Consumer Protection Act – Size Matters

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The Consumer Protection Act will not apply to transactions where the “consumer” is a juristic person (company or a CC) where that juristic person has annual turnover OR asset value over a ‘certain value’. The Department of Trade and Industry have released a notice that proposes a value of R3 million. Included with this proposal are the means of calculating the annual turnover and asset value.

Asset value is determined as “the asset value of a juristic person at any time is based on the gross value of the juristic person’s assets as recorded on the juristic person’s balance sheet for the end of the immediately previous financial year

There are some additional notes to this rule, most interesting of all is that goodwill and intangible assets will count towards the total asset value, if they are listed on the balance sheet.

Annual turnover is defined as “the annual turnover of a juristic person at any time is the gross revenue of that juristic person from income in, into or from the Republic, arising from the following transactions and events as recorded on the juristic person’s income statement for the immediately previous financial year, … (a) the sale of goods; (b) the rendering of services; and (c) the use by others of the juristic person’s assets yielding interest, royalties and dividends.

Again there are additional notes excluding certain items (such as VAT and other tax rebates).

People have until the 31st of October to submit comments on the notice.

Since this is only a proposed amount, it is possible that the value of R3 million, and the methods of calculation may change. Michalsons will be monitoring the situation and will publish the final amount or any changes as they happen.

By | 2017-03-30T13:22:27+00:00 October 15th, 2010|Categories: Consumer Protection|Tags: , |