Category: Chartered Blog

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Is the Taxman eyeing your donations?

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In this article, Charmaine Prout, Director of Chartered Tax, helps us understand the tax implications of donations that we may make – to family, friends or charitable institutions – and guides us on how to make benevolent contributions without having to donate to the Taxman at the same time.

You may have heard of or read those encouragements to give away your treasured items to loved ones or favoured friends before you pass away. That way you get to see them enjoy what once gave you joy, and they get to express their gratitude. A win all round, you might say … but is the taxman also winning?

Let’s start with what SARS understands by the term ‘donation’. The definition is a ’gratuitous disposal of property, including any gratuitous waiver or renunciation of a right”. This means that simply giving an asset away is not the only way to donate; you are also donating if you sell an asset for less than its actual market value. The difference between the price paid and the price that should have been paid is considered a donation.

The Income Tax Act indicates that donations tax – 20% of the value of the donation – must be paid by the donor within three months of making the donation.

Exemptions

If you want to see your family or friends enjoying your magnanimity, while reducing your Estate Duty at the same time, take advantage of the annual exemption per natural person of R100,000 per year – you can donate to anyone, be it a child, a grandchild, or a trust (you can make this a recurring annual investment). The R100,000 can take the form of money or assets, like property.

A loan account in a trust can also be reduced by using the R100,000 annual donation.
This is one way to benefit from using the exclusions perfectly legally and thereby shift the value of your estate into the hands of your ultimate beneficiaries now rather than only on your death.

If you donate to your spouse, that donation is completely exempt from tax, as are donations to any sphere of Government or any registered political party.

All these exemptions apply to companies as they do to individuals.

You can donate up to 10% of your taxable income annually to a recognised Public Benefit Organisation.

SECTION 18A Tax Deductible Donations

Section 18A of the Income Tax Act provides individuals, trusts and companies with a tangible incentive to make donations to non-profit organisations, within certain limits. It is the onus of the NPO to prove that its work provides a public benefit.

For example, an individual with an annual taxable income of R280,000 can donate a maximum of R28,000 to a S18A organisation and claim this donation as a deduction on his personal income tax return. This translates into an effective out-of-pocket expense of R15,400 or 55 % of the amount donated.

A company with an annual taxable income of R1,000,000 can donate a maximum of R100,000 to a S18A organisation and claim this donation as a deduction on the company’s corporate tax return. This translates to an effective out-of-pocket expense of R72,000 or 72% of the amount donated.

In conclusion

As I often say to my clients, the focus of SARS is to level the playing field. So, whether you pay 20% in donations tax or 20% in Estate Duty, it’s all the same revenue to SARS. You, however, can make decisions that result in the best outcome for your Financial Plan. For the sake of the country’s growth and the goodwill of the taxpayer, so do we.

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An Independent Trustee: why does my trust need one?

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The ‘Independent Trustee’ has become a requirement for certain types of trusts in South Africa. Philene Spargo discusses important aspects of independent trustees that those involved in a trust should know.

In a trust, the trustees contractually agree to administer the trust assets for the benefit of the trust beneficiaries. Historically in South Africa, many beneficiaries and trustees have treated trust assets as their personal assets. This is undesirable as, once a trust acquires assets, those assets can no longer be used at the whim of the former owner without adverse legal consequences.

The role of trustee

A trustee, when appointed, accepts a legal duty of good faith to administer trust assets for the benefit of the trust beneficiaries. This means that trustees must exercise care, prudence, objectivity and sound reason in their administration of trust assets. However, this does not always happen.

The need for an independent trustee

The requirement for an independent trustee to be appointed to certain trusts in South Africa arose from the 2005 decision of the Supreme Court of Appeal in Land and Agricultural Bank of South Africa v Parker and Others. The court ruled that there was no proper separation of control and enjoyment of the trust assets. Simply put, the trustees had improperly administered the trust.

When is an independent trustee required?

Because of the Parker case, the Master of the High Court issued a Directive in March 2017: all South African trusts that meet certain criteria require the appointment of an independent trustee alongside the other (interrelated and potentially conflicted) trustees. The criteria are:

  • The trustees have the power to contract with independent third parties
  • The trustees are all beneficiaries, and
  • The beneficiaries are all related to one another.

So, most trusts in South Africa require an independent trustee to be appointed to act independently of the other trustees to reassure the Master that the trust is being administered legally.

Characteristics of an independent trustee

While the independent trustee does not have to be a professional person, he/she must:

  • be completely independent of the normal contracting parties of the trust, and not a family relation of an existing trustee, proposed trustee, beneficiary or founder in a wide sense
  • not be a beneficiary of the trust
  • ensure the trust functions properly and that the provisions of the trust deed are observed
  • exercise objectivity and be competent to scrutinise the conduct of the other trustees who are not independent
  • be knowledgeable about the law applicable to trusts
  • not be disqualified to act as trustee by the Trust Property Control Act
  • have knowledge and experience of the business field in which the trust operates
  • be aware that failure to observe his/her duties may risk legal action
  • understand the legal duties attached to being an independent trustee, and
  • always maintain his/her independence by not allowing the other parties to exercise undue influence over trustee decisions.

Looking forward

While there will be additional costs by having a professional, independent trustee involved in administration of the trust, the benefits of objectivity and compliance are significant.

Ideally, an independent trustee – either a natural person or a corporate – should specialise in fiduciary law. If you would like assistance with the independent trustee role for a trust with which you are involved, or have questions regarding trusts, the Chartered Legacy and Trust team can help you to navigate the difficult landscape of trust law and journey alongside you as you protect and preserve your family’s legacy.

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Different life stage, different risk

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Craig Turton, Head of the Wealth Creation team at Chartered Wealth Solutions, explains that each new life stage comes with its own risks, and a comprehensive Financial Plan takes all of these into account. Check your own list as you read through the article.

When you were a fresh graduate in a new job, you possibly shared a small dwelling with two roommates, had a second-hand car and three neat work outfits that you laundered carefully. With no dependents, your financial priority in terms of cover was short-term insurance for your car and some personal possessions.
Now you are a parent, with significantly more expensive assets, and have many more financial responsibilities. Not having enough cover can jeopardise you, your lifestyle and your dependents’ wellbeing.

Risks associated with each life stage

Within our Wealth Creation team, we see clients of different ages and in different stages of their lives and careers.

A complete Financial Plan should include the risks associated with being at these different stages. Risks include such unexpected life events as:

  • death
  • disability
  • loss of income
  • severe illness

In this article, we touch on potential risks in the different stages of our lives and career. It’s important to note that medical aid is excluded from the risks below, so we must ensure that, at all life stages, our medical aid covers what we need it to cover.

Student

If you have student debt and you pass away, your family will inherit your debt. The solution would be to have some life cover in place to protect against this debt.

Young, single work-starter

Be aware of debt, such as study loans, as indicated. Your biggest asset at this time is your ability to earn an income. Consider the implications of not being able to work. Protect this ability through an income disability protection policy – your Financial Planner will be able to advise you.

In a committed relationship or marriage

If you buy a home together, ensure the bond is protected through a life policy. While it’s not romantic, it is caring to have a formal contract in place between the two of you, to make provision for the possible dissolution of your relationship. Ensure your Will stipulates what should happen to your share of the house in the event of one of you passing. Growing up is not easy and the conversations just get harder, but it is essential that you have them.

Married and considering having children

If you are both are income earners, will the survivor suffer financially without that income? If yes, you need to make sufficient provision to allow the survivor to maintain their standard of living. Education is a huge cost for one parent, so include this cost in the calculation.

Peak of your career

You may suffer a health risk; a severe illness benefit will assist with the financial demands of such an illness. An estate plan should address the costs in your estate when you die. Ensure your beneficiary nominations are correct and updated on your policies and retirement funds. Make sure your children will have sufficient capital to see them through varsity when you are no longer there.

Retirement

A goal here may be to be relatively or completely debt-free by this stage; if not, ensure you have covered the remaining debt. Your Will should be up to date. A severe illness benefit is likely to be very relevant. In your Financial Plan, consider the costs of long-term care for when you are less independent, such as assisted living, frail care or in-house caregivers.

Finally …

If we live, we have risk. These risks need to be planned for and managed. Most importantly, having planned, live in the moment and enjoy each day you have with your families and loved ones.

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Reporting from the Helm

John-Cambell

It was something to witness. At Crossways Hotel in Hilton, a group gathered, green-clad and geared for a gargantuan clash … all for a coveted gold cup.

I joined a few friends and family to watch the World Cup final, an event that seemed so much more than a game of rugby. I am always amazed at how sport unites a nation: we quickly forget about our turbulent and divided past and all live in the moment together as one.

South Africans are united in diversity and although divisions still clearly exist, we can achieve so much more when individuals come together and commit to a cause. President Cyril Ramaphosa affirmed this when he said that it showed what South Africans can achieve when they worked together for success.

Springbok Coach, Rassie Erasmus inspires us to serve our country following the triumph:
“Rugby should be about giving people hope through the way you play … about bringing people together to forget their problems for a while. It may not be our responsibility as rugby players to do that, but it is our privilege.”

Moody’s puts us on watch

We awoke that same morning to the news that Moody’s global credit rating agency has downgraded its outlook for South Africa. We are now on “negative watch”, the last before a downgrade to “junk status”, something we desperately need to avoid as this could set us back for many years.

The pressure is on our Government to devise serious plans for significant change in time for the Budget in February 2020.

Chartered hosted Investec Asset Management’s Jeremy Gardiner in October to share his latest views on the economy. We may see many negatives locally, but there is so much at play globally. Brexit has now been delayed until end January 2020 and Trump will be aiming for a second term re-election in November 2020. You can read Jeremy Gardiner’s article on the subject here.

Despite it being a volatile year for the markets, our JSE from 2 January to 1 November this year has returned 10.5%, and the dollar has strengthened by 3.5% to the rand.

At Chartered we continue to reinforce the importance of remaining invested and ensuring your investment strategies are adequately diversified both locally and globally to weather these uncertain times.

Chartered grows and expands

We are excited to have opened our Cape Town office. We are confident that Tom Brukman, who has been with us for five years in Johannesburg, will lead the business in Cape Town in line with our Chartered culture of excellence.

We congratulate Tom and his wife, Laura, as they will be welcoming their own tiny addition to their family. Marc Moir will be joining Tom from our Johannesburg office as an Articled Planner in the Cape Town office.

In Port Elizabeth we are delighted that Hayley Giuricich is joining Don and his team. Hayley is a Chartered Accountant and Certified Financial Planner® and I have no doubt she will be a huge asset to the Eastern Cape office. We wish Paul and Shené Greenwood a very happy marriage, and congratulate Don and Tracy Adams on the birth of Luke Michael.

I wholeheartedly congratulate Esther Mabunda for qualifying as a Certified Financial Planner® and on achieving her advanced Postgraduate Diploma in Financial Planning. We are very proud of her growth and achievements.

Finally, on behalf of the Chartered Family, I thank you for your support and contribution to Chartered over the past year. We are always grateful for the time we share together and the many insights you give us as we continue to strive to be the leading retirement planning business in South Africa.

Warm regards

John

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Trade wars – the new normal?

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The IMF warned recently that the main risk factors to the global economy currently are that further US-China tariffs, US auto tariffs, or a no-deal Brexit – could sap confidence, investment and global growth. It warned that these trade wars needed to end urgently, in order to boost confidence, investment and growth.

So, therefore, your financial fate over the next couple of years lies largely in the hands of two people, Boris
Johnson and Donald Trump.

In terms of Brexit, a no-deal exit would be ‘an event’ in global financial markets, which would scare foreign investors and result in emerging markets, including South Africa, being punished. Not to mention, the UK and Europe are significant trading partners of ours, plus the UK is responsible for approximately a third of our foreign direct investment inflows.

Boris, however, does not have an easy road ahead. He must do in three months what Teresa May couldn’t achieve in three years. Although committed to leaving on 31 October without a deal if necessary, Boris realises this route carries significant risk and
could be ‘bumpy’. Ideally, he would like to reach an agreement with the EU, but given that the previous deal failed repeatedly in parliament, he needs a new, improved deal. The problem is, the Europeans told Teresa May months ago that it’s not up for renegotiation, and they’re sticking to that.

So Boris finds himself leading a government committed to a ‘no-deal’ exit, should the Europeans refuse to negotiate a new deal (which they may well do). He is up against a parliament vehemently opposed to a ‘no-deal’ Brexit, and the Tories have a parliamentary majority of one. This is very likely to result in decision-making paralysis, followed quite possibly by a vote of no confidence and fresh UK elections. Boris will obviously be hoping for a stronger mandate, but anything, including a abour/Lib Dem coalition victory, however unlikely, is possible.

Brexit aside, I believe tariff wars are something we’re going to have to get used to, because that’s how Trump fights. The Mexicans are safe (for now), India is under pressure, and Europe, particularly the automobile industry, is next. Just as markets were enjoying a pause in the conflict over the past month, President Trump, completely disregarding the ongoing efforts of his negotiators, implemented more tariffs, by tweet. Investors panicked – again! – and world markets including emerging markets (and SA), suffered.

I’ve written before that he has a strategy, that analysts believe that he is deliberately stoking global tensions in order to get the Chinese to stimulate more and the US Federal Reserve to cut more. Then, when he eventually does a deal with the Chinese, the US economy and stock markets will crescendo, peaking just in time for the US elections. The result? A booming economy should ensure his re-election next year. Apparently, that’s how the US works. A strong economy equals almost certain re-election for an incumbent president. It seems the economy is all that counts, all other negativity is just ‘noise’.

I’ve been told that this theory gives too much credit to Trump, that he is irrational and acts impulsively with little thought of the consequences. If this is the case, we better hold on tight because there’s a very real chance that the global economy is going into recession.

The risk to his strategy is that the Chinese understand how much he needs a strong economy for re-election and may well play hardball in order to try and strike a better deal with a Democrat president. Also, Jerome Powell, Chair of the US Federal Reserve, is not yielding to Trump’s pressure to accelerate rate cuts, infuriating Trump and unsettling markets.

I’m pretty sure his strategy is to get re-elected. If that is the case, and he manages to artificially stimulate the US economy (and therefore also the global economy), the result will be a ‘risk-on’ environment which would be very positive for emerging markets, including SA.

And my goodness, at the moment we need every bit of help we can get.

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In the news – some anxiety, some advantage

On busy days at Chartered House, you may find me picking up on news headlines between meetings. Our round glass table in reception displays the daily newspapers, and I regularly scan them for positive news – sometimes, in vain.

National Health Insurance Bill

The headline catching my eye in the last few months has been of particular concern: the tabling of the National Health Insurance Bill, which aims for universal access to primary healthcare for all South Africans. My immediate question is “How?” I have had many discussions with friends and clients who are doctors and their predominant feeling is that there is not a chance that they can depend on getting paid by the government every month. Furthermore, how can six million taxpayers fund this scheme for a population of 55 million people?

This proposed Bill, together with the Expropriation Bill (land expropriation without compensation), has South Africans in a state of suspended agitation – on those proverbial tenterhooks. Both these Bills still need to go through an extensive parliamentary process before becoming legislation.

Good news for Investors

On the investment front we saw South Africa’s largest stock and success story Naspers announce the listing of its offshore assets in a new entity on the Amsterdam Euronext market. This new share, Prosus, holds all of Naspers’s foreign-owned assets, which includes its 31% holding in the Chinese internet giant, Tencent. I am explaining this to you because most of our clients (through their unit trust holdings) hold approximately 9% of their equity investments in Naspers, so this is a significant development for all of us.

The rationale behind this move is as follows:

  • Naspers was 21% of our JSE and this size had become a constraint
  • Naspers is now 14% of the JSE.
  • By listing offshore, Prosus is now eligible for inclusion in the global indices.
  • Developed market funds could not buy Naspers before owing to limitations on their mandate; they can now invest in this for the first time.
  • This is very positive for the South African investor, who now holds shares in both Prosus and Naspers.

Prescribed Assets

I have noticed in client meetings that many people are concerned about Prescribed Assets, where the government makes it law for retirement funds to invest in certain government-approved investments. For any of us, the thought of buying bonds in SAA or Eskom is most concerning.

There are couple of important points to note:

  • This policy applies only to retirement funds, such as RAs, Pension funds and Provident funds.
  • This policy does not propose to include living annuities.
  • It will only apply to a very small percentage of your investment, if at all.
  • At this stage, the policy has been mentioned as a consideration; but, for it to be implemented, it must go through fairly rigorous process and will take a long time to become law. We will keep you informed of any further developments.
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Great news for the Chartered Family

We congratulate one of our Retiremeant Specialists, Tiffany Venter, on her marriage to Chris over this past weekend. We wish Mr and Mrs Havinga much happiness for their future.

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Managing Global Assets in your Estate Plan

It’s a global village. Technological advances allow us to live, do business and invest offshore with relative ease. Against the backdrop of local uncertainty, South Africans are increasingly looking at offshore investment options; our political climate makes investing in second residency schemes attractive. How, then, do these offshore investments impact our estate planning? Kerryn Franck, Director of Chartered Legacy & Trust, underscores the importance of having an international Estate Plan.

Investing offshore exposes your personal estate to foreign laws and jurisdictions. So, understanding the different rules that may apply to your worldwide assets is imperative as part of your estate planning.

Different countries have different succession and inheritance tax laws. Which law applies to your assets may depend on your nationality, domicile, residence and location of your property.

You can, of course, deal with all your assets in a worldwide Will. It is important, though, to consider whether it may be more practical and/or efficient to deal with offshore assets in a separate Will. I would urge you to discuss the many factors to be considered when making this decision with your planner; for example, property may be situated in a jurisdiction that has forced heirship rules and you may not be able freely to dispose of the property as you wish in your Will.

Even though you have a worldwide Will, you may still be required to report your estate in the foreign jurisdiction where the asset is located and apply for a grant of probate. This requires the services of a lawyer overseas – this can be costly and is an extra expense for your estate. A jurisdiction where a foreign language is spoken can further complicate matters.

Should you opt to have more than one Will, you need to ensure that your Wills are read together. A Will dealing with your offshore assets must not revoke all your previous Wills but only those dealing with your offshore assets. Revoking all Wills may result in your local assets being distributed in accordance with the laws of intestacy. When drafting separate Wills, you must also ensure there is enough liquidity in each of the various jurisdictions to cover the costs of administering that portion of your estate and the transfer of the assets.

Often a testator will have sent money offshore with the intention of it remaining offshore for the benefit of the nominated beneficiary. In this case, a detailed Estate Plan should be created to investigate whether all estate expenses and taxes can be paid locally. This is so that the offshore funds are not repatriated and the testator’s wishes are upheld.

When you do your financial planning, remember that a South African trust cannot hold or inherit offshore assets – note this when drafting your Will. A testator wanting to leave their assets to a local trust in their Will must investigate an alternative option for any offshore assets.

In short, if you have offshore assets, you must have an international Estate Plan in place.

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What you need to know before cashing in your Pension or Provident fund

When you are leaving your employer, you may wonder what you should do with your Pension and /or Provident Fund.

The option of cashing in

Can you withdraw your retirement funds before you retire without being penalised?

The simple answer is yes, but be aware of the risks.

Living costs have gone up, with debt levels rising as a result. Household cashflow may be under pressure, and job security is an ever-present concern. These are all valid reasons to access some (if not all) the funds in your Pension Fund when leaving an employer.

Cashing in your retirement savings prematurely has a double cost: you reduce your tax-free lump sum when you retire, and you pay more tax on your retirement savings.

When you resign, you are allowed access to only R25,000 tax free – a SARS regulation. Any amount over that is taxed at a significant 18%. Withdraw more than R660,000, your tax rate is 27%, and 36% on amounts over R990,000.

Let’s look at an example. You are changing jobs and want to cash in a R400,000 pension fund. You will pay 18% tax on R400,000 minus R25,000 (your allowed tax-free amount). So, you will pay R67,500 to SARS.

Should you withdraw again on your next resignation … well, you can imagine the impact on your long-term savings. Please note that R25,000 tax free amount does not apply to every single withdrawal. On every pre-retirement withdrawal the amount will get aggregated to the previous withdrawal, and you’ll end up paying more and more in taxes.

The reasons for staying in

If you reach retirement, the retirement tax tables apply – that is, the rate of tax is determined by the taxable income. If you waited until retirement to cash in, your first R500,000 is tax-free.

South Africans are notoriously poor savers and our retirement statistics are poor. Only about 6% of South Africans retiring can afford to do so at age 65. A major contributor to jeopardising your financial wellbeing is the repeated drawing of retirement funds when leaving employers.

A full transfer from your retirement savings to your living annuity means no tax implications.

Avoid borrowing from your future.

Preserve your retirement funds for retirement. It’s not that far away!

Emigrating?

South African citizens who emigrate are entitled to have their pensions paid to them in their country of emigration, or they may choose to take the amount in cash. If you emigrate before you retire, you may withdraw all your pension or provident funds with no penalty.

You know that you may not withdraw from a Retirement Annuity before 55, and, on retirement, may access only one-third of your funds. The rest buys a pension. If you emigrate, however, you may take the whole amount in full. From 1 March, 2019, the same concession applies to members of pension provident funds. Provident pension members can take their whole amount in cash.

It’s important to note that relocation is not emigration, and, without formal emigration, the usual tax rules apply.

This information is particularly relevant in light of reports of increasing numbers of South Africans considering emigration. For Craig Turton’s message on choosing to stay in South Africa, click here.

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To financially emigrate or not?

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There is much conflicting information in the media about the taxation of South Africans on their foreign earnings and the impact of tax law amendments.

Currently, remuneration earned by South African tax residents for services rendered abroad is exempt from South African tax, if that resident has spent more than 183 full days (including a continuous period of more than 60 full days) outside South Africa in a 12-month period during which those services were rendered (‘foreign earnings exemption’).

With effect from 1 March, 2020, the foreign earnings exemption will only apply to up to R1 million of foreign income earned in a tax year. Income earned abroad exceeding R1 million will not be exempt under the foreign earnings exemption.

Many South Africans work and/or live abroad may want to ‘financially’ emigrate by placing their emigration on record with the South African Reserve Bank. They think that by taking this measure, their foreign income will not be taxed in South Africa. This move will not necessarily exempt them from paying tax in South Africa.

Who will be affected by the changes in the law?

It is important to understand the difference between becoming non-resident for tax purposes and non-resident for exchange control purposes.

The foreign earnings exemption, and its new cap, only applies to South African tax residents. If you are not a South African resident for tax purposes, you will not be affected by this amendment. People who have placed their emigration on record with the Reserve Bank may still be tax resident in South Africa.

South African tax residency

South Africa has a residence-based tax system. Residents are taxed on their world-wide income, except if specifically exempt, as is the case with the foreign earnings exemption.

A resident is defined by the Income Tax Act 58 of 1962 (ITA) as a person either:

  • ordinarily resident in South Africa (the ‘ordinary residence test’), or
  • a resident by their physical presence in South Africa (the ‘days test’).

To be defined as non-tax resident in South Africa, you must pass both tests.

Even if a South African tax resident in terms of the tests, you may still be regarded as a non-resident for tax purposes under the applicable double tax agreement (DTA) between South Africa and the country where you are working or living.

For helpful tips in determining your status in terms of the two tests, click here.

Double Tax Agreements

If you are defined as a South African tax resident by either the ordinarily resident or days test, the applicable DTA entered into between South Africa and the country in which you are living and/or working might regard you as non-resident in South Africa, and as resident in the other country. Make sure you check the terms of the DTA.

Section 6quat rebate

If you are a South African tax resident taxed in another country on the same income taxed in South Africa, section 6quat of the ITA provides for a rebate of the foreign tax paid against South African taxes. The rebate is limited to the South African tax payable on the foreign income.

So, for South African tax residents, all taxes paid abroad on income in excess of R1 million will be rebated against the South African taxes payable on that same income. Earnings exceeding R1 million will therefore not be taxed twice, but at the higher rate of South Africa or the foreign country.

Financial emigration through the Reserve Bank

The main reason for financial emigration is to break exchange control residence.

To financially emigrate, apply to the Financial Surveillance Department of the South African Reserve Bank with proof of the right, either by foreign passport or an appropriate visa, to live in another country.

Through the application, show your intent no longer to be permanently resident in South Africa.

By financially emigrating, you are strongly demonstrating the intent to have a primary residence outside South Africa and not to be ordinarily resident here.

Conclusion

Financial emigration is only a strong indication that you are not ordinarily resident in South Africa, and not a definitive factor. SARS takes various factors into account, and a person’s residency status at the Reserve Bank is only one of them.

Even if you can show that you are no longer ordinarily resident, you may still be tax resident because of number of days spent in South Africa, or of the applicable DTA between SA and the country where you are working.

Non-residents for tax purposes in South Africa do not pay tax on foreign sourced income.

The amendments to the foreign earnings exemption would therefore not be applicable to non-residents as the foreign earnings are never taxable.

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Financial Planning with Chartered excellence

John-Cambell

When I started financial planning 25 years ago, I quickly learnt that there were many significant flaws in the industry. During your working lives, you may have either experienced or witnessed some of these pitfalls.

The first is that most clients deal with an individual advisor who represents a bigger business or themselves, but who approach planning in their own way. I believe that dealing with one person compromises you and your family’s financial wellbeing.

I recall my father getting advice on different occasions from two people representing the same company: their advice was completely different. I remember seeing another client who received a letter in the post informing them that their advisor was emigrating. Where does it leave the client in each instance? The greatest risk to your finances is a new advisor changing your investments to suit him.

Considering this very real problem, when we set out to build our company, we decided that Chartered Wealth Solutions would have an offering and advice process followed by everyone who worked here, ensuring consistency of advice. It was also essential for our Planners to have an associate with them in meetings so that at least two people were aware of clients’ family circumstances and finances.

It is important that our clients deal with specialists. In my first eight years in the industry, as a generalist, I offered advice across the full spectrum of financial services: retirement funds, medical aids, life assurance, and investments. As the industry became more complex, we realised that the general practitioner days were limited – being the best at everything was impossible. I equate this to a General Practitioner versus a Specialist in the medical field: if you need heart surgery, you are unlikely to consult your GP.

Chartered ensures that at every point of the advice process you deal with a specialist: a team only advising on medical aids; a team of lawyers who only write Wills, with a specialist executor winding up estates; dedicated specialists in assurance with a thorough understanding of this complex industry. Our RetiremeantTM specialists are highly trained, all with honours degrees in Financial Planning who not only understand RetiremeantTM but who also recognise when to involve another specialist in your planning – our team of tax specialists at Chartered Tax is an example. We have worked hard to build a business offering consistency of advice, where a team of specialists takes care of you and your family’s financial planning needs. We encourage our clients to form trusted relationships with our specialists, knowing that we can be true custodians of your RetiremeantTM.

I am often cautious to share much from Chartered’s behind-the-scenes, but following a recent forum where clients shared their experiences of Chartered, I realised that much goes on that clients should know. For many years we have been working on Chartered Invest, a business responsible for the implementation of your investments. This is because there is often a blurring between advice and implementation and, though inextricably linked, these are two distinct functions.

Two exciting outcomes are, firstly, the vastly improved reporting, simplifying your affairs and placing all your investments on one statement (not the variety from a few providers you may be receiving currently); and, secondly, the Chartered App. This will give you access to your new statements and Chartered newsletters and invitations. We will share more in the months ahead about this new offering.

Warm regards
John

You can read John Campbell’s article on the SA elections by clicking here.

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