OUR INVESTMENT PRODUCTS

EQUITY MARKET PERFORMANCE
Offshore markets have performed better than the JSE over the past few years. In fact, if you exclude companies with large global exposure on the JSE, the local market has actually gone backward.

INVESTMENT DIVERSIFICATION
South Africa represent 0.70% of world equity markets. Investing offshore allows investors to diversify their exposure to different currencies, asset classes, geographies, investment themes and strategies. South Africa has no jurisdiction or authority over the offshore assets.

ACCESS TO GLOBAL INVESTMENT THEMES AND BRANDS
Investors are able to access global investment themes which are not available in South Africa. An investor can now own brands which they recognise and would like to own e.g. Apple, Microsoft, VISA, Disney, Coca-Cola etc.

PROTECTION AGAINST RAND DEPRECIATION
The Rand has historically depreciated against developed market currencies at a rate of 7% per annum. Offshore investment allows local investors to hedge against the Rand depreciation.

INDIVIDUALS
South African individuals can invest offshore via their:

• R1m Discretionary Allowance
• R10m annual Foreign Investment Allowance (Tax Clearance Required).
• Larger amounts may also be taken offshore subject to obtaining South African Reserve Bank approval.

Individuals who have assets offshore.

COMPANIES & TRUSTS
South African Companies – via Asset Swap
South African Trusts – via Asset Swap
Offshore Trusts
Offshore Companies

TAXATION
What taxes am I going to pay and to which authorities?

• South Africans are taxed on their World-Wide Income, thus all income and capital gains will be taxed in South Africa at the rate applicable to the owner of the assets.
• Marginal Tax Rates would apply
• High Net Worth Investors
  45% income tax rate on Interest income & bond yields
  18% Capital Gains Tax
  US Tax on Dividends at 30%
• Client would probably need an auditor/accountant or tax practitioner to assist in preparing the tax schedules
• Client is obliged to report to Tax authorities

SUCCESSION & ESTATE PLANNING
What happens when I die with assets directly offshore?

• Need an offshore Will
• Probate – Probate is a process whereby a Will is accepted by a court as a legal document
• Local Executor Fees
• Offshore Solicitor/Attorney Fees
• Capital Gains Tax may be triggered
• Continuity – Assets may or may not need to be sold on death. Typically, one cannot access the investment as it is frozen.
• Estate Duty on UK and US SITUS assets (See “What are SITUS Assets?” under Offshore wrapper)

WHAT ARE SITUS ASSETS?

• SITUS assets refer to assets held in a specific jurisdiction, in most cases the United States (US) and United Kingdom (UK). These assets include fixed property, shares, tangible moveable property and registered instruments.
• The jurisdiction in which the assets are held becomes important when it comes to estate planning as inheritance tax is payable on these assets at the prevailing rates of that jurisdiction.
• In the US and UK, these rates are 40% in excess of:
  USD60,000 in the US
  GBP325,000 in the UK

WHAT IS AN OFFSHORE WRAPPER?

• It is an endowment structure on which a life is insured, allowing you to nominate a beneficiary, the person to whom the proceeds will be paid on your death. The structure runs for 5 years. In the offshore world this is a major advantage, as it helps to avoid the problem of probate (the process whereby a foreign estate has to be wound up) which can prove particularly problematic.
• The endowment structure runs for 5 years, but you are able to withdraw your capital during this period.

WHY USE AN OFFSHORE WRAPPER?

• Tax Rate is favourable for High Net Worth Individuals and South African Companies and Trusts
  The Offshore Wrapper is taxed in USD not Rand
• Reduce Tax Liability on death – No Capital Gains Tax needs to be triggered
• Eliminates the need for:
  • Wills in offshore jurisdictions
  • Grant of Probate by offshore solicitor
  • Executor Fees
• Nominate Primary and Secondary Beneficiaries (instant access to the investments anywhere in the world)
• Tax Administration
  • The Life Wrapper is responsible for all Tax Reporting obligations
  • The Life Wrapper takes care of all Tax Calculations and Payments to South African Receiver of Revenue
  • Client need only report a one line value in their tax returns – no further obligations
  • Share purchases and sales do not need to be accounted for by the client for tax purposes
  • Currency movement need not be accounted for by the client
  • Coupon payments and dividend receipts need not be accounted for by the client