.

Even those pensioners who believe they saved enough are worried that their money may run out if they are in retirement for an extended period because of increased longevity.

About 30 percent of the surveyed pensioners, whose average age was 67, indicated that they are already experiencing financial difficulties and are being forced to cut back on non-essential items.

Almost 75 percent of the pensioners get a pension of less than R10 000 a month. Against this, the average amount active members who were surveyed earn now is R15 449 a month.

The survey confirms earlier research by Alexander Forbes, which showed that retirement fund members are going into retirement without having saved for long enough and are compounding the effects of their lack of savings by retiring too early. And most pensioners find they have not taken sufficient account of the costs of retirement, particularly medical expenses.

Of the 250 pensioners surveyed, the average period of contributing to a retirement fund (an occupational fund or a retirement annuity) was 26.6 years.

The average age of retirement was 59, with almost 60 percent having no choice about retiring early because of retrenchment or disability. Consequently, their pensions are lower than expected.

Most active members expect to have retired by the age of 61.

Other facts revealed by the pensioner survey include:
• The vast majority say if they could have done anything differently before retiring it would have been to plan better and save more;
• More than half the pensioners believe you have to save a capital amount for retirement in excess of 10 times your final annual income.
• In worst-case scenarios, 12.1 percent of the pensioners forced into early retirement say that early retirement had "huge financial implications" for them, with 16 percent depending on others for additional income, 3.4 percent having to sell their homes and 5.2 percent having to give up their medical scheme membership;
• Almost six percent of the pensioners live with relatives;
• Many pensioners go into retirement having to use lump sum payments from their retirement savings or other savings to pay off debt, and almost six percent continue to pay off a home loan;
• About 35 percent of the pensioners had to cut back on spending because of the economic recession;
• About 54 percent of the pensioners have other investments apart from their pensions;
• Of the surveyed pensioners, 16.4 percent changed jobs at some stage, and of these 44 percent cashed in their retirement savings, leaving them worse off in retirement;
• More than 40 percent of the pensioners received pre-retirement advice from employers;
• Of those who received financial advice before retiring, 71 percent received advice based on a financial analysis, with the vast majority then understanding their needs in retirement;
• Most pensioners spent lump-sum payments received at retirement within 30 months; and
• There are 27 percent of pensioners who still manage to save money every month.

Risk cover vs savings
There is a slow increase in the number of retirement funds offering flexible death and disability benefit life assurance options.

This is despite the fact that the combined retirement savings and death benefits of most young retirement fund members will not be adequate to meet the financial requirements of their dependants without the member taking out additional individual risk policies.

The Sanlam survey has found that the level of death benefits has slowly increased, from 3.2 times your annual pensionable salary in 2006 to 3.6 times this year.

The majority of retirement fund members (67.1 percent) say risk benefits are equally as important to them as retirement savings.

Of those funds that allow you to decide how much life assurance you require (reducing the amount that goes to retirement savings), the compulsory average minimum benefit is down to 2.3 times annual salary from 2.5 times last year.

Members who do have this choice have chosen a level of 3.7 times annual salary on average - down from 4.7 times last year.

The average cover for a lump-sum disability benefit is down to 2.6 times annual salary from 2.7 times last year.

The number of funds with capped premiums for death benefits, reducing the benefit, has dropped from 45 percent in 2008 to 33 percent this year.

Funeral assurance is now offered by 62 percent of funds, up from 50 percent in 2006.

You might be paying for choice, even if you're not using it
You are probably paying more in investment costs than you need to because of the investment choices occupational retirement funds offer.

The Sanlam survey has found that 55 percent of funds now offer members investment choice - up from 45 percent in 2006.

But 65 percent of members do not make active decisions themselves. They rely on a default choice offered by most funds or the choice is made on their behalf by retirement fund trustees.

Only 25 percent of members of large retirement funds - those with 5 000 members or more - take advantage of investment choice.

But 88 percent of funds that offer investment choice charge all members a flat fee for the right to choose. So members not exercising their choice are subsidising those who do.

About nine percent of funds surveyed limit investment choice to certain categories of members, who are considered better equipped to deal with the choice.

The majority of funds that offer choice normally have a range of four or five options, and only 6.4 percent of surveyed funds offer more than 10 options. Only one fund offered a complete fruit salad of almost unlimited choice through a linked investment product services platform.

The number of funds offering a sharia-compliant portfolio has increased from 17.3 percent last year to 23.6 percent this year.

The number of funds which deliberately invest money in socially responsible investments (SRI) has increased from 16.5 percent in 2008 to 17.5 percent. An average of 9.3 percent of the total assets of these retirement funds are earmarked for SRI.

The survey also reveals there is a trend to allow retirement fund members to switch investment options more often. This year, 34.5 percent of funds allow daily switching, which is more than double the figure of two years ago, while 22.7 percent of funds allow monthly switching. A once-a-year restriction is down to 28.2 percent of funds - from 31.9 percent in 2006.

The top investment choice for members is in what are called lifestage portfolios. These are portfolios that gradually decrease the proportion of assets held in equities to reduce volatility risk (the risk that markets could crash shortly before your retirement).

The next most popular choice (47 percent) is smoothed bonus portfolios, which guarantee all or part of your capital and smooth returns over good and bad years.

According to the survey, the lifestage portfolios are becoming more sophisticated. A few years ago these portfolios moved everyone into the same asset class mix at the end stage. The survey has established that 43 percent of lifestage funds now offer multiple end-stage profiles, with the profile being aligned to the type of annuity you will purchase.

For example, if you intend to purchase a guaranteed annuity (pension) - where a life assurance company takes the risk of paying you a pension for life - the end stage of your lifestage portfolio will have a lower amount invested in riskier equities than the end stage if you intend to purchase an investment-linked living annuity (illa),

With an illa you choose the underlying investments and take the risk that you will have a sustainable pension for the rest of your life.

Currently, 59 percent of people reaching retirement prefer illas.

Most lifestage portfolios (39 percent) are 100 percent in cash by the time your retire, and a further 30 percent have a conservative 30 percent of assets in equities.
• The Sanlam survey comprises four separate studies, which this year involved getting the opinions of 200 retirement fund principal officers, 100 participating employers of umbrella retirement funds, 750 active fund members and 250 pensioners. It involved 200 stand-alone retirement funds and all nine major umbrella funds offered by the financial services industry. The survey is conducted annually.

Please contact Jooste Henning at Bestsure on 0861 10 12 20 for great retirement planning.

Editor : Bruce Cameron

Beware of investments that sound too good to be true, says banks registrar

Illegal investment schemes, involving billions of rands, are becoming ever more sophisticated, exposing you to a greater probability of being ripped off, says Errol Kruger, the Registrar of Banks.

In the past five years, R13.7 billion has been invested in schemes that are, in fact, illegal deposit-taking operations that contravene the Banks Act. And it has cost R59.3 million for the registrar to investigate and close down the schemes.

In an interview following the publication of his 2009 annual report on bank supervision, Kruger says schemes that contravene the Banks Act have moved from simplistic pyramid schemes to far more complex structures.

And he says investors keep falling for the schemes because of their own greed.

One of the duties of the Registrar of Banks is to investigate people and institutions suspected of taking deposits from you in contravention of the Banks Act.

It is a criminal offence to take deposits from the public if you are not a licensed bank or have a specific exemption from the requirements of the Banks Act.

Kruger says that illegal deposit-taking normally involves investment schemes that "are generally operated on a fraudulent basis and are harmful not only to the established banking system, but to the economy as a whole".

And the chances of ever seeing your money again are exacerbated by the fact that the funds are often transferred abroad in contravention of exchange controls while also avoiding tax liabilities.

The number of suspected illegal deposit-taking schemes being investigated by the registrar hit a five-year record of 21 complaints in 2009, and a total of 35 schemes have been investigated. Kruger says this is not the total number of possible illegal schemes - it is only those that have been reported to the registrar.

He says in new schemes lawyers and accountants are being used to find ways around laws that are there to protect consumers, and you should not be taken in by assurances from a scheme's accountants or lawyers.

He says an example of a complex scheme was the Careturus/Sun Homes product, which was closed down by the Reserve Bank in 2007 for contravening the Banks Act. Investors were encouraged to put their money in a product which ostensibly had property as an underlying investment, but, in fact, did not.

The biggest warning to you should be any promises or "guaranteed" high returns. Guaranteed returns of 30 percent a year were offered in the Careturus/Sun Homes scheme.

Kruger says newer-model schemes being offered to investors entail the deposit of a large sum of money (R100 000 plus) in a property scheme with promises that you will receive returns of as much as 25 percent a year.

He confirmed that he is currently investigating various property syndication schemes for contravention of the Banks Act.

He warns that regulators cannot protect you in advance.

"The problem with most of these schemes is that the first people investing usually make money, but the following investors are the ones who lose out," he says.

By the time contraventions of the Banks Act come to his attention it is too late.

Health warnings
Kruger says that to protect yourself against scams you should do the following:

Don't rely simply on checking whether an adviser selling you a product is registered with the Financial Services Board as a financial service provider (FSP) or is a representative of an FSP before investing your money. You also need an independent expert such as a lawyer, accountant or your bank manager, or even all three, to check the product or proposal. This is particularly important if the product is not specifically regulated. Unit trust funds and endowment policies, for example, are highly regulated, but property syndications are not.

Don't be rushed into a decision by warnings that any delay in taking action will mean you lose out on the opportunity to invest.

Don't be mesmerised by your own greed. The old adage always applies: "If it sounds too good to be true, it nearly always is too good to be true."

Don't be taken in by glossy brochures.

Avoid complex schemes. The more complex it is, the more likely it is attempting to sidestep protective laws and regulations.

Check whether the people promoting the scheme and the type of scheme have a sound track record. You need to ask for references and do such things as check out the scheme and its promoters on the internet.

Source : B Cameron
For great investment advice please contact Bestlife on 0861 10 12 20

Carrots and sticks: how SARS plans to make you pay up

Tax return filing season for indivi-dual taxpayers began this month, with the tax authority enhancing its carrot-and-stick approach to ensure that you meet your tax obligations.

The stick has a lot more whack this year, which means there are fewer places to hide for taxpayers who do not file their returns and pay what they owe.

Over the past few years, the South African Revenue Service (SARS) has been making it easier for you to comply, introducing measures such as:

eFiling for taxpayers who have access to the internet;

Electronic returns that you can complete, with the help of SARS staff, at SARS branches;

Returns that contain only the sections you need; and

Returns that are pre-populated with your salary details.

This year, SARS has made further refinements to make it easier for you to fill in your return and pay your tax by, for example:


Giving eFilers access to faster computer software;

Scrapping the need for people who do not owe provisional tax to file provisional tax returns;

Improving the ability of SARS Contact Centre staff to track all your interactions with SARS and to help you resolve a query; and

Allowing you to access your eFiling profile, regardless of whether or not you use a tax practitioner.

But, having made it easier for you to do your part, SARS's focus is now on bringing people who should be paying tax, but who are not, into the net. SARS's approach in this respect is two-pronged:


Tougher penalties for people who fail to submit their returns and pay what they owe; and

Using information from arapidly spreading network of third parties to verify what you declare, or uncover what you fail to declare, on your income tax return.

SARS using 'agents' to check up on your financial affairs
SARS is using information about your affairs that it has obtained from a variety of other sources.

Initially, SARS received information about your salary from your employer only. Now, SARS is also receiving third-party data about the interest you earn on your investments, the sale of shares, your medical scheme contributions and your retirement annuity contributions.

SARS is working towards being able to verify all the information you enter on your tax return with the data it obtains from third parties, Mark Kingon, the group executive of business systems at SARS, says.

SARS is in the process of obtaining information from life assurance companies about your contributions to income protection schemes. Information about your vehicle and the claims you make against a travel allowance will be the next data that SARS will use, he says.

Anthea Scholtz, a director at Deloitte, says Deloitte is aware that certain car dealers that sell and service vehicles have been sentletters that request them to supply SARS with information aboutvehicle values, financing agreements and odometer readings. It is expected that SARS will use this data to cross-check the information you enter on your tax return about your vehicle and its use, ultimately ensuring that you qualify for the tax deductions that you may claim against your travel allowance.

"We are anticipating that SARS will increasingly start to engage with third parties or form relationships with them, so that they may act as 'agents' to supply data to SARS which can then be used by SARS to verify information in individuals' tax returns," Scholtz says.

The draft Tax Administration Bill, which is expected to be tabled in Parliament before the end of this year, proposes that SARS be able to list the third-party returns it requires in a public notice, and this will include information regarding assets under the control or on the premises of third parties, such as yacht clubs.

Minister's warning
Earlier this year, Minister of Finance Pravin Gordhan warned that the tax authority will soon have greater access to information about the foreign investments held by South African residents.

The next big move by SARS to obtain third-party information and put it to good use will start over the next few months, when anyone who receives any kind of employment income will have to be registered for tax purposes, regardless of whether you work part time or earn below the tax threshold (the income level at which you start to pay tax - currently R57 000 a year for people under the age of 65).

The registration of everyone who is paid by employers who deductPay As You Earn tax from employees does not mean that SARS will expect tax returns from all these employees. Currently, SARS does not require tax returns from people who earn a taxable income of R120 000 or less a year from a single employer, unless they have other income or deductions to claim.

But if you are registered for tax, SARS will be able to match the information on the income tax certificates - also known as IRP5/IT3(a) certificates - that are issued to you against your tax number.

It will then be able to identify people who should be paying tax but are not because they earn small amounts from multiple employers.

Employers are now expected to submit your salary and tax deduction details to SARS twice a year, with the first biannual reconciliation due by October 29.

When employers submit thisreconciliation, they will be expected to supply the income tax reference number (if you are registered for tax), identity number, bank details and address of every person to whom they have paid remuneration since March 1 this year. This means that employers have to collect the required information from all their casual workers.

If an employer fails to provide SARS with the information, it could be subject to a penalty equal to 10 percent of the total amount of tax it deducts from all its employees during the tax year.

Once SARS has received an employer's first biannual reconciliation, it will check if any employees are not registered for tax. If this is the case, SARS will use the employees' identity numbers, bank details and addresses to issue them with a tax reference number.
After this initial bulk registration process, SARS will expect employers to use an online process to register for tax purposes any employee who does not have an income tax reference number.

Tax audits
Besides using third-party information to pre-populate your tax return and verify the information you declare, SARS is using a wider source of information to audit taxpayers' affairs.

If SARS picks up some information from a third party or receives a tip-off that makes it believe you have not declared all your taxable income and capital gains, SARS may subject you to an audit.

The audit will attempt to establish whether or not your lifestyle and assets are in line with your declared income. To do this, SARS will make use of data from a number of sources, including banks, insurance companies, stock exchanges, the deeds office, the Company and Intellectual Property Registration Office, the National Transport Information System, other government departments - such as home affairs - the media, your friends and associates.

SARS spokesman Adrian Lackay says that in the past two years more than 10 000 taxpayers have been subjected to an audit.

Ask for a provisional tax form
The first deadline for provisional taxpayers for the 2010/11 tax year is Tuesday, August 31.

SARS is no longer sending out returns to all provisional taxpayers, because many forms are not returned or are returned with data that indicate that the taxpayer is not liable for provisional tax.

If you need a provisional tax return, you must request one from SARS. Taxpayers who do not have to submit such a return will not have to request a form or submit one, even if they are registered for provisional tax.

If you should have submitted a provisional tax return but you have not, SARS will be able to detect this when you submit your annual income tax return, and you may be charged interest and penalties.

Managing your eFiling tax profile
Taxpayer-centricity is a new eFiling function that gives you full control over and knowledge of your tax affairs. This function is available to you regardless of whether or not a tax practitioner submits a tax return on your behalf. It will ensure that you "own your own profile", whether you want a tax practitioner to have access to your return or prevent a practitioner from having access to it.

Currently, the taxpayer-centricity function is available only for income tax (ITR12) and provisional tax (IRP6).

When you register for eFiling, you will be asked whether you want to "Obtain shared access", "Remove tax practitioner access" or take "No action". Choosing "Shared access" enables you to retain access to your return and all correspondence from SARS while also allowing a tax practitioner to access your online return and correspondence.

If you choose to remove a tax practitioner's access to your return, you will block that practitioner from accessing your return and prevent any correspondence from SARS being sent to him or her.

Taxpayers who are already registered for eFiling have the same options, but in order to access them they need to log in, click on "Home" and then choose "Tax types". Then, after selecting your provisional tax, your income tax or both, choose "Click here to edit the access to your tax types".

Stiff penalties if you try to duck your tax obligations
In October last year, SARS announced stiff new penalties for people who fail to register for tax, file returns or pay tax.

The penalties apply monthly - not just once off - and begin at R250 a month for an assessed income of up to R250 000 a year. The penalties increase steeply from there - for example, R500 a month for failing to file a return or pay tax if your assessed income is up to R500 000 a year, and R1 000 a month for an assessed income of up to R1 million a year.

The penalties are in addition to the interest you will be charged on any outstanding amounts at the official rate of 9.5 percent.

In January, the first round of penalties, which amounted to R130 million, was imposed on 230 000 taxpayers who had returns outstanding for multiple tax years. Earlier this month, SARS reported that, as a result, 31 273 taxpayers had paid R33.8 million in penalties and 83 016 returns had been submitted.

However, some 180 000 errant taxpayers ignored the penalty notices, SARS said, and it now plans to deduct the outstanding penalties from their salaries.

SARS commissioner Oupa Magashula says that in August SARS will ask the employers of these taxpayers to notify them that their employers have been requested to deduct outstanding penalties from their salaries in September, unless they contact SARS and make arrangements to pay what they owe. SARS says it has the power to do this in terms of the Income Tax Act, and the relevant section of the Act has been subjected to judicial scrutiny and found to be constitutional.

For defaulters only
SARS has emphasised that this measure is only for taxpayers who are in default and who have failed to respond to repeated warnings.

If you are one of these taxpayers and your employer believes that you will not be able to afford the deduction for outstanding penalties, your employer can contact SARS about reducing the monthly amount that will be recovered.

Errant taxpayers can also contact SARS regarding the payment of these penalties. If you have good reasons for failing to comply with your tax obligations, the penalties can be waived.

SARS has said that if its attempts to recover the penalties from errant taxpayers through their employers fails, it will be forced to appoint banks with whom these taxpayers have accounts to act as SARS's agents to collect the outstanding amounts.


If you have not declared all your income or assets for tax purposes and SARS is not yet on to you, make use of the voluntary disclosure programme that is due to begin on November 1 and will run until October 31 next year.