Dear Readers,

We are almost there - South Africa is hosting the biggest sporting event in the world. It is going to be a great month for South Africa - let's all stand behind the World Cup and hope indeed that it will benefit our country in many years to come.

A lot has happened since our last newsletter: Amongst other, the volcanic ash from Iceland finally disappeared. The EuroZone is not in good shape and desperately trying to protect their currency. World stock markets are still nervous and have not found direction yet.

Our newsletter is packed with lots of information - we hope you enjoy it and your comments are welcome.

With best regards,

Your SwissFin - Team

Contents

1. INVESTMENTS

• Interest rates: Bank deposits, insurance plans and tax-free investment amounts
• Momentum's Protected Index Plan offering
• Be aware of non-compliant offshore life wrappers

2. SWISS PRIVATE BANKING

• How SwissFin can be of assistance
• Banking fraud: Warning to Swiss Bank account holders

3. TAXATION

• Update on worldwide tax developments
• Swiss withholding tax on company pension income

4. SHORT-TERM INSURANCE

• 25 Mio suitcases lost every year
• Santam excludes overflowing of rivers in Montagu
• Increased theft of Toyota Fortuners and Hilux
• Vehicle excess on policies for retired people
• Volcano ash: How are local guesthouses covered against loss of income?
• Have you got an international driver's licence?
• You need to take out separate insurance cover for building alterations
• The most expensive thing you can buy is cheap insurance

5. HEALTH CARE COVER

• Bupa wins the Queen's award
• Get insurance for a hospital bill that is not fully paid

6. LIFE INSURANCE

• New life insurance offering by Discovery Life
• Momentum and Metropolitan merge

7. IMMIGRATION

• Business Permits: CA certification required after 2 and 5 years

8. ESTATE PLANNING

• Estate Duty not to be scrapped before 2012
• Foreigners need a South African will

9. OTHER

• Do you have problems with your non-resident bank account?
• The new Companies Act
• New staff member at SwissFin
• Opening hours of our office

1. INVESTMENTS

Interest rates

Swiss Financial Consulting offers the following rates as of June 2010:

Bank Deposits:

Insurance Plans: "Guaranteed income plans" (5 year term):

1'029'000 each for taxpayer under age of 65

R 1'565'000 each for taxpayer under age of 65

Underlying assumptions: 7.7% effective interest. Couples married in community of property can double these amounts.

Comment
The Reserve Bank has reduced rates marginally since our last newsletter. Further interest rate cuts would be welcome as the Rand is still very strong. A rate reduction would also assist the export industry and help reduce unemployment levels which are still too high.

to top

Momentum's Protected Index Plan offering

Momentum Wealth has launched a new tranche for investment. The features are as follows:

• The investment is for a fixed period of 3 years
• The minimum amount is R 100'000
• The capital is guaranteed after the 3 years
• The investment is linked to the FTSE / JSE Top 40 Index
• The maximum return after 3 years is 40%
• The subscription period ends 11 June and the maturity date is 18^th June 2013

Comment
This offering could be part of a well diversified portfolio. Although the investment is linked to the stock market, the capital is guaranteed and a maximum return of 40% over the 3 years can be achieved.

to top

Be aware of non-compliant offshore life wrappers

Life wrappers, similar as to our SARS-approved SwissChoices platform, are available in other countries too. We have recently come across an example where a bank offered a client a wrapper structure which is domiciled in the Bahamas. As a customer, you should be certain that such offerings are tax compliant in South Africa. If not, you could be faced with backdated penalties and interest on unpaid taxes.

to top

2. SWISS PRIVATE BANKING

How SwissFin can be of assistance

We have noticed that many of our clients do not know that we render assistance with Swiss Private Banking matters. Our Private Banking services have been extended by offering banking relationships with Credit Suisse, UBS, Bank Baer and Luzerner Kantonalbank. The account opening is only possible in connection with an asset management mandate.

Any conflict of interest of banks by offering their own funds and structured products has been eliminated by using external, independent asset managers. All commissions that are normally paid to the asset manager are paid back to our clients. Such fees can be vary from 1% to 2% p.a. which will significantly impact the performance of a portfolio over a longer period.

We have arranged "all-in-fees" with most of the banks which is a fixed transaction charge not dependant on the number of transactions. These fees are lower than the normal fees charged by the banks.

The asset management fee can be a fixed cost or a combination with a profit share.

The minimum portfolio size is CHF 500'000. If beneficial, you can also make use of our tax-compliant SwissChoices platform to optimize your worldwide tax liability.

> Please contact Tony R. Hug for further information.

to top

Banking fraud: Warning to Swiss Bank account holders

Swiss citizens living in South Africa have lately become victims of banking frauds. The perpetrators get access to details from Swiss or Liechtenstein banking accounts (names, addresses, signatures, credit balance, etc.) and use this information to forge orders to transfer money to bank accounts in Asia. To prevent such cases, the Consulate General of Switzerland recommends Swiss or Liechtenstein bank account holders to be vigilant with their banking identity details and to request their bank not to send correspondence via postal service and not to process any written money transfer order without prior consultation with the bank account owner via the telephone number in possession of the bank (and not the one on the instructions letter).

to top

3. TAXATION

Update on worldwide tax developments

Australia wants information on offshore accounts

According to an article in the Australian Government Monitor, the Australian Tax Office has ordered every bank operating in the country to hand over information on clients who hold offshore accounts in "jurisdictions of interest". Some 100,000 bank customers are expected to be named by the 57 banks subject to the order, published in the government's official gazette a few weeks ago.

Officially, the order is merely a "request"; the gazette notice does not cite the statutory powers being invoked, if any. But most of the institutions - which include major credit card providers - are complying with the order without challenge, says the newspaper, The West Australian.

Australia still has an offshore tax amnesty in place, but it ends on 30 June.

Commission paid to tax informers in the UK

According to an article on the telegraph.co.uk:

"An increasing volume of calls to an evasion hot line coupled with the financial incentive for leaking details has provided the tax authorities with a growing source of information. In 2007-08 HMRC paid £155,950 to informers in cases where investigations produced extra tax revenue. Last year the total jumped to £281,111 on the back of more cases and bigger returns.

234 are criminally charged after South African Revenue Service audits:

SARS has - by using the lifestyle questionnaires - found discrepancies between declared income and the assets the taxpayers owned. The National Prosecution Authority is now sitting with another 1480 cases which have been referred for possible prosecution on similar grounds. SARS has selected about 60000 individuals for tax audits this year.

Registration of all persons for tax purposes

For the 2011 tax year, all employers registered for Pay As You Earn will have to ensure that their employees have tax numbers, even if these employees do not qualify to pay tax. This requirement is mandatory from August this year. By then SARS expects to have an online system to register all employees who do not have a tax number.

You might also find that you will be contacted by financial institutions enquiring about your income tax and ID/Passport number.

to top

Swiss withholding tax on company pension income

Some „Kantons" in Switzerland were not compliant and did not deduct withholding tax on company pension funds if the recipient resides abroad. Recipients of Swiss company pension funds might find a new deduction from their pension as it recently happened with funds paid from the Kanton Zurich. Please enquire with the Swiss Tax Authorities in the relevant Kanton to see how you can claim the withholding tax should you be registered for tax in South Africa.

What is somewhat disturbing is the fact that the withholding tax is not the same in every Kanton.

to top

4. SHORT-TERM INSURANCE

25 Mio suitcases lost every year

Bad news first: This is the amount of travel items that were lost and most of them did not find their way back to the legal owner. The overall cost in 2009 for the airlines was € 1.87 Bio! The good news is that this figure is 25% less than the year before.

This means, that 11 out of 1000 airline passengers will never see their suitcase again.

Please consider taking out travel insurance before you start your journey. You can book your travel insurance online on our website by clicking on http://www.swissfin.co.za/en/insurance/health-insurance/travel-insurance.html

to top

Santam excludes overflowing of rivers in Montagu

Over the past few years the beautiful town of Montagu was hit several times by severe downfalls and subsequent bursting of river banks. We have recently come across a policy endorsement where Santam no longer insured such damage. Please check your policy document if you are resident in Montagu and if you have such an exclusion, contact our office for alternative cover.

to top

Increased theft of Toyota Fortuners and Hilux

Insurers have experienced a significant increase in the number of stolen and hijacked Toyota Fortuner and Hilux vehicles. Criminals have developed a simple means of disarming the vehicle as they know where the siren is installed and are able to disconnect the siren without setting off the alarm.

Our recommendation is that you visit the nearest Toyota dealer to have the alarm moved which will significantly reduce the risk.

Also regularly test your tracking device if you have a unit installed. In the event of your client's vehicle being stolen or hijacked and the tracking device is not working, the claim could be repudiated.

to top

Vehicle excess on policies for retired people

With most insurance policies, retired persons (or persons over the age of 55) do not have an excess on a motor vehicle claim. Please be aware that this excess only applies to the policyholder. Should anybody else drive the vehicle that is not over age 55 (children, guests, employees etc.) the normal excess structure applies.

to top

Volcano ash: How are local guesthouses covered against loss of income?

As travellers have found themselves stranded following the grounding of flights for some time, B&B and guesthouse owners in South Africa have had to cancel bookings and have lost income.

We have examined all guesthouse policy wordings and can confirm that only BnB SURE has an extension that covers loss of income following the cancellation by a guest beyond the control of the guest. The volcanic ash would certainly fall into that category. Please note that you need to have insured the "Business Interruption" and cover is only in the first 7 days.

We only had one guesthouse with a claim - all the others had guests that were stuck in South Africa and therefore had to stay longer.

to top

Have you got an international driver's licence?

We would like to remind all our non-resident clients again, that YOU NEED AN INTERNATIONAL DRIVER'S LICENCE in South Africa if you do not have a local driver's licence. Your foreign one is locally not valid and will lead to delays and unnecessary problems if you have a motor claim.

to top

You need to take out separate insurance cover for building alterations

Please note that if you do alterations to your house, any damage that is caused directly or indirectly from such workmanship is not covered in terms of your personal policy. You need to take out a "Contractor's All Risk Policy" if you want protection. Please advise us in time before the alterations commence should you require such cover.

to top

The most expensive thing you can buy is cheap insurance

At SwissFin we strive to give you the best policy at the best price to give you peace of mind. There will always be a cheaper policy somewhere, but such policies cannot offer a good service and most of the times will not pay in the event of a claim.

Please contact our Swiss Team, Jacqueline Oester, Aileen Lawrence or Amanda Rasch for a quote on a tailor-made policy with excellent benefits.

to top

5. HEALTH CARE COVER

Bupa wins the Queen's award

This is the third time Bupa International has won a Queen's Award for outstanding achievement in international trade, having been a previous winner in 1999 and 2005.

The Queen's Awards for Enterprise are the UK's most prestigious accolades for business performance, and recognize and reward outstanding achievement. They are made each year by Her Majesty the Queen, on the recommendation of an advisory committee that includes representatives of Government, industry and commerce, and trade unions.

to top

Get insurance for a hospital bill that is not fully paid

We all know that there are no more tariff bindings in place between local health insurers and medical practitioners. This means that a specialist can charge any fee and that you will be liable for the difference the medical aid did not pay.

You can now take out "gap cover" that will settle specialist bills up to 400% of the guideline. The maximum premium for the cover is only R 95 for a family and R 70 for a single person. You can also take about a "daily cash back benefit" of R 400 to R 1000 per day in hospital - the premium for the benefit starts at R 88 p.m.

> Please contact Mr. Kenny Williamson at our office (Tel. 021-5513331) for more information ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ).

to top

6. LIFE INSURANCE

New life insurance offering by Discovery Life

The life insurer has recognised that some of their product offerings have become too complicated. Most policy holders only want life and maybe some disability cover. The insurer has introduced the Essential Life Plan, which is the same as the Classic Plan but without some of the additional benefits (payback, child cover etc.).

> Mr. Kenny Williamson ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ) will assist you if you need any further details.

to top

Momentum and Metropolitan merge

The two life insurance companies announced a few weeks ago that they will merge into one financial services group. The combination of the health care business will make the group one of the largest health care administrators.

The brand names will be continued to be used and until final approval of the authorities. Momentum and Metropolitan will continue to operate as two separate entities for the time being.

to top

7. IMMIGRATION

Business Permits: CA certification required after 2 and 5 years

Most Permanent Resident (PR) Certificates that were issued under the category "own business" carry the clause "CA Certificate to be renewed within 2 years and 3 years thereafter". This means that although the applicant has received the right to stay permanently in South Africa, he/she must still prove that the business exists and the CA has to confirm that the company employs 5 staff members etc.

Please check your PR certificate and contact us before expiry of the terms so that your PR does not become invalidated.

to top

8. ESTATE PLANNING

Estate Duty not to be scrapped before 2012

At a recent training session addressed by the Master of the High Court in Pretoria, some interesting facts emerged:

• 82% of deceased estates reported to the Master are under R125 000!
• Less than 1% of deceased estates reported to the Master this year were in excess of R4 125 000!

These facts clearly show that estate duty is not making any profit for the State.

The 2010 budget had the following comment about estate duty:

"Over the year ahead, several issues will be researched for possible attention in tax proposals for 2011 and 2012. "Both estate duty and capital gains tax are payable upon death, which is perceived as giving rise to double taxation. The estate duty raises limited revenue and is cumbersome to administer. Moreover, its efficacy is questionable: many wealthy individuals escape estate duty liability through trusts and other means. Taxes upon death will be reviewed."

Comment
Estate Duty has not been scrapped as yet, nor is it likely to be before 2012 at the earliest.

to top

Foreigners need a South African will

We were recently contacted by foreign clients who were under the impression that they do not need an SA will for their local assets.

Please note that it is acknowledged practice to have separate wills in different jurisdictions. International law says that a foreign will has no jurisdiction in South Africa and vice versa. The assets are being dealt with under the law that prevails where the assets are based.

The Estate Duty Act prescribes certain formalities to validate a will. Amongst others, an executor needs to be nominated and witnesses have to sign on each page.

> You are welcome to contact our office if you need assistance with drafting your will. Our fees are low and you can make use of our expertise as executors.

to top

9. OTHER

Do you have problems with your non-resident bank account?

Foreigners often are inconvenienced when money from third parties cannot be credited to their local bank account. This is due to exchange control regulations which say that no funds of residents may be credited to the account, unless funds were transferred to the 3^rd party and there is a valid reason for the credit.

We often see these problems when an insurance claim is paid. Only with a separate letter from us or the insurance company will the bank credit the funds.

Some banks are less restrictive as other. Please contact our short-term insurance department of you need assistance with such payments.

to top

The new Companies Act

The new Act was passed in Parliament in April this year. The Minister still needs to sign it off before it becomes law. We do not expect this to come into force before this or even next year. The major proposed changes are as follows:

• CIPRO will be dissolved and a new Department will reorganize matters.
• There is a major change towards the responsibilities of directors, as they will be personally liable any loss of the company.
• No new Close Corporations ("CC") can be founded but existing ones can continue to do business.
• The definition of a "Company" has changed. If a CC is defined as a company (only applies to larger ones), such conditions like annual audits etc. will now apply as well.

Comment
Anybody that is a director of a company should take out "Director's Liability Insurance". The fact that a Director will have to compensate for losses, even due to negligence, is in most cases a high risk and an appropriate insurance policy should be taken out.

> You can click on http://www.financierworldwide.com/article.php?id=6739 or contact Tony R. Hug for more information.

to top

New staff member at SwissFin

We are pleased to inform you that Ms Tiziana Di Cosmo will be joining our short-term insurance team by mid July. She is the fourth Swiss staff member and will be dealing with all insurance claims. Ms Amanda Rasch will be assisting Ms Jacqueline Oester with servicing her client base.

to top

Opening hours of our office

Please note that our business hours are Monday to Friday from 08.30 to 16.30.

This Friday, our office will be closed from 13.00. In the event of an emergency, please contact us on our cellphone numbers.

to top