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Blue Chip Issue 84

  • Text
  • Financial planners
  • Fpi
  • Equilibrium
  • Planning
  • Coaching
  • Investment
  • Financial
  • Financial planning
  • Wealth
  • African
  • Advisor
  • Investments
  • Asset
  • Income
  • Funds
  • Advisors
  • Portfolio
  • Retirement
Blue Chip Journal is a quarterly journal for the financial planning industry and is the official publication of the Financial Planning Institute of Southern Africa NPC (FPI), effective from the January 2020 edition. Blue Chip publishes contributions from FPI and other leading industry figures, covering all aspects of the financial planning industry. Visit Blue Chip Digital: https://bluechipdigital.co.za/

BLUE CHIP BLUE CHIP On

BLUE CHIP BLUE CHIP On the money Making waves this quarter The Collaborative Exchange and foreign exchange The 2021 South African Discretionary Fund Manager Survey The Collaborative Exchange is delighted to release its 2021 South African Discretionary Fund Manager Survey, following our inaugural report in 2019. Key findings to note: • With global passive investments solution integration growing significantly – and environmental, social and governance (ESG) filters becoming increasingly important in portfolio construction – coupled with the rise of alternative strategies, this complexity is now beyond the reach of the average financial advisor. • In the South African investment landscape, passive strategies have not been implemented as broadly as global markets. Only 18% passive/rules-based solutions have been implemented across the local investment Discretionary Fund Manager (DFM) market and 25% across global DFM solutions. • Global themes of asset management fees pressure are now being seen locally. A large focus on the end investor’s costing has resulted in a downward shift of total investment charges. The ASISA multi-asset high equity category average investment charge (TIC) across all DFM participants is 1.24% versus a 1.5% average fee across the ASISA multiasset high equity category. • The large DFM players with scale, extensive research capabilities and technology that makes the financial advisor’s life easier to report to clients, as well as good distribution, will increasingly dominate. We would not be surprised if there were several corporate actions and mergers as competition in this sector intensifies. For more information visit: www.thecollaborative.co.za CEASING TAX RESIDENCY The process to cease South African tax residence has become a central point of discussion since the National Treasury suggested the amendment of the foreign exemption to render foreign earnings taxable. The most important aspect of the ceasing of South African tax residence is the deemed disposal of worldwide assets in terms of Section 9H of the Income Tax Act (the ITA). The primary reason for the option in tax returns to notify SARS of a taxpayer’s change of tax residence was to ensure that the capital gain from the deemed disposal of the taxpayer’s assets was included in the relevant return. However, this created confusion regarding the process to cease South African tax residence. Many tax professionals advised that simply “ticking the box” would be sufficient. SARS changed its approach for the 2022 tax year and removed the option to “tick box” to ensure taxpayers notify SARS of their non-residence. This enables SARS to conduct a thorough review of each taxpayer’s tax status. With SARS’s new approach, a taxpayer can open their 2022 tax return and see if their “Taxpayer ceased to be a tax resident of the RSA” box has an X in it and whether it reflects the date on which they ceased to be a resident. If the box is not prepopulated with an X and the date, then the taxpayer is not recognised as a non-resident for tax purposes on SARS’s systems. It is evident that taxpayers who simply “ticked the box” in previous returns and who did not formalise their non-residence subject to the strict review by SARS, do not have a prepopulated ceased to be a resident box in their 2022 tax return. The box will be greyed out and the taxpayer will need to formalise their non-residence through the manual route which is commonly referred to as Tax Emigration. It is important to note that taxpayers who underwent the process of Tax Emigration after the submission of their 2022 tax return will not have their ceasing box automatically updated and need to ensure they are in possession of their Notice of Non-Resident letter. By Reinert van Rensburg, expatriate tax legal specialist, and Jonty Leon, managing partner, attorney and tax practitioner at Leap Group

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