With the country in election mode and Minister Mboweni facing myriad demands across the fiscus, it is unlikely that South Africans will see significant changes or new taxes introduced during the budget announcement on 20 February.
From a Wealth perspective the 2019 budget was relatively neutral with no changes to current tax brackets, no changes to capital gains tax, and no changes to inheritance taxes. There was also no direct mention of overseas allowances or any indication of an intention to change current exemption levels.
What was encouraging, however, “was a clear commitment – and deliberate allocation of budget - to fixing the capacity of SARS to collect taxes more efficiently under the existing frameworks,” said Erik Olwagen, Provincial Head, Standard Bank Wealth International, Offshore Services South Africa.
In Olwagen’s view this commitment to ‘business as usual’ from a tax perspective, with a new focus on improved collection, “demonstrates government’s awareness that the biggest challenge is actually to use the data that SARS has, and the relationships that it has developed with foreign revenue agencies, to collect tax more effectively.”
This focus on fixing things that are not working was carried through to the budgets’ broader approach to Sate Owned Enterprises (SOEs) where, again, the focus was on investing in making government work better.
From an individual perspective, therefore, South Africans will continue to be allowed utilise their annual ZAR 1 million discretionary allowance, and up to R10 million foreign investment allowance - with tax clearance. These remain very generous allowances in a fiscally constrained environment. “South Africans should commit to work with government to help improve tax collection and drive growth through the most effective investment of their wealth,” said Olwagen.
From a Standard Bank Wealth International perspective, it is encouraging that there have not been any limitations or constraints placed on South African’s ability to invest internationally. This means that Standard Bank can continue to offer South Africans local access to its wide range of international products and services. Wealth International operates from three main jurisdictions in Isle of Man, Jersey and Mauritius, made available to South Africans through provincial offices in Gauteng, Western Cape and Kwa-Zulu Natal.