Dear Readers,

The face of the world is changing fast. Whilst some northern African and Middle Eastern States are in political turmoil, Japan is suffering from the worst devastation since World War II.

Our focus in this edition is on the recent Budget Speech by our Finance Minister Pravin Gordhan. The key point of his speech was the creation of an additional 500'000 jobs per year. There were no major surprises. However, whilst the Minister is giving with one hand, he is taking back with the other. Have a look at the summary and you will see what we mean.

Further, there are some proposed changes to the Immigration and the Consumer Protection Acts, which will have an impact on many of us.

Enjoy the reading, with best regards,

Your SwissFin - Team

CONTENTS

1. INVESTMENTS

• 1.1. Interest rates: Bank deposits, insurance plans and tax-free investment amounts

2. TAXES

• 2.1. Budget Speech Highlights

3. SWISS BANKING

• 3.1. Is your offshore portfolio managed in your best interest?
• 3.2. Exclusive cost-effective portfolio management offering by SwissFin

4. SHORT-TERM INSURANCE

• 4.1. Is a golf cart part of my inventory insurance?
• 4.2. Protect items on the outside of your house against theft
• 4.3. Is my vehicle insured whilst left at a dealer for sale?
• 4.4. Are we insured against a Tsunami?

5. HEALTH CARE COVER

• 5.1. Bupa pricing and benefit changes as from 1^st April
• 5.2. Bupa launches free online health assessment

6. IMMIGRATION

• 6.1. Changes to the Immigration Act in the pipeline

7. LIFE INSURANCE

• 7.1. New annuity by Discovery Life
• 7.2. Notify your life insurer if you change jobs etc.

8. OTHER

• 8.1. The new Consumer Protection Act (CPA) is in force since 1^st April 2011
• 8.2. Proposed changes to the Employment Equity Law

1. INVESTMENTS

1.1. Interest rates

SwissFin offers the following rates as of April 2011:

Bank Deposits:

Please contact our office for more information. Conditions apply.

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

Tax-free interest income - maximum investment amounts

• R 1'367'000 each for taxpayer under the age of 65
• R 2'103'000 each for taxpayer between the age of 65 and 75
• R 2'287'000 each for taxpayer over the age of 75

Underlying assumptions: 6.0% effective interest. Couples married in community of property can double these amounts.

Comment:

It is possible that the interest rate cycle is flattening out. Whilst inflation in South Africa is approx. 4%, the high oil price and a weaker rand will have an impact on the Reserve Bank's monitoring. If the oil price stays at this level for a longer period, inflation in South Africa will start rising and so will inflation rates. The next few months will be an important period to determine where we are heading.

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2. TAXES

2.1. Budget Speech Highlights

Finance Minister Mr. Pravin Gordhan, presented his second Budget Speech on 23 February 2011. The highlights are as follows:

• The government will spend R 9 Bio. with the goal to create 5 Mio. jobs over the next 10 years
• Over R 800 billion will be spent on social infrastructure over the next 3 years
• The budget deficit is estimated at 5.3% of GDP for 2011 and 2012
• GDP forecast is 3.4% in 2011 and 4.1% in 2012
• R 5 billion is allocated for youth employment subsidy, which will be a tax credit administered by SARS.
• New tax tables for individuals for the 2012 tax year:

Tax rebates:

R 10'755; over age 65 R 16'767 applies. An additional rebate of R 2000 has been introduced for persons over the age of 75.

Tax thresholds:

Persons under 65 years of age, earning less than R 59'750 and persons over 65 earning less than R 93'150 do not pay taxes. Persons over the age of 75 now have a tax threshold of R 104'261.

Interest income exemption:

R 22'300 (under age 65) and R 33'000 (over age 65).

Foreign interest / dividends:

The tax-free exemption on foreign interest and dividends remained unchanged at R 3700.

National Health Insurance (NHI):

The government will introduce the scheme over the next 14 years. In order to fund the project, government is either increasing VAT, adding a payroll tax for employers or a surcharge on individual's taxable income. This increase will hurt those people most that will benefit from the NHI. The idea of slapping business with a payroll tax will not help to create employment either.

Medical scheme contributions:

The tax deduction will rise from R 670 to R 720 for the first two family members and from R 410 to R 440 for each additional beneficiary as from 1 March. A new system will be introduced in the next tax year.

Pension Fund Act:

Different rules currently exist for Pension Funds, Retirement Annuities and Provident Funds. The minister wants to introduce a uniform tax system for all products which will allow a maximum tax-deductable contribution of up 22.5%, subject to a maximum of R 200'000, of taxable income. The introduction will only be for the next tax year.

The tax-free amount for retirement/severance from Pension/Provident Funds has been increased from R 300'000 to R 315'000 as from 1 March.

Transfer duty:

The tax-free threshold has been increased from R 500'00 to R 600'000. This will assist low income earners and first buyers of homes.

Capital gains exclusions:

The new limit for this tax year is increased from R 17'500 to R 20'000. The exclusion in the event of death goes from R 120'000 to R 200'000.

Disposal of a small business for an owner over age 65, the exemption increases from R 750'000 to R 900'000.

Taxation from gambling winnings:

The government will tax all winnings over R 25'000 at 15% withholding tax - this includes your winnings from the lottery. Casinos will have to withhold such taxes and pay over to SARS. Obviously, losses for gambling are not tax deductable.

Other Taxes:

The yearly boring increase in excise duty was not missing: Beer 6.4c per 340ml can, Wine 13.5c per 750ml bottle, Spirits R 2.86 per 750 ml bottle and cigarettes 80c per packet of 20.

Fuel taxes are raised by 18c a litre, of petrol/diesel, whereas the Road Accident Fund (RAF) Levy is receiving 8 cents to a total of 80 cents as from 7^th April.

Comment:

We need to look at the following figures to understand that South Africa is faced with massive infrastructural problems:

• 40% of our GDP is going to government salaries - this is amongst the highest in the world.
• 15 million people are receiving social grants - six times more than in 1998. This is more than a quarter of the SA population.
• Only 13.1m of the 50m population is employed and 44% of young people between the age of 18 and 29 cannot find a job.
• 5.9 Mio taxpayers contribute to 30% of the total government tax income.

If SA cannot grow the economy fast enough and create employment, the above figures are not sustainable. The 41% of the population that is working is far below the figures of other BRIC countries such as Brazil (65%) or China (71%).

Even with the growth plan, the government will not achieve 5 Mio new jobs by 2020 for a population that will have grown substantially by then.

Mr. Gordhan has got a difficult task at hand - we wish him luck and hope that the economic environment will change favourably for his plans.

3. SWISS BANKING

3.1. Is your offshore portfolio managed in your best interest?

Many investors did not have a satisfactory experience and a bad performance over the last few years. We often see that the risk was not clearly defined and that the use of expensive in-house funds and/or structured products of banks have led to a huge reduction of the portfolio performance.

Have you ever wondered if your portfolio is structured according to your risk profile, free of any conflict of interest and really pursuing your investment objectives? We are offering an independent portfolio analysis by Mr. Mark van Deelen, a specialised analyst in Switzerland. He will elaborate about the following:

• Bank fees
• Asset management fees
• The amount of hidden fees in funds and other structures
• If your portfolio structured according to your risk profile

You can contact Mr. Hug This e-mail address is being protected from spambots. You need JavaScript enabled to view it or click here to make direct contact with Mr. van Deelen. The fee for the report is CHF 250. You do not have to disclose the bank or account numbers involved and all data is treated with utmost confidentiality.

You will receive a report that will show if you can improve the cost structure of your portfolio and if your asset manager is dealing without any conflict of interest.

3.2. Exclusive cost-effective portfolio management offering by SwissFin

We are pleased to announce that as from this month, investors with funds in Switzerland can make use of the following portfolio management offering:

• The funds offered are the SAMI balanced model portfolios in CHF, USD, GBP Sterling and Euro.
• The annual bank fee is CHF 100
• Any transaction charge is CHF 9
• The annual management fee is 1.5%
• The minimum investment is CHF 250'000

In order to keep the charges low, there are no loan facilities, credit cards, cash withdrawals etc. You have internet access at all times to view your portfolio.

The performance of the portfolio (before costs) is as follows:

We have compared the cost structure with other offerings in the market place and are confident that our offering is amongst the lowest in the market place. Combined with an overall good performance of the portfolios, you should achieve good returns in the long term.

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4.1. Is a golf cart part of my inventory insurance?

Please note that a golf cart does not form part of your contents insurance and needs to be specified under the motor section. You have a choice between 3^rd party cover only and comprehensive insurance.

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4.2. Protect items on the outside of your house against theft

Please note that none of your items outside your house (gate motors, CCTV cameras, pipes, house numbers etc. is covered against theft. You either install these items so that they cannot be removed, or you have to specify them on your policy.

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4.3. Is my vehicle insured whilst left at a dealer for sale?

The answer is no - if you leave your car at a dealer and he tries to sell it for you on a "consignment basis", any damage to your car will not be covered by your policy. This is a standard policy wording on all domestic and commercial policies.

Make sure that the car dealer has got an "internal & external motor policy" in place.

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4.4. Are we insured against a Tsunami?

After the recent events in Japan, this question has come up again. Please note that an earthquake itself is covered on all standard domestic and commercial policies. A Tsunami by definition is a tidal wave following an earthquake or volcanic eruption. Please find the summary as follows:

*the callcentre could not give us reliable information nor could they interprete the policy wording.

The above is only a summary and the policy wording refers for further details.

It is interesting to note that the risk of a Tsunami in South Africa is rather low because of the very low seabed.

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5. HEALTH CARE COVER

5.1. Bupa premium changes as from 1^st April

Please note that the insurer has adjusted its premiums - please click here to find your current premium.

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5.2. Bupa launches free online health assessment

Bupa International has announced the launch of its free online health assessment. First time users are asked to register so that Bupa can get some very basic personal information, which is important for the quality of the assessments. This also means that returning users won't have to enter the same information again the next time they visit. First time users will have to register an email address and a chosen password, which is a different login from the one currently used by Bupa International Members for MembersWorld.

The health assessment will ask the user a series of questions to help understand their medical and lifestyle risk factors. At the end users will receive a report with medical information based on their answers and guidance on how they can improve their health if necessary. The assessment takes less than 10 minutes to fill out. The health assessments on the site include maternity, diet, stress, fitness, heart disease risk and breast cancer risk.

For more information on Bupa please contact Ms. Virasha Maharaj on This e-mail address is being protected from spambots. You need JavaScript enabled to view it

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6. IMMIGRATION

6.1. Changes to the Immigration Act in the pipeline

As usual, we unfortunately cannot report about any positive developments at the immigration authorities. There is still a huge backlog of applications. To make matters worse, instead of the old applications being dealt with first, we see recent applications being approved.

Further, the proposed amendment to the Act was passed by the National Assembly on 22^nd March and will now go to the National Council of Provinces. The summary of changes is as follows:

• All first applications have to be lodged abroad. Visa changes are no longer allowed in South Africa and the applicant has to return to his country of origin. This does not include applications for Permanent Residence permits. Only in exceptional circumstances may a person change the permit locally.
• No attorney, advocate or immigration practitioner may represent a client. This amendment is in violation of the constitution, which entrenches "the right of representation.

We will continue to assist our clients with the preparation and submission of their applications.

• The amendment no longer makes provision for the exceptional skills permit and is replaced by a critical skills permit. It will probably be even more difficult to qualify for the new permit.
• Business permit owners have to employ at least 80% local staff.

There are also rumours that the minimum investment amount for businesses will be increased and that the currently required income for pensioners of R 20'000 p.m. is no longer sufficient.

Many organisations will take legal action against the Department if the proposed amendments become law - we are going to see a long battle ahead in the Courts of our country.

Comment:

The government is on an employment drive but the above changes are counterproductive. We recommend that all foreigners, currently on 4-year retired person's permits, consider taking up permanent residence. After all, it does not mean that you will become liable for tax in South Africa and that you have to stay here on a permanent basis!

Please contact Mr. Hug This e-mail address is being protected from spambots. You need JavaScript enabled to view it for further information.

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7. LIFE INSURANCE

7.1. New annuity by Discovery Life

Discovery has announced a new income annuity for persons going into retirement. This new product allows one to use the advantages of a linked and fixed annuity in one product. Meaning that for the first time you can cover your monthly expenses in retirement and take advantage of the growth opportunities of a linked annuity, all in one product.

Please contact Mr. Kenny Williamson at This e-mail address is being protected from spambots. You need JavaScript enabled to view it for further information.

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7.2. Notify your life insurer if you change jobs etc.

We recently heard of a disability income claim being repudiated.

The insured person changed from a self-employed business owner to becoming employed as a tour guide. Because of the change of risk not having been reported, the insurer did not pay out the claim.

Please note that if you have a life/disability/income replacer policy in place, you need to notify us if you change your occupation, income and/or smoking status, as your premiums are based on these criteria.

Please contact Mr. Kenny Williamson at This e-mail address is being protected from spambots. You need JavaScript enabled to view it for further information

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8. OTHER

8.1. The new Consumer Protection Act (CPA) is in force since 1^st April 2011

We have reported about the new Act in previous newsletters. The long awaited date is just around the corner. Herewith some points to remember:

• The consumer can cancel any fixed term contract giving 20 business days notice in writing. Examples of popular contracts where this applies are cellphone agreements and gym memberships. However, you will still be liable for 10% of the amount that would have been payable by you for the reminder of the fixed term, but excluding interest.
• There are no more automatic contract renewals. The supplier has to contact you at least 40 to 80 days prior to expiry.
• As a consumer, you have up to 6 months to return faulty or unsafe goods. It is your choice to have the item replaced, repaired or refunded in full. After this incident, a further 3-month guarantee period applies.
• If a delivery is late, the item does not match the order or you have examined the product and are not happy with it, the item can be returned at the supplier's expense.
• Competitions via SMS can no longer be charged at exorbitant fees, but at the normal network rates.
• For any repairs, an estimate must be given and the repairer may not charge more afterwards, unless he has informed you accordingly. They also cannot charge for a quote only, unless you have been advised so in advance.
• If something is sold via direct marketing, there is a cooling-off period of 5 business days and you must inform the supplier in writing. They have to pay you back within 15 days once you have returned the goods.
• We have been told that there is a "DO NOT CONTACT" register if you want to avoid being called by direct marketing companies. You can register by sending an SMS with the letters DMA followed by your ID number to 34385. Further, direct marketers are no longer allowed to call you after 7 pm or before 8 am, only between 9 am and 12 am on Saturdays and are not allowed to call you on Sundays or public holidays.
• Suppliers have to inform you of all defects, whether obvious or hidden. The so-called "voetstoots clause", especially in the car trade, will be difficult to apply.
• If you cancel a booking due to death or hospitalization, you cannot be charged a cancellation fee.

So if you are thinking of complaining, make sure the contract was signed after the 1^st April, otherwise it will not fall under the new CPA.

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8.2. Proposed changes to the Employment Equity Law

These changes have not been welcome by many organisations and have been labelled as racist. The new bill removed a provision in the old Act requiring employers to employ staff according to the demographic profile of the national and regional economically active population.

Fears are high that job losses would result in the coloured and Indian communities such as Cape Town and Durban.

Various trade unions have requested that the proposed amendment be withdrawn.