World remains an oyster for the wealthy post Budget 2015

The latest budget is a bitter sweet one for high net worth individuals, with this year’s tax blow softer than expected, and good news on foreign regulations.

Even though personal tax and tax on trusts have increased by 1%, and the transfer fees on homes over R2,5-million have gone up by 3%, the fact that government did not propose a wealth tax or increases in capital gains tax or estate duty as predicted from some quarters this year, may be seen as a big positive, says Henry van Deventer, Head of Wealth Development at Old Mutual Wealth.

“Government has taken a big step in addressing one aspect that particularly affects the wealthy, by relaxing exchange controls, with the current R4-million allowance increasing to R10-million (or R20-million per family) per year. In addition, there is an added R1-million discretionary allowance,” he says.

“The move increases the opportunities to diversify assets worldwide and gives some leeway for converting the weaker rand into hard currencies when travelling. It further acknowledges the fact that many wealthy South Africans reside overseas part time and it opens the door to funding offshore studies.

“It’s a move in the right direction by Government and sends out a positive message to both locals and foreign investors. It effectively dismantles exchange controls for most investors.”

Van Deventer says that with the current weakness of the Rand and the increasing pressure on the SA economy, the move allows wealthy South Africans to put more of their investment funds abroad. Already a large portion of investments in SA equities have international exposure, but this will allow for direct foreign investment as well.

He says the relaxation of exchange controls came as a surprise, although it has been many years since the Government addressed the issue. The last relaxation was four years ago when the investment allowance was raised to R4 million per annum, and the travel allowance increased to R1 million per annum.

“A further aspect which should bring a smile to investors is the recently promulgated tax free savings legislation which comes into effect next month and allows individuals to save R30 000 annually or R500 000 over a lifetime without having to pay tax,” says Van Deventer.

But it’s not all good news for the rich and famous.

“On the negative side, the wealthy could yet feel the pinch more than others as indirect taxes on various aspects of the high life could compound to inflict some nasty dents on previously impervious pockets,” says Van Deventer.

The increases in sin tax will push a bottle of wine up by 15 cents, while those with a penchant for champagne will pay 48 cents more. Whisky drinkers will cough up R3.77 more per bottle.

“Higher earners will also be penalised for their larger cars and bigger homes, which have higher electricity consumption.

“The additional 80,5 cents a litre, thanks to the increase in the general fuel levy and the contribution to the Road Accident Fund levy, as well as transfer fees for more expensive homes, might see a downsizing in petrol guzzling cars and impact negatively on property prices.

“But the better than expected current account deficit clearly shows Government’s strategy is on the right path towards fixing the economy, which will ultimately benefit everyone, including the wealthier segment of the market.”



Latest


16 Feb 2021
Transition management services partnership announced

Standard Bank has signed a memorandum of understanding (MoU) with Chicago-headquartered financial services company Northern Trust, to partner on the…

Transition management services partnership announced

Standard Bank has signed a memorandum of understanding (MoU) with Chicago-headquartered financial services company Northern Trust, to partner on the delivery of transition management services across Southern Africa. Under the partnership, Standard Bank’s clients will gain access to Northern Trust’s full suite of transition management services. Transition Management is a…

16 Feb 2021
Tax free wealth creation with property funds

By Liliane Barnard, CEO and Portfolio Manager at Metope Investment Managers, and Aimee Glisson, Director: Operations, Performance & Risk at…

Tax free wealth creation with property funds

By Liliane Barnard, CEO and Portfolio Manager at Metope Investment Managers, and Aimee Glisson, Director: Operations, Performance & Risk at Metope Investment Managers The tax year, along with the deadline for an investor’s maximum R36 000 annual tax-free savings account contribution, comes to an end on the 28 February 2021. Investors…

16 Feb 2021
Why multi-manager investing is popular

Multi-management has been around for over two decades. This investment management approach is popular among many investors because it promises…

Why multi-manager investing is popular

Multi-management has been around for over two decades. This investment management approach is popular among many investors because it promises to deliver smoother, more consistent investment returns, despite cyclical turbulence of financial markets. Given last year’s drastic swings in financial markets and continued uncertainty on how the Covid pandemic will…

16 Feb 2021
Momentum Health Solutions unpacks COVID-19 vaccine roll-out plan

Momentum Health Solutions announced its COVID-19 vaccine roll-out strategy and how it intends to support both its members, as well…

Momentum Health Solutions unpacks COVID-19 vaccine roll-out plan

Momentum Health Solutions announced its COVID-19 vaccine roll-out strategy and how it intends to support both its members, as well as the uncovered population, in being vaccinated. As the COVID-19 virus continues to spread, a third wave is imminent, should the vaccination rollout not commence soon. Speaking at a recent…


Top stories


10 Sep 2020
How too much choice is draining your brain

By: Paul Nixon, head of technical marketing and behavioural finance at Momentum Investments From the words of Francis Scott Key…

How too much choice is draining your brain

By: Paul Nixon, head of technical marketing and behavioural finance at Momentum Investments From the words of Francis Scott Key that dubbed America “The land of the free”, which stuck, to the unforgettable Mel Gibson monologue where an army of painted Scots were willing to trade their lives for the…

13 Apr 2020
Investors should keep a reasonable investment allocation outside of SA

MoneyMarketing asked Roland Gräbe, the head of Tailored Fund Portfolios at Old Mutual Wealth, about offshore investments in the COVID-19…

Investors should keep a reasonable investment allocation outside of SA

MoneyMarketing asked Roland Gräbe, the head of Tailored Fund Portfolios at Old Mutual Wealth, about offshore investments in the COVID-19 environment and what form a global market recovery will take.

13 Apr 2020
SA’s Proposed Covid-19 Disaster Management Tax Relief

The National Treasury recently issued the draft Disaster Management Tax Relief Bill (Bill) for public comment by 15 April. The…

SA’s Proposed Covid-19 Disaster Management Tax Relief

The National Treasury recently issued the draft Disaster Management Tax Relief Bill (Bill) for public comment by 15 April. The draft Bill, together with its explanatory memorandum, provides clarity with regards the tax relief measures President Cyril Ramaphosa announced on 23 March.

10 Apr 2020
When the going gets tough, farmers are on familiar territory

South African farmers are old hands at adapting to uncertain and daunting circumstances, and our local agricultural industry has proved…

When the going gets tough, farmers are on familiar territory

South African farmers are old hands at adapting to uncertain and daunting circumstances, and our local agricultural industry has proved to be most enterprising in acclimatising to challenges as they arise.


Visit the official COVID-19 government website to stay informed: sacoronavirus.co.za