The Minister of Finance’s budget speech is a few weeks behind us by now, but we are still feeling the after effects, and will do for the foreseeable future. For those who travel our highways and byways, you have already felt the pinch of the increased fuel levy (the E-tolls perhaps a distant memory for some and still a bone of contention for others!). Those who enjoy their tipple or puff may also be finding the increased so-called “sin tax” onerous.
In this newsletter, however, I would like to explore what was NOT said … and yet will have a significant impact on many of us.
We still expect a review of trust legislation, though no mention was made of it by Pravin Gordhan in the budget speech. The contention in the past has been that trusts, as currently legislated, can allow for the avoidance of payment of tax and estate duty. When Treasury published the tax amendment bills in July 2013, it stated that more consultation was necessary and the process would continue in the latter half of 2013 or in 2014.
According to Mazar’s Di Seccombe, Treasury awaits recommendations from the Tax Review Committee before making any changes to tax legislation. The committee has been tasked with reviewing wealth tax, estate duty and capital gains tax – trusts therefore fall within its mandate.
Part of the revision is a possible new tax return for trusts – a move that will bring significant challenges and that will require taxpayers to ensure their trust administration is on track. It would appear from last year’s proposal that eyes are on the ‘conduit’ function of trusts – that is, should the beneficiary receive income or capital gains in the same year of assessment, these monies are taxed at the beneficiary’s particular tax rate and not at a trust rate. It is clear that Treasury does not want trusts to have this ‘conduit’ function and that taxable income will be calculated at a trust level. Whether this aspect of trusts will be eliminated is still open to debate. In the final analysis, trusts were not initially created to avoid paying tax; trusts are meant to safeguard assets for future generations.
Farewell and Welcome
We at Chartered Wealth would like to thank Raquel Rodrigues and bid her a fond farewell as she moves to the land of the sea and mountain at the end of March. Raquel started as a Para-Planner at Chartered Wealth, and found that her personality and skills lent themselves to the Marketing department. She has served the company with great devotion for six years, and we will miss her warmth and kindness. We welcome Tanya Saraiva in her stead, and look forward to the unique flavour that she will bring to organising our events. In addition, Anne Russell, whom many of you know from our reception, will be taking over the issuing of statements, so expect to receive your updates from her.
Finally, I believe that many of our gmail clients are missing out on some of our communiques – especially our statements – because your email is redirecting them to your spam or junk mail folder. We really value our communication with you, so please do check your junk mail folder in your email to ensure that you receive the relevant information.