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navigating the complexities
Sanlam Trustees International
Apr 22, 2021
Investing offshore has always been a hot topic for South Africans, for a number of reasons – to protect wealth from domestic political or economic risk, to gain access to markets and opportunities unavailable locally, or to diversify across multiple geographic locations and currencies.
There are different ways of accessing the global market. The simplest way is to invest in rand-denominated options such as dual-listed or rand hedge companies on the JSE that earn the majority or all of their revenue from countries outside South Africa, or local feeder funds providing access to offshore versions of these funds. It’s important to note that with rand-denominated options, tax will always be paid on the rand unit price, which means that both asset price appreciation and currency depreciation could impact any potential capital gains tax (CGT).
Many South Africans prefer to invest directly offshore by owning hard currency assets, however. In this case, you’ll pay CGT only on the hard currency asset price movement (the rand will have no tax impact on your investments). If you’re not restricted by the SA Reserve Bank or SA Revenue Service from holding direct offshore assets, you can use your offshore allowances (a R10 million foreign investment allowance and a R1 million single discretionary allowance per year) to transfer your after-tax funds abroad. Alternatively, if you don’t have the required regulatory approval or you wish to invest more than your annual allowances, you can make use of the asset swap capacity of a financial services provider such as Sanlam Private Wealth.
If you’re going the direct route, it’s essential to obtain expert advice before you decide to ship out some of your assets, to ensure you don’t get tripped up by the complexities that often accompany global investments. These could include complications around estate duty or inheritance tax (both local and foreign), donations tax, local legislation and restrictions on investing offshore, and the overall effect of currency fluctuations. Professional advice is crucial to ensure you consider all the factors that could impact your eventual investment returns as well as the intergenerational transfer of your wealth.
Key factors to consider include:
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 on firstname.lastname@example.org.
Sanlam Private Wealth manages a comprehensive range of multi-asset (balanced) and equity portfolios across different risk categories.
Our team of world-class professionals can design a personalised offshore investment strategy to help diversify your portfolio.
Our customised Shariah portfolios combine our investment expertise with the wisdom of an independent Shariah board comprising senior Ulama.
We collaborate with third-party providers to offer collective investments, private equity, hedge funds and structured products.
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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.