13 Mar SwissFin Newsletter March 2013
We welcome you to our first Newsletter for 2013.
Our focus in this edition is on the recent Budget Speech by our Finance Minister Pravin Gordhan, which was held on 27 February. Whilst Gordhan spoke about a “tax policy review”, speculation about the introduction of a wealth tax, a windfall tax or an increase in company tax proved unfounded. The core message of his budget was for the government to control spending. There were no real changes to get excited about.
As usual, we have included information across the board regarding investments, insurance and other related topics.
As usual, this newsletter can be viewed under https://www.swissfin.co.za/swissfin-newsletter-march-2013/
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. SWISS BANKING
- Switzerland’s oldest bank to close
- Tax evasion in Switzerland now a criminal act?
- SAMI AG in NZZ Newspaper
4. SHORT-TERM INSURANCE
- Chartis changes its name
- Are you working from home? Check your insurance cover!
- Ensure cars are covered at motor dealers
- MUA insurance offer new geyser maintenance cover
- HIC enhances sectional title policy?
- Mr Bean breaks insurance record
5. HEALTH CARE COVER
- Swiss lead European move to restrict executive pay
- New property valuations by the City of Cape Town
- Crime stats in the Western Cape
- Life expectancy in South Africa increases
- SwissFin at Arabella’s Captain’s Day
SwissFin offers the following rates as of March 2013:
Bank Deposits ››
- Money Market
- 12 Months
Please contact our office for more information. Conditions apply.
Insurance Plans: “Guaranteed growth plans” (5 year term) ››
- Gross Yield
- Taxes Payable
Tax-free interest income – maximum investment amounts ››
R 1.82 Mio for taxpayer under the age of 65
R 2.78 Mio for taxpayer between the age of 65 and 75
R 3.03 Mio for taxpayer over the age of 75
Underlying assumptions: 5.0% 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:
- GBP STERLING
- 1 Year
- 7.2% p.a..
- 7.5% p.a.
- 7.1% p.a.
- 9.4% p.a.
- 3 Years
- 4.0% p.a.
- 7.3% p.a.
- 9.2% p.a.
- 8.8% p.a.
- 8 Years
- 4.0% p.a.
- 5.2% p.a.
- 7.2% p.a.
- 6.2% p.a.
This investment must be maintained at this minimum level to qualify for the extension of stay and ultimately for indefinite leave to remain.
Please contact Tony R. Hug for further information or to book an appointment.
2. SWISS BANKING
Switzerland’s oldest bank to close ››
Bank Wegelin & Co., founded in 1741, has admitted helping US citizens hide more than USD 1.2 Billion in secret accounts. It is the first time a foreign bank has been indicted for facilitating tax evasion and the first time a guilty plea has been submitted.
The fine was USD 74 Mio and led to the closure of the bank.
Tax evasion in Switzerland now a criminal act? ››
Most countries in the world see tax evasion as a criminal act – not so in Switzerland. Offenders in Switzerland are currently charged with a fine if they are caught out. The Swiss Government is now reviewing the act and the intention is to define tax evasion as a criminal act. The proposed threshold is CHF 600’000 and banks are obliged to report suspicious clients.
The above and a few other measures to combat tax evasion have been proposed by the Swiss minister, Mrs. Eveline Widmer-Schlumpf. We will keep you updated on further developments.
SAMI AG in NZZ Newspapers ››
Mr Rudolf Wiser and his team have been interviewed by the „NZZ“. To read the article, please click here.
Should you wish to contact Mr Wiser, who will be in South Africa visiting clients from 5th March to 18th March, please contact our office to make arrangements.
Budget Speech highlights ››
Taxable income rates of tax for the 2014 tax year ››
R 0 – R 165600 18% of taxable income
R 165601 – R 258750 R 29808 + 25% of the amount over R 165600
R 258751 – R 358110 R 53096 + 30% of the amount over R 258750
R 358111 – R 500940 R 82904 + 35% of the amount over R 358110
R 500941 – R 638600 R132894 + 38% of the amount over R 500940
R 638601 + R 185205 + 40% of the amount over R 638600
It is proposed that individuals earning less than R 250’000 p.a. from a single employer no longer have to submit a tax return.
Tax rebates for individuals ››
Primary rebate increased from R 11440 to R 12080
Secondary rebate (age 65 – 74) increased from R 6390 to R 6750
Tertiary rebate (age 75+) increased from R 2130 to R 2250
Tax thresholds ››
Under 65 years – R 67111
Over 65 years – R 104611
Over 75 years – R 117111
Medical tax credits ››
There is an increase from R 230 to R 242 for the first two dependants, thereafter R 162 (was R 154) for each additional beneficiary.
Interest income exemption ››
Persons under 65 years: R 23800 (was R 22800)
Persons 65 years and older R 34500 (was R 33000)
As from 1 March 2012, the foreign interest and dividend exemption (2012: R 3700) falls away. The foreign dividend exemption is replaced by a formula whereby the maximum effective rate of taxation is 15%.
Those in excess of 10% to PBOs (Public Benefit Organizations) can be carried forward to the next tax year. Currently the excess was lost.
Offshore Trusts ››
Distributions from such trusts will be treated as ordinary income. No other income categories are allowed!
Retirement fund contributions ››
The tax treatments of contributions to pension, retirement annuity and provident funds will be harmonized during the course of this year.
Increased contributions to provident funds from 20% up to 27.5% will be allowed, but a capping of R 350’000 has been introduced.
Withholding tax on interest and royalties ››
Last year’s budget announced the proposal. The effective date has been pushed out to 1 March 2014 as the Government wants to look at the various double taxation agreements.
Exempt offshore income ››
Currently employees working overseas are not taxed if they are overseas for more than 183 days and at least 60 continuously. The government wants to revisit this area, especially if a South African employer is involved.
Employment tax incentives ››
To help the youth enter the workforce, an incentive to employers will be provided. The benefit will fall away once the youth reaches the income tax threshold. This will be looked at again, especially if a South African employer is involved. Such changes may cause more complexity than generating revenue, due to double taxation agreements in place.
National Health Insurance (NHI) ››
There has been no funding proposal yet. The discussion paper on public comment will be published this year.
Sin taxes ››
The yearly boring increases were announced this year again: A bottle of spirits increases by R 3.60, a bottle of wine by 19.5 cents, a cider by 7.3 cents, a can of beer by 7.5 cents and cigarettes by 60 cents per packet. The government is increasing these taxes every year but they certainly have no influence over the habits of smokers and drinkers.
Bad parastatals face restructuring ››
A host of state owned companies, from SAA to Armscor, the Post Office, Denel, SABC and Alexcor, are producing a loss every year. They will have a harder time getting funding from the Government and will if necessary, be restructured. To privatize these companies has been ruled out.
Other taxes ››
The road levy is going up 8 cents to 96 cents and the fuel levy by 15 cents per litre to R 2.13.
Electricity will increase 8% for the next 5 years.
Last year, the budget deficit was estimated at 4.8%, this year it is 5.2%. A deficit of more than 3% increases the debt servicing costs which is now estimated at R 100 Billion this year. These funds could be directed for economic and social infrastructure. Tax collection is further expected to fall by R 16.3 Billion compared to last year’s budget.
It is a concern that the Government will need to rely on significant foreign portfolio flows to fund its budget. The Government is introducing five new long-term bonds and tapping into foreign debt markets as it increases borrowing to put a plug into the widening gap.
4. SHORT-TERM INSURANCE
Chartis changes its name ››
The short-term insurer is going back to its old name – AIG.
The holding company successfully repaid the US Government USD 182 Billion they received as a bail out in 2008.
AIG is the world’s largest insurer with over 88 Million customers and has been in South Africa for over 50 years.
Are you working from home? Check your insurance cover! ››
Please note that all domestic insurance policies have restrictions in terms of your cover if you conclude any commercial activities from your private residence.
So if you have an office at home, rent out rooms to guests etc., you must please inform us.
Ensure cars are covered at motor dealers ››
Most insurance policies exclude cover if you leave your car at a motor dealer for sale on a consignment basis. There are reports of syndicates targeting Lexus, Mercedes, Volvo and Range Rover dealerships.
Do the following if you want to sell your car:
- Go to a trusted motor dealer only.
- Make sure that the dealer shows you his policy that is in force.
- Read the fine print of the dealer’s contract with you.
MUA insurance offer new geyser maintenance cover ››
For a monthly premium of R 35 (annual R 380) you can now have your geyser covered against maintenance related losses or damages. Typical examples are leaks or thermostats that break.
HIC enhances sectional title policy ››
The insurer has improved the policy benefits. Please click here to read the summary.
Mr Bean breaks insurance record ››
Mr Rowan Atkinson – better known as the comedian Mr. Bean – broke a record last month when he submitted the biggest car insurance claim ever recorded in British history. The Independent reported that Atkinson’s insurance company has had to pay out £ 900000 (R12.6 million) to repair his McLaren F1. The car was originally purchased by the Mr Bean star for £ 640000 in 1997, after which repair work was done on the vehicle at the McLaren headquarters in Woking, Surrey, escalating its value dramatically.
4. HEALTH CARE COVER
New Bupa premiums from 1st April 2013 ››
Please click here to view the new premium rates valid from 1st April 2013.
Update on residency applications ››
The delays at the department are unfortunately getting worse. Simple visitor’s extensions can now take up to 3 months as all applications are referred to Pretoria.
The Permanent Residence approval process has not improved and the Department is now working on applications dated back to 2010.
The only way to put pressure on the Department is if the applicant phones the call centre to obtain a reference number.
Please note that attorneys and immigration practitioner are not assisted via the call centre and you need to call them personally.
The Call Centre number is 0800 601190 or from outside of South Africa +27 12 4062500.
Please make contact and let us know the reference number that you were given.
Swiss lead European move to restrict executive pay ››
The people of Switzerland voted to introduce restrictions on the remuneration of all listed companies in the country.
Large bonuses will not be paid without the consent of the shareholders and the days of the “golden balloons” or “golden handshakes” are over – at least in Switzerland. Executives who violate the terms can find themselves in jail for up to three years. The political pressure is now on Germany and the rest of Europe to follow suit.
New property valuations by the City of Cape Town ››
We have received numerous requests regarding the new property valuations. Please note that we cannot assist you but suggest the following if you want to object:
and click on “how to object”. Download the application form, complete it and mail it to:
The deadline for objections is the 30th April 2013.
Crime stats in the Western Cape ››
The Province has scored highly in terms of health, education and service delivery compared to the rest of the country. A report released by the South African Institute of Race Relations (SAIRR) shows that the Western Cape attracted over 300’000 more people between 2001 and 2011.
However, drug-related crime in the Western Cape shows a bleak picture – 4 times higher than the national average and the Province is the country’s hot spot for drugs. The murder rate, 44 per 100’000, is the second highest behind the Eastern Cape. The Western Cape has also the worst residential and non-residential burglary rate.
Life expectancy in South Africa increases ››
Three years ago the life span was age 54 and has now increased to age 60. The change is attributed to an improving health care system and better access to HIV/Aids treatment programs. The current world average life expectancy is around 67 years.
SwissFin at Arabella’s Captain’s Day ››
We recently attended the Golf Day at Arabella Golf Estate in Kleinmond. MUA Insurance Company was also present and sponsored a lucky draw which included a tour to a wine estate in a chauffeur driven 1957 Bentley. Congratulations to Mr Sean Mason, who was the lucky winner of this fantastic prize!
We value your comment ››
Do you want to know about something, share something with us or comment? Please feel free to send us an e-mail so that we can assist.