Archive for March, 2017

Our Involvement with Petals Care

Petals Care Centre (owned by the PETALS TRUST) was established in 2014 by founding member, Christine Coelho. It provides a secure facility for elderly men and women who are destitute, to enjoy peace and independent living within a safe environment.

Their latest residential premises in Riviersonderend were purchased in 2016 and accommodate 16 residents who:

  • suffer from dementing illnesses;
  • are destitute from families;
  • need access to proper personal care;
  • suffer from sensory or physical disabilities;
  • are victims of domestic violence.

It is our joy to manage the financial statements for Petals Care Centre, absolutely free of charge.

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2017 Taxation Update

Individuals

The maximum marginal rate for natural persons is increased to 45% (previously 41%) and is reached when taxable income exceeds R1 500 000.

The minimum rate of tax remains at 18% on taxable income not exceeding R189 880.

The primary rebate for all natural persons has been increased to R13 635 (previously R13 500). The additional rebate for persons aged 65 years and older is increased to R7 479 (previously R7 407). Persons aged 75 and older are granted a further R2 493 (previously R2 466).

The tax free portion of interest income remains at R23 800 for taxpayers under 65 years of age, and R34 500 for persons aged 65 years and older. In addition the tax-free savings dispensation for other investments, including collective investment schemes, became operative 1 March 2015 and is R33 000 (previously R30 000) per tax year.

Local dividends tax is increased to a flat 20% rate (previously R15%), effective 22 February 2017.

Foreign dividends are also to be taxed at a flat rate of 20%, however, this may be reduced in terms of Double Tax Treaties.

An individual is exempt from the payment of provisional tax if the individual does not carry on any business and the individual’s taxable income…

  • will not exceed the tax threshold (see 4 below) for the tax year, or
  • from interest, foreign dividends and rental will be R30 000 or less for the tax year.
INCOME TAXINDIVIDUALS AND SPECIAL TRUSTS
Taxable income (R)Rates of tax
0 – 189 88018% of taxable income
189 881 – 296 540R 34 178 + 26% of taxable income above R 189 880
296 541 – 410 460R 61 910 + 31% of taxable income above R 296 540
410 461 – 555 600R 97 225 + 36% of taxable income above R 410 460
555 601 – 708 310R149 475 + 39% of taxable income above R 555 600
708 311 – 1 500 000R209 032 + 41% of taxable income above R 708 310
1 500 001 and aboveR533 625 + 45% of taxable income above R1 500 000

Individual Tax Thresholds

Liability for tax is as follows:
Under 65 yearsR75 750(previously R 75 000)
65 to 74 yearsR117 300(previously R116 150)
75 years and olderR131 150(previously R129 850)

Trusts

The flat rate increases/d to 45% (previously 41%), although distributions in the same tax year are taxed instead in the beneficiaries hands.

Estate Duty and Donations Tax

The rate of estate duty and donations tax remains at 20%.

The estate duty abatement (exempt threshold) remains at R3,5 million per person and a surviving spouse may also benefit automatically from any unused deduction in the first dying spouse’s estate, i.e., the abatement remains a combined maximum R7 million for the second dying spouse.

Estate pegging through the use of soft loans to trusts are under review. Proposals are that the asset growth in the trust be included in a deceased estate and that interest free loans to trusts be treated as donations.

The first R100 000 of amounts donated in each tax year by a natural person remains exempt from donations tax. Donations between spouses are fully exempt.

Capital Gains Tax (CGT)

  • The annual capital gain exclusion for individuals increases remains at R40 000.
  • The primary residence exclusion from capital gains tax remains at R2 million.
  • The capital gain exclusion at death remains at R300 000.
  • The effective rate of CGT is the range of 7.2% to 18% for individuals, 22,4% for companies and 36% for trusts, although correctly structured trusts can result in the individual rate being applicable.

Retirement Funds (The tables remain as before)

Retirement Fund Lump Sum Withdrawal Benefits

Taxable IncomeRates of Tax
0 – 25 0000% of taxable income
25 001 – 660 00018% of taxable income above 25 000
660 001 – 990 000114 300 + 27% of taxable income above 660 000
990 001 and above203 400 + 36% of taxable income above 990 000

Retirement Fund Lump Sum Retirement Benefits or Severance benefits

Taxable IncomeRates of Tax
0 – 500 0000% of taxable income
500 001 – 700 00018% of taxable income above 500 000
700 001 – 1 050 00036 000 + 27% of taxable income above 700 000
1 050 001 and above130 500 + 36% of taxable income above 1 050 000
 
  • Tax Harmonisation of Retirement Fund Contributions As from 1 March 2016, all retirement funds (pension, provident and retirement annuity funds) are treated similarly for tax contribution purposes. The tax deduction formula of 27,5% per annum (with a cap of R350 000) of the greater of taxable income and remuneration applies to members of all retirement funds, including provident funds.
  • Annuitisation Pension and Retirement Annuity (RA) Funds will still require a compulsory annuity purchase upon retirement with two-thirds of such fund benefits whereas Provident Fund benefits may be commuted in full, until 1 March 2018. The threshold below, which a full fund benefit from a Pension or RA is allowed to be commuted, is R247 500 effective 1 March 2016.
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Client Well Wishes on Peter’s Retirement Announcement

“Congratulations and very best wishes for a long and happy retirement. I can only say that I have had nothing but amazing help and encouragement with those I have dealt with at Foster Wealth for which I have been very grateful. Having never given much thought to retirement in my younger years, I did not retire with a large bank balance but at least purchased my flat. It was through Safmarine where I had worked for 18 years that I was directed to Foster Wealth and I can only say thank goodness!” – Pauline Brueton

“Congratulations in heading an organisation so successfully for so long and now being in a position to hand it over to capable hands, knowing your clients will be well looked after. In the few years I have known you, I have seen the genuine concern for your clients’ welfare and it has been a privilege to have been associated with you, even if somewhat at arm’s length. I hope to still be in contact in the foreseeable future and wish you good health and happiness.” – Peter Walsh

“I am sad that you are retiring, but pleased for you, so my prayer and wish for you is that you will have many days, weeks and months to fulfil all your plans. Thank you for your input in my and my family’s life. I am sure your office will continue to look after us in the same way as when you were at the helm. EVERY GOOD WISH FOR THE YEARS AHEAD.” – Rose Marie Morris

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Introducing Foster Private Clients

Having focused on investment portfolios for 29 years, Foster Wealth Management has now also launched Foster Private Clients. We believe financial advice must be given independently and with an holistic view of our clients’ financial situation. Far too often clients end up with products that they do not understand and policies they don’t need.

We endeavour to untangle the complexities of financial planning and offer clients meaningful advice and transparent products. Our independence leaves us loyal only to our clients and enables us to ensure that they are paying for what they want and need. We take annual reviews seriously and want to build long term relationships. Keeping our clients informed and keeping their plans on track as their lives develop is important to us.

FPC is an independent financial planning business committed to guiding clients to achieving financial goals.

Contact chad@fosterprivateclients.co.za for more information and visit www.fosterprivateclients.co.za today.

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Foster Wealth Partnership with Fundhouse

Given the vastly changing landscape in the investment world, we endeavoured to partner with an independent investment consultant, more commonly known as a DFM-discretionary fund manager or a RIC-retail investment consultant. In South Africa, we have a wide variety of options and selecting a consultancy is not an easy task. Our search ended and we decided on FundHouse as a steady partner; a few key reasons being independence and relationship.

Ian Jones (CEO) and Peter Foster (CIO), not our Peter Foster, have ample qualifications but, more importantly, share similar values to us as we believe in best practise and putting clients first. They have an incredible process of researching and analysing qualitative factors of funds and make themselves accessible to Foster Wealth on a regular basis. Fundhouse forms part of our Investment Committee. We meet with them on a regular basis as well as a quarterly basis for a detailed committee meeting.

Fundhouse undertakes in-depth, qualitative fund research for all funds considered for selection across our range of solutions. Their research capability has extensive experience within the asset management industry and is uniquely equipped to evaluate the quality and capability of local and offshore investment managers. Fundhouse is completely independent and rates funds on merit to be used across the range of solutions, where the fund has exhibited the following traits:

  • Demonstrated a high-quality investment offering
  • Fair value for money for the investor
  • Consistency in how investments are managed
  • Suitability for the particular strategy (cautious, balanced, growth etc.)

In order to properly and objectively assess each fund, Fundhouse follows a structured framework to evaluate funds, each evaluation taking a minimum of 50 hours upfront, with additional ongoing monitoring and annual reviews.

 THOMAS FOSTER

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