Budget Review

On Wednesday last week, South Africa’s Finance Minister delivered his maiden budget speech. Minister Mboweni attempted to limit the negative impact on economic growth by not increasing the tax rates for natural persons. Some of the main points from the budget were the following:

No income adjustments to personal income tax.
Rebates and tax-free thresholds marginally increased for natural persons.
No increase in the annual interest exemption.
Tax-free investments limits remain the same; R33,000 annual allowance with a R500, 000 lifetime allowance
Medical tax credits remain the same.

Invitation to attend our first presentation of 2019

We would like to remind you that we will be hosting the chief investment officer of Allan Gray, Andrew Lapping, on the 6^th of March 2019.

Andrew will be providing a market update as well as sharing his views on the current state of the South African stock market. To make sure you do not miss out on your seat at this event simply click on the RSVP.

Date: Wednesday 6^th March 2019

Time: 11h00 for 11h30

Venue: Allan Gray Offices, 1^st Floor, Brookes on the Bay, Humewood, Port Elizabeth.

Don’t miss out on the opportunity to reduce your tax

February 28^th is the end of the financial tax year. For those investors who have not contributed the maximum amount into a retirement annuity, this is a great opportunity to minimise your tax liability whilst making provision for your retirement. Investors who wish to make any last minute contributions can click on the following link.

The Marriott Retirement Annuity attempts to assist investors in being able to predict what amount of income they may expect once they come to retire. This is based on Marriott’s investment philosophy of investing in local and international companies that will continue to produce both reliable and growing income regardless of the market conditions. By implementing this investment strategy Marriott are able to reasonably predict what your income in retirement will be. For more information or to invest in the Marriott Retirement Annuity please click here.

“In the business world, the rearview mirror is always clearer than the windshield.” Warren Buffett

May 2018: Estate Duty Planning

Estate Duty Planning

Estate duty is payable on the estate of every person who dies and whose net estate is in excess of R3.5 million. Estate duty is charged at a rate of 20%. For those individuals with estates over the value of R30 million estate duty was recently changed to 25%.

Estate Duty comprises the total of all the property (fixed property, business interest and investments) and deemed property (life insurance policies) of an individual less certain deductions.

Below is a basic illustration of an Estate Duty calculation:

Property + Deemed Property – Deductions = Dutiable Estate * 20%

The most common deductions are a Section 4A abatement and the Section 4(q) deduction.

The Section 4A abatement allows for an amount of R3.5 million to be deducted from the net estate of a deceased person.

The Section 4(q) deduction provides that any property that accrues to a spouse is deductible from the Estate Duty calculation. Most spouses typically leave their estates to their spouse. This creates a largely inflated estate for the surviving spouse and merely postpones the tax for when the surviving spouse passes away.

Momentum have introduced a Last survivor death benefit where the two lives are assured at the outset of the policy. Upon the death of the first assured life the future premiums are waived. Once the second life assured passes away the benefit is paid into the estate.

The advantage of this type of a policy is that it provides for liquidity in the deceased’s estate and allows for the beneficiaries to not have to sell assets to pay the tax liability.

The Last survivor death benefit is typically a quarter of the price of traditional life insurance, so this is an excellent way to mitigate against the cost of death taxes.

For more information regarding the Last survivor death benefit you can contact Kevin or Greg on 0027 41 373 0601.

March 2019: Budget Review