The shareholder-, buy and sell agreement and MOI in your business

The shareholder-, buy and sell agreement and MOI in your business should cover all the taxation aspects of Income Tax, Capital Gains Tax, Donations Tax and Estate Duty, upon the departure any one or more owner[s] / shareholder[s].

It is imperitive that the buy and sell agreement is structured and aligned with the Shareholders Agreement and the Memorandum Of Incorporation of the company, in order provide the most tax efficient solution possible.

A correctly structured buy and sell agreement will ensure that Income Tax, Estate Duty, Capital Gains Tax and Donations Tax implications are either:

  • Avoided entirely
  • Reduced to manageable and acceptable levels
  • Funded through tax efficient structures and mechanisms.

From an income tax perspective you need to consider Section 11(w) and all its implications. Although there are choices and decisions that can be made here, in very simple layman’s terms, if the premiums were deducted for income tax purposes by the company, then the proceeds of any life insurance policies paid to the company, will be taxable.

For the most part, Estate Duty is not a concern if life insurance is used to pay for the share transfer between owners / shareholders, assuming that the departing owner / shareholder is a natural person. There is an unusual anomaly to this, insofar as a company, which is a shareholder, is defined as a person by the Interpretation Act, Act No 33 of 1957 and so it is possible to maintain Estate Duty free payments to shareholder companies. Trusts on the hand do not enjoy the same exemption. There are nevertheless corporate structuring techniques available with a combination of trusts and companies, whereby Estate Duty benefits could still be obtained.

At any stage that the payment for the owner’s interest or shareholding exceeds the base cost of the interest / shares, there will be a capital gain and capital gains tax will ensue. Similarly, there could be a capital loss, which will not be deductible for tax purposes. It is vitally important that an acceptable valuation method is adopted and adopted in all relevant agreements and the MOI of the company, to avoid excessive CGT [capital gains tax] being raised by SARS.

Donations tax could arise if the payment for the ownership interest / shareholding is substantially less than a fair market value thereof. This is also why one needs to define the share valuation method in an acceptable manner and structure to SARS. If insufficient consideration is given to this aspect, you could find yourself in the unenviable position of incurring both Donations and Capital Gains Tax upon the transfer of ownership.

The fixed yearly return with the Discovery Enhanced Yield Fund

Discovery Invest has launched a structured product which might yield great returns for investors.

The Discovery Enhanced Yield Fund is designed to give you a high fixed return of 15%* in flat or positive markets.

How the Discovery Enhanced Yield Fund works

The Discovery Enhanced Yield Fund is available on the lump-sum Discovery Core Flexible Investment Plan and is only open from 18 June to 24 July 2018. With a minimum investment of R50 000, you will get a fixed return of 15%* if the FTSE 100 index shows flat or positive returns on the Discovery Enhanced Yield Fund’s first anniversary.

If the FTSE 100 index shows a negative return on the first anniversary, we will reinvest the funds for another year and increase your returns by another 15%*. The total will then be paid at the end of the second year if the FTSE 100 index return is flat or positive since inception.

We will continue to reinvest the funds and add 15%* to the returns each year until the FTSE 100 index provides a flat or positive return since the Fund’s inception. This will continue for up to five years.

Protect your capital in negative markets

In addition, the Discovery Enhanced Yield Fund offers you downside capital protection*. If the FTSE 100 index return is negative at the end of each of the years in the five-year period, we will provide full capital protection* at the end of the five-year period, if the FTSE 100 index has not fallen by more than 40% at any stage over the five years.

However, this capital protection* falls away if the FTSE 100 index fell by more than 40% at any stage over the five–year period. In this case, you will receive the return of the FTSE 100 index at the end of the five-year period if negative.

Please consult your financial adviser to get more comprehensive information on the Enhanced Yield Fund.

*The fixed return and capital protection is before the deduction of fees, such as Discovery administration fees, initial and ongoing financial adviser fees, withdrawal fees and tax, if applicable.

The above information should not be taken as financial advice. For tailored financial advice, please contact your financial adviser.

Discovery Life Investment Services Pty (Ltd): Registration number 2007/005969/07, branded as Discovery Invest, is an authorised financial services provider. Product rules, terms and conditions apply

ABSA’s new logo

Barclays Africa institution is getting a revamp, finishing Barclays %’s one hundred-yr records at the continent.

The lender on Wednesday ditches the name of its former discern to revert to Absa organization after the British bank sold down the controlling stake it offered in 2005. The Johannesburg-based totally employer has already begun reorganising its operations to further distance itself from the UK company, which itself is overhauling its investment financial institution to boost returns.

Absa chief government officer Maria Ramos, 59, in April refocused the lender round 4 divisions — retail and business banking, corporate and funding banking, relaxation of Africa and wealth management and insurance — in a bid to double its percentage of sales from its 10 operations in Africa and regain marketplace percentage within the South African retail marketplace. The restructuring started out with halving the wide variety of executives on the retail and business banking unit ultimate month.

examine: Absa reorganises retail financial institution’s structure to trim pinnacle jobs

“Barclays has been a totally huge logo in Africa, now not in South Africa necessarily, but inside the relaxation of Africa,” stated Adrian Cloete, a portfolio supervisor at PSG Wealth. “that means they’re going to have to spend extra on their emblem after the logo returned to Absa.”

Ramos isn’t going empty surpassed after negotiating 765 million pounds sterling ($1 billion) from Barclays for the investments wanted in era, rebranding and different separation-related expenses.

in the week leading up to the relaunch of the enterprise’s logo, social media channels flashed teasers of a brand new look and sense that deviates only slightly from the brand’s signature pink hue. It has additionally communicated the approaching trade with customers in its operations outside of South Africa, where it retains the authority to apply the Barclays emblem for two years.

The financial institution’s website relaunched on Wednesday with a sparkling brand.

photograph:

ABSA New logo

At domestic, in which the Absa brand by no means virtually left, the transition can be easier. Absa’s call is presently SA’s fourth maximum-treasured logo and is predicted by way of brand Finance to be worth 18.8 billion rand.

greater than the brand relaunch, it is going to be the employer’s capacity to fulfill its ambition to retake its as soon as-main marketplace position amongst South African customers that investors might be looking carefully, Cloete stated.

Commercial Property Finance

The Fedgroup Commercial Property Finance offering is based on three features that make our approach unique: competitive rates, flexible terms and the personal touch.

Competitive Rates

Fedgroup’s rates are highly competitive so why not give us a call. In addition, Fedgroup’s premium for fixing your interest rate is unrivalled in the South African market.

Flexible Terms

Our minimum contract period is five years. This affords you the flexibility to renegotiate the terms of your commercial property bond agreement every five years.

The personal touch

Fedgroup’s head of Commercial Property Finance meets personally with prospective property owners a loan decision is provided in principle within 48 hours.

Contact Fedgroup Commercial Property Finance today to find out more about our unrivalled interest rates and turnaround times.

How to apply for a commercial property loan

  1. Approach Fedgroup with a property in South Africa that you wish to finance

  2. Fedgroup expresses interest

  3. Complete the easy-to-use application form

  4. Fedgroup assesses the value of the property

  5. Credit risk assessment is completed

  6. Approval in principle is given within 48 hours after site inspection

  7. Terms of loan agreed to in principle

  8. Full valuation is performed

  9. Loan agreements are signed

  10. Guarantees are issued where necessary

  11. Conveyancing commences and the bond is registered

  12. Funds are transferred

Tax Consequences of Pension/Provident fund withdrawals at resignation

Tax Consequences of Pension/Provident fund withdrawals at resignation

Most of us will experience the process of resigning from an employer at some stage of our lives and, if you are lucky enough to receive a pension, you will be left with an important choice to make at that point.

I would like to share, in simple terms, the different tax implications when someone opts to take a 100% cash withdrawal at the point of resignation (before retirement age) or transfer their Pension fund to an approved Preservation Fund.

To understand the tax implication, there are three important aspects we need to understand:

The difference between Pre-Retirement and Retirement

  • Retirement, in normal circumstances, is allowed at the age of 55 or older
  • Pre-retirement, in normal circumstances, is before the age of 55

The difference between how Lump Sum or Pension Benefits will be taxed pre-retirement (Withdrawal Benefits Table)
and at retirement (Retirement Benefits Table), please see below:

Taxable Lump Sum Rate of Tax
0 – R25 000 0% of taxable income
R25 001 – R660 000 18% of taxable income above R25 000
R660 001 – R990 000 R114 300 + 27% of taxable income above R660 000
R990 001 and above R203 400 + 36% of taxable income above R990 000
Taxable Lump Sum Rate of Tax
0 – R500 000 0% of taxable income
R500 001 – R700 000 18% of taxable income above R500 000
R700 001 – R1 050 000 R36 000 + 27% of taxable income above R700 000
R1 050 001 and above R130 500+ 36% of taxable income above R1050 000

By simply looking at these tables, you will already have noticed the difference between the portions taxed at 0%:

R0 – R25 000 – Withdrawal Benefits Table

R0 – R500 000 – Retirement Benefits Table

The options available at resignation to the Taxpayer:

  1. Receive a cash lump sum
  2. Transfer the pension benefit to an approved Preservation fund (Pension Preservation of Provident Preservation) or Retirement annuity.
  3. Choose a combination of the two options (Excl. GEPF)