The recent fall in business liquidations is an indicator of the benefit of business rescue benefit, says lawyer Adam Harris of Bowman Gilfillan on the LegalBriefToday website
After all,business rescue could be indirectly responsible for the 71% drop in local year-on-year liquidation figures in 2011, writes the Tax Bulletin
But it's not all plain sailing.
If your company's under business rescue, you might escape liquidation but there's still a lot of financial pressure
It's likely that you still have many debts owing to your suppliers going backmore than 12 months.
That's why, with the 2013 budget speech fast approaching, the South African Institute of Chartered Accountants (SAICA) is calling for Finance Minister Pravin Gordhan to review provisions related to the Vat Act
Here's what SAICA's suggesting to help ease the financial pressure while your business is under business rescue
If you haven't paid the full amount for a previously claimed input tax deduction
within 12 months, you need to account for output tax
for the amount still outstanding.
Having accounted for this output tax,
you can claim an input tax deduction
, equal to the tax
fraction of the amount subsequently repaid.
But being obliged to account for output tax
on outstanding amounts may result in 'the failure of any otherwise viable business rescue
attempt,' says Piet Nel, SAICA's Project Director: Tax.
So if your business has already instituted business rescue proceedings
, 'these payments should only come into effect once the business rescue
proceedings have failed and the company is placed in liquidation,'Nel adds.
With just three weeks to go until this year's budget speech, let's hope this suggestion is taken to heart to help ease your business' financial pressures
For more information on business rescue click here