5. OPTIONS
• Single Discretionary Allowance up
to R1 million.
• Foreign Investment Allowance up
to R10 million.
• Special Dispensation Allowance.
This is unlimited.
6. OPTIONS
• Acquire asset/investment directly
in own name.
• Acquire asset/investment through a
life wrapper or roll-up fund.
• Acquire asset/investment through
an offshore structure.
7. ACQUIRING ASSET DIRECTLY IN
OWN NAME
• Benefit:
–As a general rule, no additional costs
over and above the normal holding
fee i.e. asset managers fee etc.
8. ACQUIRING ASSET DIRECTLY IN
OWN NAME
What else should I be aware of?
•Any taxable income or capital gains
produced by the investment must be declared
for tax in SA on the received by or accrued to
basis.
•Asset will still form part of my deceased
estate.
9. ACQUIRING ASSET DIRECTLY IN
OWN NAME
• If the asset still forms part of my estate
what are the consequences?
• Succession planning through a will.
• Estate duty tax (both local and offshore).
• Share the love but not too far!
• South African Reserve Bank will allow co-ownership
but only between spouses. Don’t add the children!
12. OFFSHORE WILL v LOCAL WILL
• A local trust may NOT directly own foreign
investments.
• If your local will directly or indirectly
bequeaths assets to a local trust the offshore
assets will need to be repatriated.
• No one size fits all! Speak to your estate
planner to determine if you need a foreign
will to compliment your local will.
13. LIFE WRAPPER OR ROLL-UP
FUND
• In a roll-up fund the capital gains tax is only triggered
when the unit is disposed off. Taxable income such as
dividends and interest don’t accrue to the taxpayer and
are added to the value of the unit.
• In a life wrapper the tax is paid within the wrapper
generally at lower rates than the individual’s personal
rate.
• The life wrapper will fall outside the estate for
executors fees i.e. no probate.
14. LIFE WRAPPER OR ROLL UP
FUND
Anything special I should be aware of?
• Even though there may be no income
tax on an annual basis in the wrapper
the value of the investment will still be
subject to estate duty tax.
• Probate is still required for the roll-up
fund.
17. OFFSHORE TRUSTS
• INCOME TAX:
– There is little to no income tax benefit in
utilising an offshore trust but avoiding income
tax should never be the reason for establishing
a trust.
– Due to the deeming provisions in the Income
Tax Act you should be in no worse off position
than if you invested in your own name.
18. OFFSHORE TRUSTS
• TECHNICAL TALK:
–Section 7(8): deeming provision for
income.
–Paragraph 72: deeming provision for
capital gains.
–Section 31: interest on the loan.
25. FOREIGN TRUSTS
Recommended that;
• Attribution principles remain in place.
• All distributions of foreign trusts be taxed as
income.
• Inclusion of separate criminal charges in the Tax
Administration Act that can be brought against
taxpayers who fail to disclose direct or indirect
interests in foreign trust arrangements.
27. DTC WEBINAR DECEMBER 2015
• It was incorrect to suggest taxing all
distributions from offshore trusts as
revenue and the DTC is going to
suggest focussing on neatening up
paragraph 80 of the Eighth Schedule of
the Act to deal with the double tax
issues.
28. SOMETHING TO THINK ABOUT
ON THE WAY HOME!
• Estate Duty Tax in the United Kingdom:
–40% on any amount exceeding
£325,000.
• Estate Duty Tax in the USA:
–40% on any amount exceeding
$60,000.
