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WHAT ARE THE TAX IMPLICATIONS?
Sanlam Private Wealth
Jul 06, 2021
You can watch a recording of the webinar here:
In a nutshell, the most important duties and taxes that may impact your offshore investments, are:
South African estate tax: In SA, this tax is paid by the estate of the deceased in the form of estate duty. The beneficiary inheriting the funds generally has no liability to pay the tax, as the estate has already paid it. The estate duty rate is 20% on the dutiable amount for estates up to R30 million, and 25% for anything above R30 million.
Foreign inheritance tax: Most countries have their own inheritance and estate duties or taxes, and a South African resident owning a foreign asset may be subject to these. For example, the UK and US apply rates of up to 40% on assets located in these countries. Depending on whether an estate duty double taxation agreement is in force with SA, the rates levied in the foreign jurisdiction may be in addition to the SA estate duty. Where such an agreement is in force, the higher rate of the foreign jurisdiction will typically apply, with SA giving a credit against the SA estate duty payable, limited to the amount that would have been payable in SA.
SA donations tax: Levied at a flat rate of 20% on the value of the property donated. However, donations exceeding R30 million are taxed at a rate of 25%. Section 56(1) of the Income Tax Act contains a list of exempt donations, including those between spouses, and donations to approved public benefit organisations. An annual exemption applies on the first R100 000 of property donated.
Another factor to consider is probate – the process in which a will is ‘proved’ in a court as a valid public document and accepted as the true last testament of the deceased. Probate will generally be required in the jurisdiction in which an asset is held. If the country in question doesn’t recognise a South African will or executor, this can be a time-consuming and costly affair. An offshore will is therefore sometimes required to simplify the process.
At Sanlam Private Wealth, we have all the key skills in place to assist you and your family on your offshore investment journey, from start to finish. We can provide world-class advice and integrated onshore-offshore wealth management solutions – if you need further information, please don’t hesitate to contact us at email@example.com.
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Sanlam Private Wealth (Pty) Ltd, registration number 2000/023234/07, is a licensed Financial Services Provider (FSP 37473), a registered Credit Provider (NCRCP1867) and a member of the Johannesburg Stock Exchange (‘SPW’).
All reasonable steps have been taken to ensure that the information on this website is accurate. The information does not constitute financial advice as contemplated in terms of FAIS. Professional financial advice should always be sought before making an investment decision.
Participation in Sanlam Private Wealth Portfolios is a medium to long-term investment. The value of portfolios is subject to fluctuation and past performance is not a guide to future performance. Calculations are based on a lump sum investment with gross income reinvested on the ex-dividend date. The net of fee calculation assumes a 1.15% annual management charge and total trading costs of 1% (both inclusive of VAT) on the actual portfolio turnover. Actual investment performance will differ based on the fees applicable, the actual investment date and the date of reinvestment of income. A schedule of fees and maximum commissions is available upon request.
COLLECTIVE INVESTMENT SCHEMES
The Sanlam Group is a full member of the Association for Savings and Investment SA. Collective investment schemes are generally medium to long-term investments. Past performance is not a guide to future performance, and the value of investments / units / unit trusts may go down as well as up. A schedule of fees and charges and maximum commissions is available on request from the manager, Sanlam Collective Investments (RF) Pty Ltd, a registered and approved manager in collective investment schemes in securities (‘Manager’).
Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. The manager does not provide any guarantee either with respect to the capital or the return of a portfolio. Collective investments are calculated on a net asset value basis, which is the total market value of all assets in a portfolio including any income accruals and less any deductible expenses such as audit fees, brokerage and service fees. Actual investment performance of a portfolio and an investor will differ depending on the initial fees applicable, the actual investment date, date of reinvestment of income and dividend withholding tax. Forward pricing is used.
The performance of portfolios depend on the underlying assets and variable market factors. Performance is based on NAV to NAV calculations with income reinvestments done on the ex-dividend date. Portfolios may invest in other unit trusts which levy their own fees and may result is a higher fee structure for Sanlam Private Wealth’s portfolios.
All portfolio options presented are approved collective investment schemes in terms of Collective Investment Schemes Control Act, No. 45 of 2002. Funds may from time to time invest in foreign countries and may have risks regarding liquidity, the repatriation of funds, political and macroeconomic situations, foreign exchange, tax, settlement, and the availability of information. The manager may close any portfolio to new investors in order to ensure efficient management according to applicable mandates.
The management of portfolios may be outsourced to financial services providers authorised in terms of FAIS.
TREATING CUSTOMERS FAIRLY (TCF)
As a business, Sanlam Private Wealth is committed to the principles of TCF, practicing a specific business philosophy that is based on client-centricity and treating customers fairly. Clients can be confident that TCF is central to what Sanlam Private Wealth does and can be reassured that Sanlam Private Wealth has a holistic wealth management product offering that is tailored to clients’ needs, and service that is of a professional standard.