Calculation of a Juristic Persons Asset Value & Annual Turnover

The CPA does not apply to juristic persons if their income or assets exceed a prescribed threshold

Transactions entered into for the supply of goods or services to a consumer who is a juristic person are excluded from the ambit and application of the CPA where such a consumer has an asset value or annual turnover exceeding R2 000 000 (Two Million Rands). The Regulations provide that the consumer’s monetary threshold must be calculated in accordance with South African generally accepted accounting standards. The Regulations further stipulate that the asset value of a juristic person is based on the gross value of the juristic person’s assets, namely: 

  • The asset value equals the total assets less any amount shown on that balance sheet for depreciation or diminution of value;
  • The assets are to include all assets on the juristic persons balance sheet, including any goodwill or intangible assets;
  • No deduction may be made for the juristic person’s encumbrances.

For purposes of the CPA, the annual turnover of a juristic person is the gross revenue of that juristic person from income in, into or from the Republic, arising from the Republic, arising from the following transactions and events:

  • the sale of goods;
  • the rendering of services; and
  • the use by others of juristic persons’ assets yielding interest, royalties and dividends.

 

When calculating the annual turnover, the following amounts may be excluded:

  • any amount that is properly excluded from gross revenue in accordance with South African generally accepted accounting standards;
  • taxes, rebates, or any similar amount calculated and paid in direct relation to revenue, as for example, sales tax, value added tax, excise duties, and sales rebates;
  • gains arising from noncurrent assets and from foreign currency transactions;
  • for banks or insurance entities, revenue includes those amounts of income required to be included in an income statement in terms of South African generally accepted accounting practices.

The financial statements that may be used to calculate the juristic person’s assets or turnover must be the juristic persons’ audited financial statements.  If the juristic person is legally obliged to produce the statements, such statements must be for the relevant period and must be prepared in accordance with South African generally accepted accounting standards.