FINANCE DIRECTORATE,
SHAREHOLDING MANAGEMENT DEPARTMENT
MUNICIPAL ENTITY
QUARTERLY NEWSLETTER
Analyst
Quarter 2 – 1 October to 31 December 2007, ISSUE NO. 03
As parent municipality to the municipal entities we aim to keep our municipal entity boards of
directors and staff abreast of all current news, legislation and policies directly affecting the
municipal entities. This will enable directors to be continuously informed as well as ensuring that
we meet the legislative requirement as parent municipality to ensure that both the municipality
and the municipal entity comply with the Municipal Systems Act, the Local Government: Municipal
Finance Management Act and any other applicable legislation.
Contents
The newsletter’s intend to convey information relating to the Local Government: Municipal Finance
Management Act, Local Government: Systems Act, Companies Act, Corporate Governance and any
information relevant to municipal entities.
THE LOCAL GOVERNMENT LEGISLATION:
THE MUNICIPAL FINANCE MANAGEMENT ACT:

Mid Year Assessments and Draft Budgets

Draft Municipal Asset Transfer Regulation
In terms of S88 of the MFMA the accounting officer of a municipal entity must conduct an
assessment of its performance by 20 January. This assessment must be submitted to the
board.
In terms of S 87 of the MFMA a municipal entity must submit a proposed budget to the City
by end of January 2008.
National Treasury published the Draft Municipal Asset Transfer Regulations for comment.
The City has submitted comment on the draft regulations. The purpose of the regulations is
to “give effect to the enabling provisions of the MFMA and to comprehensively regulate all
transfers and disposals of municipal assets, including the transfers to private sector parties,
other municipalities, municipal entities and national and provincial organs of state and the
granting of temporary rights to use municipal assets (such as the leasing of assets)”.
Municipal entities and municipalities will have to follow similar onerous procedures before an
asset can be disposed of.
COMPANY LAW:
CORPORATE LAWS AMENDMENT ACT NO 24 OF 2006

In terms of a government notice dated 14 December 2007, the Corporate Laws Amendment
Act has been put into effect. A summary of the Act is attached.
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SARS ADVICE:
2007 TAX RETURNS FOR COMPANIES


2007 Tax returns for companies and close corporations are not being mailed at all, SARS
advise. These returns have to be extracted via the SARS e-filing system. This was
apparently advised by a SARS e-mail, but it appears that not all tax practitioners received
the e-mail.
Note that the annual returns IT14 should not be confused with the recent dispatch of the
IT3 Return of General Information sent to companies and close corporations recently.
NEW TAXATION PROVISIONS ON RETIREMENT
Source: Corporate Governance Newsletter issue 105, October 2007

From 1 October 2007 there have been a number of changes to taxation on retirement. The
changes, in summary, are as follows:
o Lump Sums
 The first R300 000
:
Tax free
 Between R300 000 and R600 000 :
Taxed at 18%
 Between R600 000 and R900 000 :
Taxed at 27%
 Above R900 000
:
Taxed at 36%
The limits apply to the total lifetime of the individual.
o
o
o
Upon retirement or death the tax deductible will be increase by:
 Contributions not previously allowed for tax deduction
 Contributions to a public sector fund before 1 March 1998.
Withdrawal from a retirement fund is permissible before reaching the age of 55, if
the member’s interest is less than R7 000.
The full retirement benefit, from a pension fund or retirement annuity, may be
withdrawn in a lump sum on retirement if it amounts to R75 000 or less.
THANK YOU
On behalf of the City, the Shareholding Management Department would like to thank all the staff
and board members of all the City’s municipal entities for their contribution and commitment
during 2007. We know that it is not always comfortable having someone “looking over your
shoulder” to ensure compliance, but you have accepted us with plenty of good grace! We look
forward to our interaction in 2008.
Please contact Louise Muller (021 4003940) or Richard Wootton (021 4002701) if you have any
queries in respect of this newsletter.
Although every effort is made to check the accuracy and quality of the information supplied, The
City cannot be held responsible for any errors that may arise.
Copyright(c) City of Cape Town 2007. All rights reserved. No part of this newsletter may be reproduced or transmitted in any form
without written permission from the City of Cape Town, Finance Directorate, Shareholding Management Department.
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