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We welcome you to our first Newsletter for this year.

We are very pleased that we have received the approval from SARS on our off-shore "SwissChoices" structure, making us the first company in SA tax history to have been given an Advance Tax Ruling on this matter. We are answering questions that arose after our last Newsflash in this Newsletter.

The Budget Speech by our Finance Minister is also summarised further below. There were no major fireworks, but the economic environment did not allow for such to happen. And at long last, our interest rates have started the long-awaited downward trend, to the relief of many consumers.

We hope you enjoy the reading, with best regards,

Your Swissfin - Team

Swiss Financial Consulting offers the following rates as of 10^th March 2009:

Bank Deposits:

Please contact our office for more information. Conditions apply.

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

Tax-free interest income - max. investment amounts:

R 654'000 each for taxpayer under age of 65

R 993'000 each for taxpayer under age of 65

Underlying assumptions: 11.5 % effective interest. Couples married in community of property can double these amounts.

Comment:

The Reserve Bank has decreased lending rates at their last meeting by 1% which has pushed long- and short-term yields lower. Combined with the tax relieve declared at the budget speech, the tax-free investment amounts have increased substantially. Further interest rates cuts are expected.

We trust you have received our Newsflash a few weeks ago. If not, you can view the information under

http://www.swissfin.co.za/en/swiss-banking/off-shore-private-banking-insurance.html

Several questions were raised thereafter:

What was the performance of the SwissChoices Portfolio?

Answer: Because the client transfers existing assets into the structure, such figures depend on his/her selected assets and investment strategy. Model portfolios are available upon request.

I do not need SwissChoices because I can make use of an asset swap?

Answer: The assets that are transferred under the asset swap are still fully taxable in South Africa and will have to be brought back to SA. SwissChoices takes care of the tax savings for the investor.

Why should I declare my off-shore assets?

The fact that there is a world-wide movement to eradicate tax-havens and places with banking secrecies for undeclared funds, should make every investor aware that he/she needs to become compliant in the long-term. SwissChoices might give you a constructive solution for the beneficiaries of your estate. They should not inherit a problem, by not being able to bring funds back into circulation and living with a constant fear that authorities will discovery these funds one day.

I have incurred losses at the stock exchange and do not wish to make a new investment.

Answer: You are not entering into a new investment with SwissChoices, as you are transferring existing assets into the structure. A book loss is the ideal opportunity to start a SwissChoices, as the future growth is tax-free.Time for planning is now!

Can I receive a foreign pension from SwissChoices?

Answer: Yes, they can pay you a regular annuity.

I had bad experiences with assets managers and would like to make my own investment decisions.

Answer: You can make use of this option under SwissChoices.

For more information please contact Mr. Hug on 021-551331 or This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

Over the last six months the Swiss banking secrecy has been under enormous pressure from the United States, Germany, France and the UK. Some of these countries are demanding an automatic information exchange. Others have demanded the abolition of the different treatment of tax evasion and tax fraud by Switzerland. If Switzerland is not cooperative on this, the OECD will put the country on a black list of tax havens. This would have grave consequences for the Swiss banking industry and for the country's economy as a whole. The Swiss government caved in to the pressure and no longer differentiates between tax evasion and tax fraud for foreigners. Singapore, Liechtenstein, Austria and Luxemburg all announced that they would also adhere to OECD standards from now on.

Nothing has happened as yet. Switzerland has double taxation treaties with 70 countries in which the treatment of income, capital gains and inheritance tax is governed. The treaties also describe the treatment of tax evasion and tax fraud. In future, Switzerland will cooperate in proven cases of tax evasion. Switzerland will probably demand that tax havens such as British Virgin Islands or Cayman be treated in the same manner. Instead of offering automatic information exchange, Switzerland will most likely offer an automatic but anonymous withholding tax on interest income (and possibly dividends) to other countries such as the US, much like the EU withholding tax.

What does this mean for clients with assets in Switzerland? Clients with non-declared assets will be at a much higher risk than in the past, no matter where the assets are placed. Income out of those assets will likely be levied with a non-refundable withholding tax of up to 35%. International money transfers will become very risky. Such transactions can easily be backtracked to the paying bank. Incoming money transfers from abroad will likely be tracked and the receiver checked for full tax compliance.

We recommend tax compliant solutions to avoid withholding taxes, to guard your privacy, save on income tax and to arrange your estate. Our SwissChoices Portfolio offers all these advantages whilst being fully tax compliant. With the transfer of your assets into the structure, you no longer have declarable and taxable income or capital gains. SwissChoices Portfolio is ideal for citizens of Germany, Spain, Italy, UK, Scandinavia, South Africa and the USA (other countries on request).

Once again, our partner company in Switzerland, SAMI AG, is represented this time of the year by Rudolf Wiser's visit.

He will be in Cape Town from 15^th to 28^th March. Should you wish to discuss private banking, global investment and tax matters with him, you can contact him via our office on 021-551331, at This e-mail address is being protected from spambots. You need JavaScript enabled to view it or his local mobile no. 082 719 1783.

The insurer is offering a new investment for existing life insurance policy holders. Depending on the monthly premium for your life policy, any lump sum investment into an endowment policy with Discovery is boosted by a guaranteed 14% to 26%! Please contact Mr. Kenny Williamson ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ) for further information.

Finance Minister Trevor Manuel presented his 13^th Budget Speech on 20th February 2009. The most important points are as follows:

Individuals:

New tax tables for individuals and trusts for the 2009 tax year:

Tax rebates:

R 9756; over age 65 an additional R 5400 applies.

Tax thresholds:

Persons under 65 years of age, earning less than R 54'200 and persons over 65 earning less than R 84'200 do not pay taxes (previously R 46'000 and 74'000).

Interest income exemption:

R 21'000 (under age 65) and R 30'000 (over age 65) - the exemption previously was R 19'000 and R 27'500.

Foreign interest / dividends:

It is proposed that the tax-free exemption on foreign interest and dividends is increased to R 3500 from R 3200.

Estate duty:

In the event of the first dying spouse not utilising the R 3.5 Mio abatement, the surviving spouse will be entitled to the unused portion. This means that an effective abatement of R 7.0 Mio is available.

VAT:

The compulsory registration threshold is increased from R 300'000 to R 1.0 Mio. Companies with a turnover of less than R 50'000 cannot register for VAT.

CGT:

The annual exclusion threshold for capital gains/losses will rise from R 16'000 to R 17'500.

Primary residences sold for less than R 2.0 Mio. are not be subject to CGT. The R 1.5 Mio primary residence exclusion remains.

STC:

The tax is phased out and replaced by a dividend withholding tax of 10%. The introduction of a final dividend tax is expected in the second half of 2010.

Medical scheme contributions:

The tax deduction will rise from R 570 to R 625 for the first two family members, and from R 345 to R 380 for each additional beneficiary as from 1^st March.

Travel allowance:

The "deemed private kilometres" allowance falls away. Anybody with a travel allowance will have to keep a logbook to claim the deduction. Please go to:

http://www.sars.gov.za/uploads/images/0_SARS_Travel_LogBook.pdf

You can download the sample of the SARS logbook.

Tax on withdrawal of retirement funds:

The first R 22'500 will be tax-free. Thereafter, the following table applies:

Social Security:

The disability/old age grant has been increased from R 940 to R 1010 p.m. The child grant goes from R 220 to R 240 p.m.

Foreign Exchange:

No changes.

Other Taxes:

The increase in excise duty has been introduced again: Beer 7.0c per 340ml can, Wine 32c per 750ml bottle, Spirits R 3.21 per 750 ml bottle and cigarettes 88c per packet of 20. Did you know that the revenue from every second cigarette goes into the taxman's pockets?

The General Fuel Levy is increased by 23/24 cents (petrol/diesel) as from 1^st April.

The Road Accident Fund (RAF) levy increases to 64 cents per litre (was previously 46.5 cents).

The levy for plastic shopping bags will increase from 3 cents to 4 cents.

The levy on non-energy saving bulbs will increase by 1 to 3 cents.

Electricity costs will increase by 2 cents per kilowatt hour as form 1^st July.

Economy:

- R 44.5. billion is going to poverty reduction, other amounts are allocated to education, health services, crime fighting etc.

- R787 billion over 3 years is allocated to the bus transit system, freeways, electricity and rail projects.

- The state is guaranteeing for R 176 billion of Eskom's debt.

Comment:

The current global economic crisis and its possible impacts on South Africa did not give the Minister a lot of room to manoeuvre. The government is protecting the poor, creating employment, investing in infrastructure, promoting competitiveness and fiscal sustainability.

It was, however, disappointing that the abolishment of Exchange Control Regulations is further prolonged.

Parliament approved a change to the Act, that if estimates of provisional tax is not at least 80% of the final tax, a penalty is payable. However, this is only applicable if the calculation was deliberately or negligently understated.

You should receive a reminder in the post when your drivers' licence needs to be renewed. But not everybody notifies the Department of a change of address nor is the postal service always accurate. We recommend that you diarise when your licence is due for renewal.

We refer to our last newsletter's article. We have been told that moving away from the accident scene by about 50 metres will make this jammer ineffective.

What happens if your property is damaged whilst your neighbour is building or doing renovations? Your insurance policy unfortunately does not cover such events. If your neighbour's contractor has not taken out a Contractor's All Risk policy and submits the claim, you have no real chance to receive compensation, unless you employ an attorney to claim for the damages.

Should you wish to have a replacement vehicle whilst yours is in for repairs, you need to take out this cover separately. Please check your policy if it mentions "car hire". Should you wish to have such cover, please notify our office.

Peter Flint, Regional President - Africa, recently released the following statement (summary): "The local operation has achieved a profit after tax of R 180 Mio., an increase of 32% over 2007. The capital base of AIG SA is protected and cannot be accessed by the mother company AIG Inc. The local company still enjoys an AAA rating, which is the highest local rating available. The losses incurred by the parent company have no effect on local operations. We will underwrite risks and pay claims as we have in the past".

Recent large claims on thatch risks are pointing to a general premium increase. A large hospitality concern burnt down recently with an estimated loss of R 50 Mio. The current premium rates are no longer sustainable and your renewal document will most likely show an increased rate.

The insurer recently integrated all policy systems onto a single platform. There systems were not available for extended periods and many policy renewals are arriving late. Please note that your cover is in place and we will forward those documents to you upon receipt. The handling of claims is unfortunately also affected.

From the 9^th to the end of March, vehicle drivers can have their windscreen checked free of charge at any PG Glass outlet.

Bupa International has announced pricing adjustments as from 1^st of April 2009. For Zone 6 (South Africa), the following applies:

USD Premiums:

• Lifeline Essential Plan: - 10.8%

• Lifeline Gold: -2.3%

Euro Premiums:

• Lifeline Essential Plan: - 8.8%

• Lifeline Gold: -0.2%

LSTG Premiums:

• Lifeline Essential Plan: 5.0%

• Lifeline Gold: 14.9%

It is nice to see that Bupa International, the largest international expatriate health insurance provider, has managed to reduce premiums (except LSTG Plans) where others constantly increase their rates.

Young persons are often reluctant to take out a retirement annuity because they might emigrate at some stage. You can now take out the capital - in excess of R 22'500 will be subject to tax. The following shall illustrate the tax advantages of an RA:

The client contributes R 200'000 to an RA and claims a 40% tax relief (R 80'000 refund from SARS), which makes the net costs R 120'000. After 5 years, the client emigrates and the fund has in the meanwhile grown at 10% p.a. to R 322'102.

The tax payable on withdrawal is R 55'928 (tax-free amount R 22'500 deducted, balanced taxed at 18%).

The net proceeds amounts to R 268'173, representing an overall return of 17.4% p.a.!!

Please make sure that you take your air fare return ticket with you, should you visit one of our neighbouring states whilst in possession of an SA visitor's visa. Regardless if you travel by air or road to a neighbouring country, upon return to SA, you need to proof that you have a valid flight ticket back to your country of origin, before you can enter SA again.

When last have you looked at your will? Have your personal circumstances changed, have you looked at the additional R 3.5 Mio. abatement that is given to surviving spouses? Do not yet remove the testamentary trust provision in your will, as the Act still needs to be amended. Please consult Mr. Hug ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ) for further information.

Clients wanting to provide for surviving heirs can do this best with an RA for the following reasons:

• A lump sum and the annuity payable at death are not subject to estate duty since 1 January 2009.

• Contrary to trusts, where a loan account is created, there is no outstanding account with an RA as well as no interest -free loan and therefore no deemed property.

• You have a choice of investment portfolios, some insurance companies even offering a stock broking portfolio. The discount for a direct investment on the JSE can therefore be almost 40% - sponsored by SARS!

• Because the tax on retirement funds have been abolished, all capital gains and interest earned on the portfolio is tax-free.

• Once in retirement, a living annuity with a low income level will probably result in a surplus income that continues to grow tax-free in the fund.

• With the amendments made to the Income Tax Act this year, a member never has to retire from the fund. Therefore, the income for the heirs can be postponed until the member dies. Persons over the age of 70 can now get tax relieve and remove assets from their estate.

For the reasons above, it makes sense to contribute a large lump sum to an RA, not only are you saving on income tax and CGT, but also 20% on estate duty.

The insurance industry in SA is strictly regulated. Any advice giver needs to be in possession of a licence. At contact stage, the advisor needs to show the client an "intermediary disclosure" document which needs to be signed off by the client. Make sure that this document shows the type of services the advisor is authorised to provide. In most cases, bank brokers do not have such a licence. Should they render other advice, which is highly illegal, they risk the suspension of their licence.

You will need the following to apply for a local driver's licence:

• 4 black/white photos of applicant

• Application fee of R 120

• Original driver's licence from abroad that needs to be handed in

• South African ID book

• A translation, done by the foreign embassy/consulate, of the foreign driver's licence

• Eye-test by optician (only valid for 3 months)

We would like to welcome Aileen Lawrence in our team. She is South African but has spent 20 years in Switzerland, worked for a private bank and is fluent in German and Swiss-German.

Carolina Painczyk will be leaving us at the end of March. We would like to thank her for her great support over the years and wish her good luck in her new ventures.  Jacqueline Oester and Tiffany Häfeli will look after all your domestic and commercial short-term insurance needs, whilst Aileen Lawrence will be assisting them.

We have found a golden ladies bracelet with diamonds in our boardroom. Kindly contact us if you have lost the item.