South Africans have ample investment options available to them. But do you know what the various tax implications are on your returns?
South African savings and investment instruments – and the tax breaks offered as incentives to save – are considered adequate, and even generous, for the average man in the street, according to the experts.
However, in terms of high-net-worth individuals, the monetary tax-free thresholds are not that attractive as they are considered too low, the capital gains tax rate for individuals is relatively high and the impact of inflation on savings is seldom considered.
Although these thresholds for tax-free savings and investments may seem trivial to many, very few South Africans are able to make full use of all the taxfree saving incentives available.
In recent years there has been a change in saving behaviour, mainly driven by political uncertainty rather than tax issues.
Cheryl Howard, MD of the wealth advisory firm Talaria, says there has been an increase in people using their R10m investment allowance to move their wealth offshore.
“Sadly, from an investment perspective, it has not been the wisest decision because the local market has performed much better than the offshore market. Unfortunately, tax and investment decisions have lately been driven by politics.”
Why we don’t save
According to Trading Economics, an international provider of economic data, the Household Saving Rate to disposable income in South Africa decreased to -0.2% in the first quarter of 2018 from 0.2% in the fourth quarter of 2017.
Personal savings in South Africa averaged 4.8% from 1960 until 2018, with an all-time high of 23.8% in the second quarter of 1972 and a record low of -2.7% in the fourth quarter of 2013.
Bu hikaye Finweek English dergisinin 30 August 2018 sayısından alınmıştır.
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Bu hikaye Finweek English dergisinin 30 August 2018 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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