24 Mar SwissFin – SwissSure Newsletter March 2021
We welcome you to our first Newsletter for 2021.
The autumn weather is slowly heading towards Cape Town and we had our first stormy rains, which are always very welcome. The “Corona-front” is becoming less stormy and we are happy to have moved towards the lowest lockdown level, which almost feels back to normality.
As usual in our newsletter, we have included information for you across the board regarding insurance, immigration, taxation and other related topics.
This newsletter can be viewed under https://www.swissfin.co.za/newsletters/swissfin-swisssure-newsletter-march-2021/.
Our Team would like to wish you a wonderful Easter Weekend and good luck with the Easter egg hunt!
Enjoy the reading, with best regards,
Your SwissFin / SwissSure – Team
Your SwissFin / SwissSure – Team
- Interest rates: Bank deposits, insurance plans, tax-free investment amounts and our foreign exchange rates
2. LOCAL AND INTERNATIONAL FINANCIAL NEWS
4. SWISSSURE: SHORT-TERM INSURANCE NEWS
- SHA becomes a division of Santam
- Santam pays Covid claims
- Vantage restructures legal liability for motor only policies
- Breaking news: Home Affairs automatically extends visitor’s visas!
- We are planning to take the Department to the High Court
- South Africa’s 2021 draft critical skills list
- The Department is chasing illegal visas and permits
- Resumption of services at the Department
6. HEALTH INSURANCE
- South African medical aid schemes and understanding late-joiner-penalties
- BDAE premium adjustment for the Expat Retired plan
- Driver licence renewal extensions
- Buying or servicing your car in South Africa: Things are about to change
- We value your comment
Interest rates: Bank deposits, insurance plans, tax-free investment amounts and our foreign exchange rates >>
SwissSure offers the following rates as of March 2021:
Interest rates ››
- Our Money Market Fund
- 12 Months bank deposits
Insurance Plans: “Guaranteed income/growth plans” (5 year term), approx. 80% of the income is tax-exempt: ››
- Gross yield
- Taxes payable
Tax-free interest income – maximum investment amounts: ››
R 2,57 Mio. for taxpayers under the age of 65
R 3,89 Mio. for taxpayers between the age of 65 and 75
R 4,25 Mio. for taxpayers over the age of 75
These figures mean that you can invest these amounts in i.e. our money market or fixed deposit offerings and not pay any tax. Couples married in community of property can double these amounts!
Underlying assumptions: 4,0 % effective interest rate and no other income sources.
SwissSure Forex Rates ››
- Bank A
- Bank F
- Bank N
- Bank S
- Our Rate
The above table shows that our rates are attractive compared to commercial banks. Over and above, we do not charge any fees when the funds are credited or transferred to another local account.
2. LOCAL AND INTERNATIONAL FINANCIAL NEWS
South Africa climbs out of recession ››
South Africa has come out of its longest recession in 28 years as the economy rebounded more than projected in the third quarter after most of the curbs to contain the spread of Covid-19 were lifted. The economy expanded 13.5% from the previous quarter. That’s the strongest growth since at least 1990 and the first positive number after four quarters of contraction. However, the recovery remains vulnerable, with power shortages and slow structural reforms likely to weigh on investor sentiment.
Statistics South Africa (Stats SA) unveiled on 8 March 2021 that SA’s GDP grew 6.3% in the fourth quarter, which was better than expected. The forecast was 4.3%. This figure means that the 2020 contraction of 7% was not as bad as anticipated.
We are back to lockdown stage 1 ››
President Cyril Ramaphosa announced the change on Sunday evening 28th February.
Under Alert Level 1, the following applies:
- Curfew hours are now from 12 midnight to 4am;
- Religious, social, political and cultural gatherings are permitted with audience size limitations;
- Indoor gatherings must be restricted to 100 or less;
- Outdoor gatherings must be restricted to 250 or less;
- If the venues are too small for these numbers, no more than 50% of the venue capacity may be accommodated;
- Nightclubs will remain closed;
- The sale of alcohol will resume according to normal licence provisions;
- The wearing of masks is still mandatory and failure to do so a criminal offence;
- SA’s 32 currently closed land border posts will remain closed;
- SA’s 20 currently open land border posts will remain open; and
- Five airports will be open for international travel with infection controls, namely: OR Tambo, Cape Town International, King Shaka, Mpumalanga and Lanseria.
Ramaphosa said that the Cabinet had taken the decision to ease restrictions in this manner because evidence shows that South Africa has “now emerged from the second wave” of the Covid-19 pandemic.
Budget Speech highlights ››
Finance Minister Tito Mboweni delivered his Budget Speech on Wednesday 24 February 2021. The minister focused on the financial implications of fighting the Covid-19 outbreak and South Africa’s ballooning debt. In the wake of the Covid-19 pandemic, high unemployment rate and a weak economy, there is a sigh of relief.
This is a brief summary of the highlights:
No significant tax changes will be implemented in 2020/2021, given the weak economy. Here are some of the key points:
- There is an R 213-billion tax shortfall and expected 88.9% government debt ratio to GDP by 2025/2026.
- GDP had contracted 7.2% for 2020/21 financial year and the treasury has forecast 3.3% growth for the year ahead, before moderating to 2.2% for 2022 and 1.6% for 2023.
- The South African Revenue Service (Sars) has unveiled a high wealth individual taxpayer segment, which will focus on wealthy taxpayers with complex financial arrangements.
Sars said that it will be assessing wealth “derived from multiple sources” and these individuals “employ complex, and often offshore, financial arrangements”.
The first group of taxpayers have been identified and will receive a letter during April.
- The corporate income tax rate will be lowered to 27% for companies with years of assessment commencing on or after 1 April 2022.
- Provident and provident preservation fund members will, with effect from 1 March 2021 (called the T-Day), be subject to the same annuitisation requirements as pension, pension preservation and retirement annuity fund members. Transfers between pension, pension preservation, provident and provident preservation funds and all other types of approved retirement funds will be tax free.
At retirement, all funds can only withdraw 1/3 in cash and the remaining 2/3 must purchase a pension annuity. For members younger than age 55 at 1 March 2021, the vested share includes their accumulated fund balance plus any returns on that balance until retirement. The entire balance on the member’s vested share will be treated under the rules that existed before such date. The vested share balance can be withdrawn in cash at retirement. Any contributions made after T-day, and the returns on these contributions, will fall into the member’s non-vested share, and be subject to the changed rule. These members will also be able to withdraw the full balance on their non-vested share provided that balance is less than R 247500. Non-vested balances greater than R 247500 can only be withdrawn as one third in cash, with the remainder used to buy a pension. All withdrawals are subject to taxation per the existing tax tables.
- As usual, the annual boring “sin taxes” have been adjusted with the following results:
A 340ml beer will cost 14 cents more, a packet of 20 cigarettes R 1.39, a bottle of wine 26 cents and spirits R 5.50.
- The initial monthly tax credit for contributions to medical schemes is increased to:
– R332 for a taxpayer;
– R664 for a taxpayer and his or her first dependant;
– R224 is afforded for each additional dependant.
- There have been no changes to Donations Tax, Estate Duty, Capital Gains tax, transfer duty, local dividend withholding tax, interest exemption or any other taxes.
One of the most positive outcomes of the Budget was the above-inflation increase of the personal income tax brackets, of 5%. Most of the relief brought about by this increase will be felt by the lower and middle-income households.
The income tax tables for individuals for the tax year 2022 (1 March 2021 to 28 February 2022) are as follows:
|Taxable income (R)||Rates of tax (R)|
|0 – 216 200||18% of taxable income|
|216 201 – 337 800||38 916 + 26% of taxable income above 216 200|
|337 801 – 467 500||70 532 + 31% of taxable income above 337 800|
|467 501 – 613 600||1100 739 + 36% of taxable income above 467 500|
|613 601 – 782 200||163 335 + 39% of taxable income above 613 600|
|782 201 – 1 656 600||229 089 + 41% of taxable income above 782 200|
|1 656 601 and above||587 593 + 45% of taxable income above 1 656 600|
|Primary||R 15 714|
|Secondary (65 and older)||R 8 613|
|Tertiary (75 and older)||R 2 871|
|Under 65||R 87 300|
|65 and older||R 135 150|
|75 and older||R 151 100|
The most heartening feature of this year’s Budget is the fact that there are no major tax increases. In fact, significant tax relief has been afforded to personal taxpayers via above-inflation adjustments to the marginal tax brackets.
Although Mboweni made the point that National Treasury will tap into its cash reserves to fund the budget shortfall, given that the economic recovery will be staged from a very low base, and that government has scrapped some of its taxes and offered some additional tax relief, this may prove difficult to achieve. South Africa is far from out of the woods in terms of risking a debt spiral, with one of the highest debt-service levels in the world. And these high debt levels and interest repayments leave only 80% of revenue for key and productive government spending
4. SWISSSURE: SHORT-TERM INSURANCE NEWS
SHA becomes a division of Santam ››
As from 1 January 2021, SHA will change from operating as a wholly owned subsidiary company of Santam to operating as a division of Santam.
SHA is a specialized liability and professional indemnity underwrite for the past 35 years.
Please note that this change does not affect any existing polices and in essence it is business as usual.
Santam pays Covid claims ››
The insurer announced on 25 January 2021 that it will settle valid claims for all commercial policies with Contingent Business Interruption (CBI) extensions in addition to those covered by its Hospitality & Leisure division.
Santam made the decision to include the claims emanating from all commercial policies with CBI extensions after analysis and consideration of recent court judgments. Following further engagements with stakeholders, Santam has concluded that the core of the judgments in these cases can be applied in principle to all policies with CBI extensions that provide cover for infectious disease, namely the Covid-19 losses.
Vantage restructures legal liability for motor only policies ››
The insurer had to amend their policy schedules. Please click here to read the explanation for the change.
Breaking news: Home Affairs automatically extends visitor’s visas! ››
The Department has sent out communication on 26th March 2021, extending the deadline for foreign visitors with expired visas, from the end of March to 30th June 2021. Please note that this does not apply to visa that were issued on or after 15th March 2021. To read the communication, please click here.
We are planning to take the Department to the High Court ››
We have recently informed our immigration clients, that we are no longer willing to accept the non-performance of the Department of Home Affairs, when it comes to processing permanent residence (PR) applications.
The Department is delayed by many years and we estimate that in excess of 20’000 PR applications remain untouched. The lockdown has exacerbated the situation, but the department was in arrears before the Covid-crisis hit.
In co-operation with another immigration practitioner we are trying to accumulate a large number of claimants for a class action claim, in order to reduce the costs for each applicant.
Preliminary discussions have taken place with an Attorney and an Advocate who are willing to present our case to the High Court in Pretoria.
From experience, such cases are ruled against the Department, as they often do not even appear at Court. In the past, the Court has ordered the Department to finalize outstanding matters within 60 days from the ruling.
We estimate that the costs per applicant should not exceed R 5000 (plus VAT).
In order to be more accurate, we need to have the exact amount of clients that want to follow our suggestion.
South Africa’s 2021 draft critical skills list ››
The Minister of Home Affairs, Dr Aaron Motsoaledi, has published the 2021 Critical Skills List on the 17th February 2021 for public comment and it includes 128 occupations. Members of the public, interested organisations and institutions are invited to submit written comments on the Technical Report by 16:00 on 31 March 2021.
The published list was developed through an extensive scientific methodology led by the Department of Higher Education and Training, through its Labour Market Intelligence Research Programme.
To view the list, you can click here.
The Department is chasing illegal visas and permits ››
The Portfolio Committee on at Home Affairs has set up a task team to review some permits that were issued by the Department over the years. Many prominent people were issued permits in the past, involving corrupt department officials. Further, 14 staff members launched a petition in November last year to have the Counter Corruption unit stop investigating their “errors”!
The following visas, issued since 2004, will be reviewed.
- Permanent Residence Permits (PRP), which are just a step away from citizenship
- Corporate visas, especially in the mining sector
- Business visa
- (Professional) Critical skills visa
- Retired person’s visa
- Citizenship by naturalisation
- Study visa
The year 2004 was chosen as the cut-off date, because that is the year the Immigration Act, Act number 13 of 2002, came into operation.
Comment: Whilst we embrace the initiative by the Minister, this investigation should have been launched at least 10 years ago. We feel that it is currently more important to clear the backlog of thousands of applications and these task team resources could have been used more effectively.
Resumption of services at the Department ››
Following the President’s announcement that the country has moved to Alert Level 1, the Department has decided to extend their service offering. The following services were offered during Adjusted Lockdown Level 3:
- Births Registration
- Re-issuance of Births Certificates
- Late Registration of Birth (LRB) for learners and pensioners only
- Death registration
- Applications temporary Identity certificate (TIC)
- Collection of Identity cards or documents
- Applications and collection of passports for those who are exempted to travel
- Applications for identity (Smart ID) Cards or documents for matriculants only
In addition to those mentioned above, the following services apply under Lockdown Level 1:
- Re-issues of Smart ID Cards and identity documents
- Registration and Solemnization of Marriages
- Amendments and rectifications
- Late Registration of Birth (LRB) for all categories
- Applications and collections of passports for all categories
Comment: We are very disappointed and fail to understand why no PR applications are taken in. It has been now over 1 year, since the last ones were accepted!
6. HEALTH INSURANCE
South African medical aid schemes and understanding late-joiner-penalties
Many new applicants, especially from abroad, do not understand why they need to pay a lifelong penalty due to uninsured years in South Africa.
Local medical aid schemes are bound by the Medical Schemes Act of 1998, to apply the following penalties:
|No of years that a member has not been on a registered South African medical scheme after the age of 35||Late-joiner penalty applied|
|1 to 4 years||5% contribution|
|5 to 14 years||25% contribution|
|15 to 24 years||50% contribution|
|25 years or more||75% contribution|
Please note that the late-joiner-penalty is therefore not a choice by the insurance company, but rather a legislative requirement.
For foreign nationals over the age of 60 and taking up residence in South Africa, it is worthwhile looking at international health insurance providers, as the 75% penalty could render the local policy very expensive.
For more information please contact Tony R. Hug .
BDAE premium adjustment for the Expat Retired plan ››
The risk carrier of the EXPAT RETIRED international health insurance will change as of 1. April 2021 to SwissLife.
This change does not change the insurance cover of our clients and they will continue to receive the contractually guaranteed benefits as usual.
Although unrelated to this new partnership, the insurer will be forced to adjust the monthly insurance premiums in the EXPAT RETIRED product as of 1. April 2021. The reason for this is the global increase in healthcare costs, which has led to a significant increase in insurer’s costs regarding claims settlements.
The new contributions from 1 April 2021 is as follows:
Driver licence renewal extensions ››
The Minister of Transport, recently updated the Regulations pertaining to the expiry of driver’s licences:
1. All learner’s licences, driving licence cards, temporary driving licences and professional driving permits that expire during the period that commenced from 26 March 2020 up to and including 31 December 2020 are deemed to be valid and
2. Their validity period is extended for a further grace period ending on 31 August 2021.
Based on this new amendments insurers are extending their grace period to 31 August 2021, which is an important amendment for possible motor claims.
Buying or servicing your car in South Africa: Things are about to change ››
We have found the following interesting article and there seems to be more consumer protection being introduced as from 1 July 2021: