03 Aug SwissFin Newsletter August 2015
We welcome you to the winter edition of our Newsletter.
The first half of 2015 has come and gone. Over that period we have been inundated with Eskom’s load shedding schedules, further definitions to the new immigration regulations and the Greek debt crises.
Load shedding continues to remain an issue that has a direct impact on everybody. In this newsletter, we detail some more ways in which you can minimize your risk exposure including some tips on gas installations.
We would like to ask all our short-term insurance clients to read the article “SwissSure is coming to life” under point 6. May we ask you to send us the required form at your earliest convenience?
As usual, we have also included information across the board regarding investments, taxes, insurance and other related topics and this newsletter can be viewed under https://www.swissfin.co.za/newsletters/swissfin-newsletter-august-2015/
Enjoy the reading, with best regards,
Your SwissFin – Team
- Interest rates: Bank deposits, insurance plans, tax-free investment amounts and our offshore model portfolios
2. INTERNATIONAL FINANCIAL NEWS
- Automatic Information Exchange and OECD reporting guidelines
- Swiss reject federal inheritance tax
- Julius Baer has to pay USD 350 Mio. for US tax evasion
- Tax filing season has opened from 1 July 2015
- Who does not need to submit a tax return?
- Over 65 – check if you may have become a provisional taxpayer
- Finance Minister withdraws implementation of UIF principle
- Erratum on transfer duty
4. SHORT-TERM INSURANCE
- Tips to minimize your risks due to load shedding
- Hollard takes over Execuline
- Are you a trustee of a body corporate – be aware of the risks!
- Make use of MUA’s Concierge service
- Vantage changes insurance carrier
- Update on new interpretations of the immigration regulations
- Is the number of visiting tourists down?
- Travelling with minor children – be aware of the requirements!
- Clarification on the PR stickers
- SwissSure is coming to life!
- Marius Romer is here for all your short-term insurance needs!
- Are you an e-cigarette smoker – be aware when travelling by air
- South Africans are the biggest borrowers in the world
- What is the most used App in South Africa?
- Police officers lose 2356 guns in three years
- South Africa’s top 10 residential estates
- Please participate in our client survey
- We value your comment
SwissFin offers the following rates as of July 2015:
Bank Deposits ››
- Money Market
- 12 Months
Please contact our office for more information. Conditions apply.
Insurance Plans: “Guaranteed income/growth plans” (5 year term), approx. 80% of income tax free: ››
- Gross Yield
- Taxes Payable
Tax-free interest income – maximum investment amounts ››
R 1.5 Mio for taxpayers under the age of 65
R 2.3 Mio for taxpayers between the age of 65 and 75
R 2.5 Mio for taxpayers over the age of 75
Underlying assumptions: 6.5% effective interest. Couples married in community of property can double these amounts.
SwissFin offshore model portfolios ››
The annualized performance (before costs) of our balanced portfolios is as follows:
- 1 Year
- 2.8% p.a.
- -1.1% p.a.
- 3 Years
- 5.6% p.a.
- 6.2% p.a.
- 8 Years
- 2.2% p.a.
- 5.5% p.a.
In mid-June this year, Standard & Poor’s re-affirmed SA’s credit rating at BBB- with a stable outlook. The rating is the lowest investment grade following the downgrade 12 months ago.
Recent wage settlements in the public sector should help limiting financial risks for the next three years and allowing Treasury to stick to its hard line expenditure ceilings. GDP is expected to gradually increase to 2.8% by 2018. The other rating agencies, Fitch as well as Moody’s, confirmed their unchanged ratings too.
However, the SA Reserve Bank has bowed to the pressure to hike interest rates, because of expected inflation rises and the US increasing their rates by the end of the year. The Reserve Bank has increased the repo rate to 6%, the first increase since July last year. Inflation is possibly going to rise due to higher oil prices, a weak rand and above inflation wage settlements.
The SA economy is currently on thin ice with the unemployment rate still over 26%, the highest in 11 years. Stagflation is becoming a real threat if the government does not succeed in addressing the challenges successfully.
2. INTERNATIONAL FINANCIAL NEWS
Automatic Information Exchange and OECD reporting guidelines ››
Vast amounts of money are kept abroad and go untaxed to the extent that taxpayers fail to comply with tax obligations in their home jurisdictions. The OECD has published guidelines for the automatic exchange of information and closer co-operation between tax administrations against tax evasion.
You can click here to read the standard reporting guidelines.
The Swiss Government will follow the guidelines in 2018 and has published draft regulations for further discussions. Please click here to read them (in German).
We are currently in the process of finding tax efficient solutions for South African tax residents with taxable assets abroad and will keep you posted on the progress in our next newsletter.
Swiss reject federal inheritance tax ››
On June 14th, the Swiss people massively rejected an initiative that called for the introduction of an inheritance tax to be administered from the Swiss Federal level.
The initiative was not only rejected by each canton, but effectively crushed with 71% of the voters casting a “No” vote. An initiative needs not only a majority of votes to pass, but also a majority of the cantons as well.
Currently inheritance and gift taxes are regulated on a cantonal level and the implementation varies strongly from one canton to another. Some of these cantons have no inheritance tax while others impose rates that are higher than the one that had been proposed by the initiative. The initiative wanted to take away the taxing power of the 26 cantons and redistribute this right to the federal government. The goal of the initiative was to implement a uniform tax rate of 20% on inheritance and gifts above two million Swiss Francs and drastically reduce the amount of tax exemptions.
Switzerland’s cabinet, both houses of the parliament, and all of the cantons were recommending voters reject the initiative.
Julius Baer has to pay USD 350 Mio. for US tax evasion ››
The decision follows discussions between Julius Baer and the US Department of Justice (DOJ) regarding the final settlement of the investigation into the bank’s legacy US cross-border business. Julius Baer is accused of aiding US tax evasion by providing undeclared accounts through Switzerland’s bank secrecy laws.
Earlier this month, Swiss banks Société Générale Private Banking (Suisse) and Berner Kantonalbank AG, also entered deferred tax evasion prosecution agreements with the US.
“Whilst there is no defined timetable for a final settlement, Julius Baer continues to work towards closing this regrettable legacy issue as soon as possible,” the bank added. Last year, Credit Suisse pleaded guilty to aiding US tax evasion, for which it paid $2.6bn
Tax filing season has opened from 1 July 2015 ››
1 July marks the beginning of Tax Season. As from this date taxpayers can submit their Income Tax Return (ITR12) to SARS for the 2015 tax year (period 1 March 2014 to 28 February 2015).
The deadlines are as follows:
- Manual returns: 30 September 2015
- Electronic returns (e-filing): 27 November 2015
- Provisional taxpayer with e-filing: 29 January 2016
Please also note that provisional taxpayers have to submit the second return by the end of August 2015.
Should our office attend to your tax returns, please make sure you send us all relevant details (IRP 5, RA certificates, medical tax certificate and expenses, rental schedule, commission expenses, income statement, interest certificates, foreign interest, foreign dividends, donations, log book and motor vehicle details, pension pay-outs etc.) by no later than the end of September, so that we can submit timeously on your behalf. We’d hate for you to miss the deadline and get a penalty!
Who does not need to submit a tax return? ››
If all of the following criteria apply to you, you may not have to submit an income tax return:
- Your total salary for the year before tax is not more than R 350’000.
- You only receive employment income from one employer for the full year.
- You have no other income such as a car allowance, business income, taxable interest or rent, or income from another job.
- You don’t have any additional allowable tax related deductions to claim such as medical expenses, retirement annuity fund contributions and travel expenses.
- You received interest from a South African source of less than R 23’800 if you are below 65 years, or R 34’500 if you are 65 or older; or
- Dividends were paid to you and you were a non-resident during the 2015 year of assessment.
Still not sure? Visit www.sars.gov.za and click on “Do you need to submit a return” on our Tax Season page to see whether you need to submit a return.
Over 65 – check if you may have become a provisional taxpayer ››
Amendments to the Income Tax Act that took effect on 1 March 2015 will affect certain taxpayers over 65, who will become liable for provisional tax.
The amendments have important implications for over-65s who receive income of more than R 30’000 a year from interest, foreign dividends and rental. SARS removed the provision that exempted from provisional tax those taxpayers over 65 whose taxable income did not exceed R 120’000 in a tax year.
In terms of the amendments, you are exempt from provisional tax if you do not carry on a business and your taxable income for the tax year:
- Does not exceed your tax threshold for the tax year; or
- From interest, foreign dividends and rental was not more than R 30’000. The tax thresholds for the 2015/16 tax year, which began on March 1, are:
- Taxpayers below 65: R 73’650;
- Taxpayers aged 65 to 74: R 114’800; and
- Taxpayers aged 75 and over: R 128’500.
Over-65s who, in terms of the amendments, are now liable for provisional tax will have to make sure their cash flow is sufficient for them to pay income tax early. The first provisional tax payment for 2016 is due on August 31 this year, and the second payment is due in February next year. Taxpayers who meet the criteria to register as provisional taxpayers but fail to do so and do not pay tax by the due dates become liable for interest and penalties.
Finance Minister withdraws implementation of UIF principle ››
The Minister of Finance has decided not to proceed with the implementation of the proposal to reduce the remuneration threshold against which contributions to the Unemployment
Insurance Fund (UIF) is calculated. This decision was taken after detailed engagements with the National Economic Development and Labour Council (NEDLAC).
In the 2015 Budget, the Minister proposed to reduce the remuneration threshold against which contributions to the UIF are calculated from the current monthly amount of R 14’872 to
R 1’000, for a period of one year. The proposal was aimed at providing support to the economy by allowing workers and employers to use R 15 Billion that would otherwise have gone to UIF. The UIF currently has an accumulated surplus of more than R 72 Billion, which is well in excess of annual expenditure on benefits.
After carefully considering all of the public comments received, it became apparent that the proposal could lead to unintended consequences.
The Minister has decided that the UIF Budget proposal will therefore not be implemented in the 2015/16 fiscal year, to allow more time for consultation at NEDLAC and with other interested stakeholders.
Erratum on transfer duty ››
Due to incorrect information from the daily press, the tables in our last newsletter on the new transfer duty were not displayed correctly. Herewith the amended ones:
|Value of property in R||Rate|
|0 – 750’000||0%|
|750’001 – 1’250’000||3% of value exceeding R 750‘000|
|1’250’001 – 1’750’000||R 15’000 + 6% of value exceeding R 1‘250‘000|
|1’750’001 – 2’250’000||R 45’000 + 8% of value exceeding R 1’750’000|
|2’250’001 and more||R 85’000 + 11% of value exceeding R 2’250’000|
3. SHORT-TERM INSURANCE
Tips to minimize your risks due to load shedding ››
Following our recommendations in the last newsletter, we would like to continue assisting you with avoiding damages. We have already started seeing an increase in power surge related claims resulting from the load shedding:
- A hairdryer left on the bed when load shedding was implemented, set the bed alight when the power was turned back on.
- Candle fell over setting curtains or bedding alight. Never leave candles unattended or burning when going to sleep!
- An iron left on during load shedding, set the ironing board alight and caused subsequent further fire damage.
- Heaters placed too close to flammable material such as blankets and curtains are also a major fire risk.
Make sure to unplug all appliances that were being used before the power outage to prevent them turning on unattended when the power is restored. In doing this you will also protect these items from electricity spikes or surges.
Also keep an eye on cell phones being left on charge, as well as alarm systems and electric fencing being rendered inoperable due to load shedding.
Gas installations: Regulations that were introduced in 2009 indicate that all gas installations must have a Certificate of Conformity according to the Pressure Equipment Regulations that have been promulgated under the Occupation Health and Safety Act (No 85 of 1993). Without gas installations being done by certified professional, who is registered with the Liquefied Petroleum Gas Safety Association of Southern Africa (LPGAS), homeowners could have their insurance claims repudiated in the event of any financial loss linked to faulty installations.
Hollard takes over Execuline ››
As of 9 July 2015, Execuline Motor Underwriting Managers has become part of Hollard Insurance Company Ltd. The take-over has very little effect on policyholders as Hollard has always been the underwriter.
Hollard is a rapidly growing insurance company and this takeover follows the recent acquisition of Aquarius Underwriting Managers in March this year. At the moment, Hollard is looking at taking over Regent Insurance too.
Should you require any additional information, please do not hesitate to contact our short-term insurance department.
Are you a trustee of a body corporate – be aware of the risks! ››
There could be some unknown risks when looking at the Sectional Title Act:
Paragraph 40.3.a states ““ A trustee of a body corporate whose mala fide or grossly negligent act or omission has breached any duty arising from his fiduciary relationship, shall be liable to the body corporate for any loss suffered as a result thereof by the body corporate (…). “
Furthermore, Prescribed Management Rule 29.1.a states that “At the first meeting of the trustees or soon thereafter as is possible, and annually thereafter, the trustees shall take steps to insure the buildings, and all improvements to the common property, to the full replacement value thereof, subject to negotiation of such excess, premiums and insurance rates as in the opinion of the trustees are most beneficial to the owners.”
Therefore, the Act does not directly require trustees to have valuations done, but if found to have acted in gross negligence, they can be held personally liable for financial losses incurred by the body corporate.
Trustees would be well advised to have their sums insured backed by a professional valuation, at least every 3 – 4 years. When appointing a valuator, he must fulfil the following basic requirements:
- must be a certified and registered professional valuator
- must be specialised in sectional title valuations
- must carry adequate professional indemnity cover (at least R 10 Million per claim)
- must be able to provide a detailed Schedule of Replacement Values showing each section’s participation in the total sum insured, including common property.
Please do not hesitate to contact our short-term insurance department should you require contact details of such professional valuators.
Make use of MUA’s Concierge service ››
We recommend to all our MUA clients to read up about the above additional service. For an additional cost of only R 30 per month, you can make use of various services, including a driver taking you home if you had one drink too many.
Please click here for the updated benefit information or contact our short-term insurance department.
Vantage changes insurance carrier ››
The underwriting manager recently announced that with effect from 1 July 2015, Vantage Insurance Acceptances (Pty) Ltd will act on behalf of Centriq Insurance Company Ltd.
Please note that there will be no changes in covers provided and this includes all additional offerings and related services to policyholders.
All policyholders should have received a summary of the changes by now. Should you not have received any communication, please contact our short-term insurance department.
Update on new interpretations of the immigration regulations ››
There has been some confusion with the interpretation of the new regulations. Please find the following important points:
Extensions of visitor’s visa:
We heard several rumours that an extension for tourists after 90 days is no longer possible. This is not correct and you can locally extend for a maximum of another 90 days. Be aware that the application needs to be submitted within the first 30 days of arrival. We will gladly assist you with the online application and booking of appointment at VFS.
Local applications for permanent residence:
A person on a visitor’s visa may no longer apply for PR in South Africa and has to submit the application in his/her home country. The Department has reviewed the definition of “status change” and has included a change from a visitor’s visa to a permanent residence as such.
If you are not certain with an application, please note that we will gladly prepare it for you and courier the documents to your home country for submission.
Parents of South African children:
It is no longer possible for a foreign parent of a SA-child to apply for permanent residence under the “relatives” category in relation to the child. The parent can only lodge an application as a spouse or a partner of the other parent (if such is a South African citizen or PR holder), or any other category.
Children born in SA and citizenship
As from October last year, children born to permanent residency holders are no longer automatically granted citizenship by virtue of the fact their parents are South African. The law now states:
“Any person born in the Republic of parents who have been admitted into the Republic for permanent residence and who is not a South African citizen, qualifies to be a South African citizen by birth, if-
(a) he or she has lived in the Republic from the date of his or her birth to the date of becoming a major; and
(b) his or her birth is registered in the Republic in accordance with the Births and Deaths Registration Act, 1992 (Act No. 51 of 1992).
This means that a child born after October last year will not be granted automatic citizenship, nor will they be granted permanent residency status automatically and have to apply for a visa to be legal in South Africa. Most likely the “Relatives Permit” should be considered. The child can only become a South African citizen having resided in South Africa until the age of 18.
Check your child’s birth certificate to see if he/she has been given an ID number. If so, your child is a SA citizen. If not, you have to apply for a temporary and permanent residence permit.
Is the number of visiting tourists down? ››
According to the Business Day newspaper, official figures show that the number of tourists visiting SA from China have fallen sharply, demonstrating the effect of controversial new visa regulations, which require tourists to apply in person to South African consulates for their visas.
Tourism and migration figures from Statistics SA show the number of tourists declined 7.2%, to 681’216 between February last year and February this year, with the number arriving from China seeing the largest decrease, of 32.4%. China accounts for only about 4% of overseas tourists to SA but it is seen as a huge potential growth market.
The regulations requiring biometric identification of those who apply for visas, which came into effect late last year, have been a particular concern in relation to geographically vast countries such as China, where there were (until recently) only two South African visa offices.
The February figures do not yet reflect the effect of stringent new requirements for minor children, which came into effect only on June 1.
On the other hand, Department of Home Affairs Director-General Mkuseli Apleni said that “the drop in tourism numbers is not as significant as people are talking about, but we still need to understand why people are not travelling.” Speaking during a media briefing in June, Apleni said the total numbers for people travelling to South Africa indicate a drop of 1.3%.
Tourism Minister Derek Hanekom said a survey would be used to assess the scale of devastation to the tourism sector, which stands to lose 270’000 prospective tourists and 21’000 jobs as a result of the rules.
It would be helpful to the general public, if SA Statistics and the Department of Home Affairs would use the same information before publishing different figures.
Travelling with minor children – be aware of the requirements! ››
The Department has now finally introduced the new regulations as from 1 June 2015 for South African minors (under the age of 18) leaving the Republic and foreign minors who are visa-exempt entering the Republic:
CHILD TRAVELLING WITH BOTH PARENTS
Parents must produce an unabridged birth certificate and a valid passport for each child travelling.
CHILD TRAVELLING WITH ONE PARENT
Parents must produce an unabridged birth certificate, a valid passport and a court order / death certificate / affidavit confirming the absent parent has given permission for the child to travel.
CHILD TRAVELLING WITH A GUARDIAN
Guardian must produce an unabridged birth certificate, a valid passport and a court order / death certificate / affidavit confirming that the parents have given permission for the child to travel.
Child must produce an unabridged birth certificate, a valid passport and a court order/death certificate / affidavit confirming permission to travel from both parents, or legal guardian.
A letter from the person who will receive the child in South Africa including their full contact details and a certified copy of their ID / passport must be produced.
Travellers who are from countries that are not visa-exempt do not have to bring along unabridged birth certificates for the child/children travelling with. The Visa Exemption List is on the Home Affairs website.
This is being done to curb human trafficking. According to the Department of Home Affairs, 30 000 minors are trafficked through South African borders every year. 50% of these minors are under the age of 14.
Click here for the detailed checklist and the Parental Consent Affidavit form.
Clarification on the PR stickers ››
As mentioned in a previous newsletter, the Department no longer issues the stickers in passports for permanent residence holders. It has come to our attention that some immigration officers at border control now also want to see the PR certificate, even if the PR sticker is attached in the passport.
We recommend all clients to carry a laminated, certified copy of their PR certificate with them when travelling abroad, as well as their ID books/cards.
SwissSure is coming to life! ››
We are very excited to share our latest developments with you: We have founded a sister company to SwissFin, which will exclusively look after all our short-term insurance clients.
The new company will be effective towards the end of this year and will be managed by Mr. Tony R. Hug and Mr. Marius Romer.
What does this mean for you as a client?
SwissSure and SwissFin are housed under the same address, same telephone numbers etc. All our staff is the same and you will be dealing with the same persons as before. The only change will be the SwissSure logo on your policy.
Why are we implementing this change?
SwissSure will be operating on different IT systems. Some insurance companies are giving us wider mandates allowing us to render an even better service to our clients.
What needs to be done?
All short-term insurance policies will be transferred from SwissFin to SwissSure. Regulations require us to send you a “broker change form” for signature, although there is no real change. We would appreciate if you could assist in sending the forms back to us.
Please click here to complete the form.
What happens to SwissFin?
The company will keep operating as usual with immigration, tax and investment advice, but is no longer offering short-term insurance products, as SwissSure (Pty) Ltd. will be the dedicated company assisting you with your short-term insurance needs.
Marius Romer is here for all your short-term insurance needs! ››
As mentioned in our last newsletter, Mr. Romer joined us in May, after having successfully managed a large team on behalf of Axa Winterthur Insurance in Switzerland. Mr. Romer has over 20 years’ experience in short-term insurance and will be leading our short-term insurance department.
Are you an e-cigarette smoker – be aware when travelling by air! ››
These devices have enjoyed a boom over the last years with Millions of people using them worldwide. Recent debates have highlighted the risks of these cigarettes and a recent amendment by the International Civil Aviation Organisation (ICAO) in Montreal has shown a further danger: Air travellers are no longer allowed to have these devices stored in checked-in luggage and have to carry them in their hand luggage. If an e-cigarette is not switched off or is activated by error, it can cause combustion and is a fire risk.
All 191 member states of the ICAO have implemented this ruling. Smoking and charging of e-cigarettes is also not allowed on board of a plane.
South Africans are the biggest borrowers in the world ››
According to a World Bank survey, about 10.3 Million South Africans are at least 3 months in arrears with their debt repayments. According to the report, 86% of South Africans have debt, the highest in the world, followed by Iranians with 71%.
A recent amendment to the National Credit Act, which now requires lenders to conduct an affordability assessment, has been introduced to prevent over indebtedness. Many consumers fill in credit applications incorrectly in order to receive credit. Another reason for the high rate of default also lies with many of the lenders, who lend recklessly.
What is the most used App in South Africa? ››
You would be mistaken by thinking the most popular apps in the country are Facebook, Instagram or BBM: Two out of three of the most downloaded free iPhone apps are load-shedding schedules or alert apps! They are only beaten out of first place by WhatsApp – the most popular application in the world according to App Annie, a data and mobile analytic website.
Police officers lose 2356 guns in three years ››
Police Minister Nhati Nhleko revealed the details to Parliament in May this year. The trend is currently declining, with the most guns lost in Kwazulu-Natal. South Africa has got one of the worst crime statistics worldwide and with the loss of these guns, more illegal weapons will be in circulation.
Police negligence is the main reason for the loss. However, at an average rate of 2 guns lost per day, it still compares favourably to 18 lost per day by the public!
South Africa’s top 10 residential estates ››
According to a publication of New World Wealth, 7 out of the 10 estates are based in the Western Cape.
Please click here to read the report.
Please participate in our client survey ››
We would like to hear from you if you are happy with our service or have any recommendations.
Our online survey will not take more than 2 minutes of your time and we value your input.
Please click here to start the anonymous survey.