Friday we will be saying good-bye to holiday-ridden April with … yet another public holiday, the worldwide celebration of the improvement in the socio-economic conditions of workers. But were does this holiday come from?

Labour Day has its origin in the British Eight-hour day movement, led by Robert Owen from 1817 for several decades. Its slogan, “Eight hours labour, eight hours recreation, eight hours rest”, illustrates the goals of the movement perfectly. At the time, the working day lasted between 10 and 16 hours, 6 days a week. Despite Owen’s toiling, most countries had to wait until the early and mid twentieth century for a work day to be legally limited to eight hours.

Not all developed countries enjoy this work hour protection, though. And some bend the rules in pursuit of more time at the office. The Japanese, for example, are notoriously bad at sticking to their 360 hours per year restriction on overtime (about two hours per work day). Furoshiki or ‘cloaked overtime’ – workers staying at the office with the lights off or taking work home – is widely prevalent. It’s no accident that the Japanese language has a word specifically for death from overwork: karōshi. In 2007 there were 147 karōshi deaths and 208 cases of severe illness due to work-related stress.

This would explain the market in Japan for the i-pot. In this work-focused culture there is often no-one to regularly check in on elderly parents. But no worries, this kettle sends a signal through to a relative’s laptop, monitoring whether the elder is still alive and well and switching on the kettle regularly.

While working long hours is common among cultures that associate hard work with a good and meaningful life (look no further than the Afrikaner’s Calvinist work ethic locally), fear of losing your job can also be a big driver of working longer hours than necessary. But the reality is that, for most people, the law of diminishing returns kicks in after about 7-8 hours of work per day. In other words, at some point the extra hours start to add very little extra productivity. In fact, excessive overtime could even cause you to revise and destroy some of your good work due to fatigue and the poor judgement that often accompanies it.

Work-related burnout is a very real threat, with people in the ‘caring professions’ being particularly susceptible, according to Christina Maslach in Burnout: The Cost of Caring. In worst-case scenarios, burnout could lead to contempt for your clients and ultimately total abandonment of your career.

‘A 40-hour work week? Forget it!’ says Tim Ferriss on the other end of the work-life scale from karōshi. How about the 4-hour work week? Ferriss propagates the new rich lifestyle – valuing time as your greatest resource, in order to pursue the adventure called life.

I can appreciate Ferriss’s philosophy. While regulated work hours are necessary to protect repetitive task or support service workers from employer exploitation, a fixed number of hours per week for anybody else doesn’t really make sense. There are just too many other variables driving productivity: intelligence, experience, creativity, inspiration, peer-appraisal, physical fitness, EQ and biorhythms – to name only a few. Hours at work seem a very poor indicator of value added. And we haven’t even brought human capacity to create value-adding systems and ultimately earn a passive income into the equation yet.

But while we’re given the choice to either take a break or not on Friday, let’s celebrate!

The deadline for South African micro businesses to register under the new, simplified turnover tax system is 30 April 2009. Not only could this lift an administrative burden from your shoulders, but also leave significantly more after-tax money in your pocket. Find out whether this system could work for you.

Who may want to register for the new turnover tax?

• Profit-making non-professional service providers
• Profit-making trading businesses with large profit margins
• Profit-making trading businesses with medium-sized profit margins that could benefit from the significant compliance cost savings

Who qualifies for the turnover tax?

Sole proprietors, partnerships, close corporations or companies with an annual turnover not exceeding R1 million may register.

What types of businesses are disqualified?

• Businesses of which the tax year does not run from the beginning of March until the end of February of the following year
• VAT-registered vendors
• Professional services, including accounting; actuarial science; architecture; auctioneering; auditing; broadcasting; broking; commercial arts; consulting; draftsmanship; education; engineering; entertainment; health; information technology; journalism; law; management; performing arts; real estate; research; secretarial services; sports; surveying; translation; valuation; or veterinary science
• Public benefit organisations
• Clubs
• Businesses of which the investment income (interest, dividends, rental income) form more than 10% of the total income of the business
• A ‘personal service provider’ according to the SARS definition
• Another few, less commonly applicable exclusion. Please see the SARS checklist for turnover tax

What are the main benefits?

• In the case of profitable, high profit-margin businesses the total annual tax payable could be significant lower than with the normal tax system.
• Simpler administration.

Why is the turnover tax system simpler than the normal tax system?

• Under the normal tax system, it can be quite complicated to calculate the taxable income according to the SARS definition.
• No VAT is payable under the turnover system.
• Under the turnover tax system, no secondary tax on companies (STC) is payable if the annual dividends are less than R200 000.

What are the main differences between normal tax and turnover tax?

What are the turnover tax rates for 2009/2010?

In comparison, what are the normal tax rates for 2009/2010?

For companies, profits are taxed at 28% from the first R1. To this, STC of 10% on all dividends declared needs to be added.

For small business corporations, no tax is payable up to R54 200 of taxable income. For taxable income between R54 200 and R300 000, 10% tax is payable on the amount above R54 200. For taxable income exceeding R300 000, R24 580 + 28% of the amount above R300 000 of tax is payable.

How are capital gains taxed under the turnover system?

Capital gains tax is payable at 50% of the selling price of business assets.

In the case of a sole trader, what happens to other non-business earnings?

Any salaried income, as well as interest, rental income and dividends earned in your personal capacity, will be subject to normal tax and handled outside the turnover tax system. The turnover tax is therefore a stand-alone tax and the taxable turnover from a qualifying micro business will be ring-fenced.

What if you’re currently VAT-registered?

You would need to de-register from the VAT system before you can apply for the turnover system. (Exit VAT may apply.)

Who may want to think twice before registering under the new turnover tax system?

• Loss-making businesses have little incentive to change to the turnover system.
• Profit-making businesses with really small profit margins may end up actually paying more income tax under the turnover system.
• For businesses considering selling large business assets soon, it may be worth staying under the old system to benefit from the smaller capital gains tax.
• Businesses with clients that prefer VAT registered vendors as an indication of formality and good standing, may lose clients when de-registering for VAT to apply for turnover tax status.

To get a better idea of the types of businesses that will benefit most from the turnover tax system, have a look at BDO’s article

What if you’re only starting your business during the current tax year?

A new micro business needs to register, if interested, under the turnover tax system within two months from the date of commencing business activities.

Can you change between the turnover and normal tax system as you please every year?

No. You will need to apply before the start of the tax year in which you want to fall under the turnover tax system. If you choose to exit the turnover tax system, you cannot re-register for at least three years.

What records would you need to keep?

• All amounts received
• All dividends declared
• All assets worth more than R10 000
• All liabilities worth more than R10 000

When do you pay the turnover tax?

The turnover tax year runs from 1 March to the end February of the following year. Income tax is due in two six-monthly provisional payments.

For more details on the new turnover tax system, visit your registered SARS branch or the SARS website.

When I was about five years old I got my first ‘grown up’ bike, a classic black broad-wheel pushbike. My dad told me that he intended to put side-wheels on it, but if I wanted he could hold it and I could give it a test run. ‘No thank you, no need to hold it,’ I told him. With my feet barely touching the pedals, let alone the ground, you can just picture how spectacular the fall was when I lost the less than two seconds of momentum that kept the bike upright. I waited for the side-wheels until I gave it another try. Some lessons are only learnt the hard way.

As you may have noticed, the US banking system is still taking the gravel and dirt out from under its skin after an earth-shattering fall – the greatest since the Great Depression. Some of the assets owned by US banks have dropped in value so rapidly that the market has frozen and it has become almost impossible to trade these ‘toxic’ assets. As a result, over the past year the market capitalization (number of shares in issue multiplied by the prevailing share price) of many banks has diminished three-, four- or even more than ten-fold, as is the case with the once mighty Citigroup and Barclays, for example.

But it is not only the shareholders of these financial companies that have seen their investment portfolios blasted to pieces. Ordinary citizens are suffering too. Because of their own precarious financial situation, banks are not parting with any comforting cash in the kitty right now, and have become extremely reluctant to lend to almost anyone other than those who barely need the loan. Not the kind of environment that enables entrepreneurs to start new businesses and existing businesses to expand. Economic growth and job creation has screeched to a halt.

Even more worrying, is the fact that the link between the government’s generosity towards the banks (in the form of bail-out plans and quantitative easing) and the banks opening their hands for potential borrowers, appears severed for the moment. Basic monetary policy (lowering interest rates and/or releasing more money to stimulate the system) is failing. And, unlike South Africa, the US has very little room for fiscal manoeuvring (using the national budget to invest in infrastructure or spending to stimulate the economy).

But the most disturbing is the latest plan by Geithner to effectively use tax-payers’ money to sponsor investors who are willing to take some toxic assets off the books of the largest banks. And who wouldn’t be willing if the terms are so enticing as to provide potential upside (growth in the value of the assets) with almost no downside (the US government and taxpayers will carry most of the burden if the toxic assets remain worthless)? No wonder some of the top executives of the banks have already indicated that they would be very interested in this investment opportunity in their personal capacities.

To put it bluntly, the caretakers of many US financial institutions have become spoilt brats. Not only is their sense of their own importance as inflated as their salaries (which in 2007 peaked at 181% of the average for all US domestic private industries), but they are also abusing the close political relationships between government and financial enterprise. For example, as former IMF economist Simon Johnson points out, Robert Rubin, once the co-chairman of Goldman Sachs was also the Treasury secretary under Clinton, and later became the chairman of Citigroup’s executive committee. Henry Paulson, the CEO of Goldman Sachs, was also the Treasury secretary under George W. Bush.

Expecting that their friends in government will always be there to bail them out, the upper echelons of the financial industry continue to borrow excessively, lend irresponsibly and invest in assets which they barely understand, but which satisfy their lust for continuously higher returns. But higher returns and above-average growth always comes at a price: risk. Risk is and remains the most misunderstood (and sometimes totally ignored) concept in the financial industry. When risk continually realises in your favour and you reap the higher returns, you start to believe that you’ve tamed the market. But the high-risk investment landscape is, by definition, always unpredictable and when you are surprised by the vicious, previously hibernating bear, only then do you know whether you are truly comfortable with that specific risk landscape. Unfortunately, the managers of these financial institutions did not venture into the wilderness alone; they also dragged shareholders, home owners and taxpayers along on the hunting trip.

In times like these the US government cannot afford to act like the indulgent grandparent, allowing its greedy child to run amok and create ruin without experiencing the consequences. Stronger interference, even up to the point of temporary nationalisation, is necessary. If the US financial system does not learn its lesson here and now, it may be taking even bigger risks as soon as it is back on its bike again.