The tax and exchange control amnesty applies to individuals, closed corporations and deceased estates.
Bryan Hirsch, CEO of Pioneer Financial Planning, warns that assets in your own name internationally will now attract estate duty.
“This means even an amount of $100 000 assuming an 8% growth and 4,5% depreciation in the rand will, in rand terms, increase to R6-million over the next 18 years. At the current estate duty rate of 20%, your duty would amount to R1,2-million, which your children will have to pay when they inherit.”
South African estate duty is half that typically levied elsewhere and hence is more likely to increase rather than decrease. Hirsch says a reassessment of your global estate plan is now essential. “One should not wait until amnesty is obtained as in most cases this will be a formality. In the event of your death your estate would probably continue to apply for amnesty and therefore the cash would still be required.”
One way to reduce the tax burden is by contributing to a retirement annuity that allows for a 15% tax-deductible contribution based on total worldwide income.
South Africans living off fixed investments where the income is below the taxable threshold may now, after including foreign income, find themselves roped into the tax net.