The South African Institute of Chartered Accountants Circular 3/2001

(Replacing Circular 4/99)

PROFESSIONAL FEES
Introduction
The fundamental principles underlying the charging of professional .01
fees and general guidance in connection therewith are given in Section
12 of the Code of Professional Conduct. This circular must be read in
conjunction with the Code.

Members and associates are advised that when charging fees they .02
should ensure that such fees are commensurate with the
responsibilities they assumed. They should be particularly careful to
ensure that there is no danger that standards of performance will be
adversely affected because the fee charged is insufficient to allow the
necessary amount of time to be spent for this purpose.

Time records
Where fees are based on time evaluated at a rate, time records should .03
be kept for individual staff or grades of staff, depending on how the
rates are calculated, and applied in accordance with paragraph .04
below. Time necessarily incurred on work for clients should be
recorded.

Rates for staff

The rates per hour should be calculated on an annual basis using the .04
following formula:

Salaries and related costs multiplied by mark-up factor for

overhead costs and margins divided by chargeable hours.

Salaries and related costs

This element of the formula should include the total costs of the .05
employees' remuneration packages, including salaries and related costs
such as the firm's contributions to pension and medical aid funds,
insurance, direct recruiting expenses, such as the costs and fees paid
to recruitment agencies, the levy payable in respect of the registration
of trainee accountants and all direct training costs. Any Value Added

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 CIRCULAR 3/2001 PROFESSIONAL FEES

Tax (VAT) included in the above expenses, which can be claimed as

an input credit, should be excluded from these costs.

Mark up factor
.06 Significant overheads to be covered by this mark up factor include
rents and related costs, professional indemnity insurance,
administration costs incurred in running the practice, and the cost of
continuing professional education. The factor will vary according to
the overhead structure of the practice and the location of each office
and it is therefore not possible to establish a fixed factor. The mark up
factor should normally fall within the range set out in Annexure A.

Chargeable hours
.07 The chargeable hours per annum used in the calculation should be the
estimate of the hours which could reasonably be expected to be
charged by the individual or an average of a grouping of individuals to
which similar costs and circumstances apply. It should be based on
the fundamental premise that the organisation and conduct of the
practice and its clients’ work are well planned, controlled and
managed. Excessive idle time should not be allowed for. However,
greater allowance for idle time should be made for specialist staff
engaged on work of a fluctuating nature.

.08 The number of chargeable hours should be arrived at after excluding

time spent on annual study leave, training courses, attending lectures
and tutorials, technical research and illness.

.09 For staff engaged in providing core professional services the number
of chargeable hours used in the calculation should normally fall within
the range set out in Annexure A.

Principals’ rates
.10 The rates for principals should be set in terms of Annexure A. Higher
rates than normal are usually charged for specialist advice on such
matters as business advisory services, estate planning, taxation,
arbitrations, investigations, mergers, takeover bids, reconstructions,
prospectuses and applications for stock exchange listings and share

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The South African Institute of Chartered Accountants Circular 3/2001
(Replacing Circular 4/99)
valuations, accounting and litigation support where the work involves
special demands on members' and associates' time and skill.

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 CIRCULAR 3/2001 PROFESSIONAL FEES

Secretarial and tax fees

.11 Annexure B contains a guideline on determining fees for routine
secretarial and tax work for which fees cannot readily be based on the
time taken to do the work. It is stressed that Annexure B is a guide
and that there are many instances where the guidance given is not
appropriate and therefore higher or lower fees may be justified.

Expenses
.12 The foregoing paragraphs relate to fees as distinct from reimbursement
of expenses. Out-of-pocket expenses necessarily incurred in
connection with the engagement, e.g. travelling and accommodation
expenses, specific stationery, communication costs and any direct out-
sourced expenses should normally be charged to the client in addition
to the professional fees calculated in accordance with this circular.

.13 Care should be taken to ensure that such disbursements are claimed
from clients in a way that does not preclude them from claiming an
input credit for VAT purposes in respect thereof.

Representation on fees
.14 A member or associate should not make a representation that specific
professional services in current or future periods will be performed for
a stated fee, estimated fee or fee range, if it is likely at the time of
making the representation that such fees will be substantially increased
and the prospective client is not advised of that likelihood.

Provisions in financial statements

.15 Where it is not possible to determine the final fee at the time financial
statements are finalised, clients should be informed, when appropriate,
that the amount provided therefor should be regarded as being
provisional only.

Johannesburg I Sehoole
September 2001 Executive President

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PROFESSIONAL FEES CIRCULAR 3/2001

Annexure A

PROFESSIONAL FEES
A substantial proportion of the costs of running a practice is salary .01
related. These costs have continued to increase at amounts in excess
of the rate of inflation. Practitioners have often not been able to pass
the full increases on to their clients, with the result that profit margins
have been severely squeezed. SAICA's Board accordingly considers
that members in public practice are justified in increasing their charge
out rates, to be able to ensure that the remuneration of their qualified
staff, as well as their own, is competitive, particularly in the light of the
practitioner’s responsibility and commitment to continuing professional
education. On the other hand it is incumbent on practitioners to give
their clients value for money for the fees charged. Accordingly,
members should make certain that the organisation of and the methods
used in their offices are up to date and efficient.

Practitioners are advised that their fee-notes should indicate as much .02
detail as is practicable, and, in particular, that charges for other
categories of work, for example, secretarial, tax, accounting and
consulting, are specified separately, and not included in, say, the audit
fee. Disbursements should also be disclosed separately.

As a guide the ranges for the mark up factor for overheads (see .03
paragraph .06 of the circular), the number of chargeable hours of staff
(see paragraphs .07 to .09), and the rates for principals (see paragraph
.10) would normally be as follows:

Mark up factor for overheads and margin

2,5 to 3

Chargeable hours of staff

1200 to 1400 per annum

Rates for principals

Members or associates who undertake professional services for a
client, assume the responsibility to perform such services with integrity
and objectivity and in accordance with the appropriate technical

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CIRCULAR 3/2001 PROFESSIONAL FEES

standards. That responsibility is discharged by applying the

professional skill and knowledge which members or associates in
public practice have acquired through training and experience.

Members and associates are entitled to be fairly remunerated and are

urged to charge their time at rates that reflect the above responsibilities
as well as their status as professionals.

As a departure point for determining the appropriate rate for their firm,
it can be noted that the rate paid to Chartered Accountant principals by
the Auditor-General for the period 1 April 2001 to 31 March 2002 is
R645 per hour excluding VAT.

Rates for specialist work

These rates would depend upon the demands on practitioners' time and
skill but would certainly be higher than the normal rates for principals.

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SECRETARIAL AND TAX FEES CIRCULAR 3/2001

Annexure B

GUIDELINE ON SECRETARIAL
AND TAX FEES
This guideline is issued for the assistance of members and associates in .01
the determination of fees for secretarial and tax work. It is emphasised
that this document is a guide and does not attempt to state minimum or
maximum fees.

This appendix lists the various secretarial and tax tasks commonly .02
undertaken by practitioners.

In order to avoid the problem of continually updating the fees set out in .03
the appendix, each of these tasks has been allocated a certain number
of standard units, based upon the length of time generally required to
perform the task and the degree of difficulty associated with it.

In order to convert the standard units into fees, the standard units must .04
be multiplied by 1/65 of the normal monthly remuneration of an
average first year trainee accountant (matriculant) in the particular area
in which the accountant practises. The factor thus takes into account
the effects of inflation and the fact that fee structures vary from area
to area. The fraction 1/65 is a constant and is merely the proportion
which the current fee for 1 standard unit bears to the current salary of
a first year trainee accountant.

For example, the initial work involved in the formation of a company, .05
is allocated 86 standard units. Therefore, if the monthly remuneration
of a first year trainee accountant in the particular area were say R2 500
per month, the fee would be calculated as follows:
R2 500 x 1/65 x 86 = R3 308.

It is important to note that the remuneration used in all these .06

calculations is the starting remuneration of an average first year trainee
accountant and not that of the person performing the work. The
reason for this is that the level of expertise required to perform the task
is taken into account in the standard units. If it is difficult to determine

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 CIRCULAR 3/2001 SECRETARIAL AND TAX FEES

the starting remuneration of a trainee accountant, the starting

remuneration of a matriculant following some other type of work can
be substituted. For example, the monthly remuneration of a matriculant
working at a municipality or a bank may be used.

.07 The principle of this guideline is that standard units will not change
from year to year unless the nature of the task changes. Therefore it
will not be necessary to re-issue this annexure each year. The rate per
unit will change from year to year depending upon the changes in
remuneration levels of first year trainee accountants. The rate per unit
will vary from region to region depending upon respective
remuneration levels.

.08 Value-added Tax (VAT) must be added to the resultant fee by

practitioners who are registered as VAT vendors. It should be kept in
mind that services supplied for and to a person who is not resident in
South Africa, and who is outside the country at the time the services
are rendered, are zero rated.

.09 Revenue stamps and other disbursements are not included in the
standard units and therefore should be charged for separately.

.10 The guidance given assumes that there are no delays or unforeseen
complications. Should such delays or unforeseen complications occur,
it would normally be appropriate to charge according to time spent
rather than basing the fee on the units set out in this guideline

.11 The rates for certain tax work may need to be adjusted if use is made
of the recently introduced electronic filing facility made available by
SARS through its appointed electronic filing service providers.

.12 "TS" indicates that fees should be charged on the basis of time spent.

.13 Any secretarial or tax work not covered by this guideline should be
charged for on the basis of time spent.

.14 On receipt of this guideline members are advised to establish a first

year trainee accountant's remuneration for their area and then to
convert the units for each task to standard fees for their office for the
coming year. This exercise should be repeated annually.
Issued September 2001 8
SECRETARIAL AND TAX FEES CIRCULAR 3/2001

Secretarial work Standard units

1. Companies
1.1 Initial work in connection with the
formation of a company, including initial
secretarial work, name reservation and
appointment of auditors, excluding
disbursements to attorneys for preparation
and registration of memorandum and
articles of association. 86
1.2 Initial secretarial work in connection with
the formation of a company, where the
company has already been formed (1-4
directors or members)
Inaugural minutes 6
Share certificates 1 each
Share transfers 2 each
Advise Receiver of Revenue of
appointment of public officer and
registered 5
address
Writing up of company register (1-4 9
directors or members) 3 each
CM 27 9
CM 29 (1-4 directors or members) 16
CM 15 allotment
1.3 Registration of defensive name 18
First time (CM 5, CM 8 and proof 6
required)
Annual renewal (CM 8A and proof)
1.4 Appointment or resignation of director,
secretary or officer (CM 27 or letter of
resignation, CM 29, writing up of 3
register)(Combined Fee) 9
Resolution (1-4 directors) 3
CM 29 (1-4 directors) 2
CM 27 or letter of resignation – each
Writing up of register - per director

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SECRETARIAL AND TAX FEES CIRCULAR 3/2001

Standard units
1.5 Change of name of a company (CM 5,9,
25,26, notice to shareholders, name
reservation minutes, advise Receiver of
Revenue and update records and statutory
register), excluding disbursements to
attorneys for preparation and registration of
changes to memorandum and articles of
association. 29
1.6 Change of financial year end (CM 32,
resolution, letter to Receiver of Revenue and
update register)(Combined Fee) 11
1.7 Change of public officer (resolution, letter
to Receiver of Revenue and updating 8
records)
1.8 Change of registered office (CM 22,
resolution, update register, notify Receiver 12
of Revenue)
1.9 Lodgement of CM 25 and CM 26 in respect
of changes to memorandum and articles,
excluding disbursements to attorneys for
preparation and registration of changes to TS
memorandum and articles of association
1.10 Opening new banking accounts
(based on 4 local signatories) (photocopies
of memorandum and articles, certificate of
incorporation, certificate to commence
business, signed by a Commissioner of
Oaths, resolution, bank forms and update 16
register)
1.11 Change in banking account
signatories(based on 4 signatories), (bank 11
forms, resolution and update register)
1.12 Transfer of shares
(a) Checking Articles and if applicable, 6
shareholders; agreement, resolution 2 each
(b) Transfer deeds 1 each
(c) Share Certificates 3
(d) Writing up register (per transfer)

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Standard units
1.13 Allotment of shares (based on 4
shareholders, no subdivision, no premium,
CM 15, share certificates, minutes,
checking articles, updating register) 30
1.14 Increase in authorised share capital (CM
11,25,26, notice to shareholders, minutes
of meeting, checking articles and register,
updating register) 30
1.15 Increase in authorised share capital where
creation of new class of shares is TS
necessary
1.16 Photocopies of memorandum and articles,
certificate of incorporation, certificate to
commence business, signed by a 3
Commissioner of Oaths TS
1.17 Take over statutory books of a company 30
1.18 Buy back shares (including CM 14A)
Payment to shareholders (including CM 30
14A) TS
Registration of an external company TS
1.19 Extensions (CM 17)(various) TS
1.20 Restoration of a company to the register
1.21 Preparation of other minutes and notices 4
(per matter dealt with)
1.22 Use of office as registered address per 6
annum
1.23 Acting as company secretaries of private 4
companies per annum
1.24 Storage of stationery, books and records 3
per annum
1.25 Notice of Extraordinary Meeting for 5
Special Resolutions
1.26 Deregistration of a company with the TS
Registrar of Companies
1.27 Annual General meetings (notice, minutes,
directors' resolution, letter of 12
representation x 2)

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SECRETARIAL AND TAX FEES CIRCULAR 3/2001

Standard units
1.28 Conversion of the status of a private
company to a public company and vice
versa TS
1.29 Acquisition by a company of its own
shares (including change of articles, notice
to shareholders, minutes of meetings, CM
25, CM 26 and CM 14A, where applicable) TS
1.30 Disclosure of beneficial interest in
securities required by Section 140A TS
1.31 Resignation of a secretary of a public
company (minutes of a directors’ meeting,
CM 27A, CM 29 and updating register (See 1.4 above)

2. Close Corporations
2.1 Formation
CK 1 25
CK 7 5
Members’ certificates 1 each
Members’ register 2 each
Advise Receiver of Revenue of
appointment of public officer
and registered address 5
2.2 Amended of founding statement (CK 2) 16
2.3 Amended founding statement in respect of
accounting officer and addresses (CK2A) 8
2.4 Conversion of a company to a close
corporation (CK 1,4)(no reserves) 28
2.5 Conversion of a close corporation to a
company TS
2.6 Restoration of close corporation
(CK3) TS
2.7 Use of office as registered address per
annum 6
2.8 Storage of stationery, books and
records per annum 3
2.9 Deregistration of a close corporation
with Registrar of Close Corporations TS

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Standard units
3. Regional Services Councils
3.1 Registration 6
3.2 Monthly returns 4

4. Completion of Individual forms

companies
CM5 Reservation of name or a translated
form or a shortened form or a 5
defensive name
CM6 Extension of the period of the
reservation of a name or a shortened 4
form or a defensive name
CM7 Registration of a translated form or a 4
shortened form of a name (See 1.3 above)
CM8 Registration of a defensive name
CM8A Renewal of the registration of a (See 1.3 above)
defensive Name (See 1.5 above)
CM9 Certificate of change of name
CM9A Registration of a change of a translated 5
form or a shortened form of a name
CM9B Deregistration of a translated form or a 5
shortened form of a name TS
CM10 Certificate of consolidation of articles (See 1.14 above)
CM11 Payment of fees on increase of capital
CM12 Statement of payment of commission TS
on shares 30
CM14A Buy back of shares 30
CM14A Payment to shareholder (See 1.13 above)
CM 15 Allotment of shares
CM16 Return of allotment which has become TS
void TS
CM17 Extension of a prescribed period TS
CM18 Registration of an order by the court
CM19 Notice of redemption of redeemable TS
preference shares
CM20 Notice of variation of rights in respect TS
of
shares

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SECRETARIAL AND TAX FEES CIRCULAR 3/2001

Standard units
CM21 Notice of place where registers are
kept 4
CM22 Notice of registered office and postal
address 4
CM25 Waiver of notice 6
CM25A Consent to propose and pass special
resolution at meeting of which notice
has not been given 6
CM26 Registration of a special resolution
(refer to specific task under 1 above)
CM27 Consent to act 3
CM27A Appointment/registration of secretary
of a public company 5
CM28 Director’s contract to take
qualification Shares 9
CM29 Return of directors and officers
(based on 1-4 directors) 9
CM30 Notice of failure to appoint or
reappoint auditor at annual general
meeting TS
CM31 Appointment or resignation of
auditors 3
CM32 Change of a company's financial
year end (See 1.6 above)
CM33 Exemption that group annual
financial statements need not deal
with a subsidiary TS
CM34 Lodgement of financial statements
or interim report 6
CM35 Approving that interim reports need
not be issued TS
CM36 Take over offer and take over
statement TS
CM37 Person authorised to accept service
5
on behalf of an external company

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Standard units
CM38 Notice of termination of
authorisation of person authorised to
accept servic e of notice on behalf of
an external company 5
CM39 Registration of an alteration made in
the memorandum of an external
company TS
CM40 Appointment as liquidator or
provisional judicial manager or judicial
manager TS
CM42 Securities transfer form 2
CM43 Director of dissolved company within
the meaning of section 421(1) TS
CM44 Articles of association of a company
having a share capital (See 1.1 above)
CM45 Amended certificate of incorporation
relating to the conversion of one type
or form of company into another type
or form of company (See 1.28 above)
CM46 Certificate to commence business (See 1.1 above)
CM47 Statement by each director regarding
adequacy of capital of company (See 1.1 above)
CM48 Affidavit pursuant to Section 172(2) TS
CM49 Certificate of registration of
memorandum of external company TS
CM50 Requesting the submission of
provisional financial statements of a
private company TS
CM51 Certifying additional copies of
documents lodged for registration TS
CM52 Granting of exemption from lodging
annual financial statements of a
subsidiary TS
CM100 Statement of affairs TS

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SECRETARIAL AND TAX FEES CIRCULAR 3/2001

Standard units
Annexure
CM101 General directors, form and contents
of accounts TS
Annexure
CM102 Affidavit/affirmation verifying the
liquidator's account TS

5. Completion of Individual Close

Corporations forms:
CK1 Registration of a founding statement (See 2.1 above)
CK2 Registration of an amended founding
statement (See 2.2 above)
CK2A Amendment of Founding Statement
(accounting officer and address) (See 2.3 above)
CK3 Restoration of Registration (See 2.6 above)
CK4 Conversion to a close corporation (See 2.4 above)
CK5 Registration of an order of court TS
CK6 Registration of a resolution to wind up
voluntarily TS
CK7 Reservation of a name 5

6. Income Tax
6.1 Completion of returns and forms:
IT3 Return of general information 4
IT3(a) Return of payments for work and
services in respect of which
employees' tax has not been deducted 4
IT3(b) Return of income from investments,
property, rights and royalties 4
IT3(c) Return of purchases/sales/shipments
of Livestock/produce/timber/ores/
minerals/precious stones or bonuses
paid/accrued to members of
cooperative companies or societies 4
IT4 Return by person tendering payment
of income tax deducted at source

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CIRCULAR 3/2001 SECRETARIAL AND TAX FEES

from royalties or similar payments TS

Standard units
IT11 Personal return (request for SITE
refund) TS
IT12 Personal return (farmers and
business-men) TS
IT12S Personal return (salaried employee,
not a provisional taxpayer) 11
IT 12 Return for a trust TS
IT14 Return by a public officer of a
company or close corporation:
Dormant company or close
corporation. 9
Trading company or close
corporation with minimal disclosable
items/ schedules TS
IT16 Return by the agent of an owner
of a ship or aircraft TS
IT18 Return by insurance company TS
IT50 Company's estimate of life of mine TS
IT53 Mining annex to forms IT12 or IT14 TS
IT144 Donations tax – declaration by donor TS
IT56 Return for payment of Secondary Tax
on Companies (STC) 5
IRP101 Registration as employer 8
IRP101(a) Change of registered particulars of
employer 11
IRP101(b) Registration of branches and of
employers in other areas TS
IRP3(a) Request for a tax deduction directive TS
IRP201 Employee's tax remittance return TS
IRP5 Employee's tax certificate TS
IRP5(a) Duplicate employee's tax certificate 3 each
IRP501 Reconciliation of tax deductions made
and of stock of certificates on hand TS
IRP6(c) Return for payment of provisional tax 5

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SECRETARIAL AND TAX FEES CIRCULAR 3/2001

Standard units
IRP6(c) Provisional tax – company 3rd
payment TS
IRP7(m)Demand for payment of provisional 5
tax 5
IRP6(i) Provisional tax – individual
IRP6(ii) Provisional tax - individual 3rd TS
payment
IRP30(a)Application for certificate of TS
exemption from PAYE deductions

6.2 Other: 4
6.2.1 Application for extension of time
6.2.2 Application for extension of time TS
to pay
6.2.3 Change in appointment of public (See 1.17 above)
officer 4
6.2.4 Checking of tax assessment
6.2.5 Registration of an individual 8
taxpayer
6.2.6 Registration of a provisional 3
taxpayer TS minimum of 3
6.2.7 Attending to minor tax queries
6.2.8 Attending to objections to tax TS
assessment and major tax
queries
6.2.9 Application for relief from SA
tax in terms of reciprocal TS
agreements with other countries:
IT24 or in letter format
TS
7. Value Added Tax
VAT101 The application for registration
VAT102 Application for separate 13
registration of an enterprise,
department or branch 6
VAT 117 Application for changing

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accounting basis 6
VAT 123 Application for cancellation (de-
registration)

Standard units
VAT 123T Application for cancellation
(de-registration of a separately
registered enterprise, branch or
division. 6
VAT 201 Return for remittance of Value-
Added Tax (simple return with
data readily available) TS minimum of 6

8. Retirement Fund Tax

RFT 1 Return of first provisional tax
payment 4
RFT 2 Return of second provisional
tax payment 5
RFT 3 Return for payment of tax on
retirement funds TS

9. Other
9.1 Statistical returns TS
9.2 Advising appropriate government
departments of deregistrations of
companies or close corporations TS
9.3 Registration for UIF 4
9.4 Monthly UIF return 6
9.5 Registration for workmen’s
compensation 6
9.6 Completion of annual workmen’s
compensation return TS
9.7 Tax clearance certificates TS
9.8 SDL 1 - Skills development levy
registration 8
9.9 Regional council levies registration 8
9.10 Acting as representative taxpayer
while client overseas, for example TS

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SECRETARIAL AND TAX FEES CIRCULAR 3/2001

Standard units
9.11 Indemnity for lost share certificate
and replacement thereof 6
9.12 Certificate re remittability of foreign
exchange earnings to a foreign
controlled entity TS
9.13 Certificate of earnings of a director or
member of a close corporation TS
9.14 Application for payment of assessed
tax or provisional tax in instalments TS
9.15 Notification by bank re cession of loan
accounts and/or stock – preparation
of minutes arising therefrom. TS

21 Issued September 2001