FINANCES
been increased to 25%. This now follows
that higher net worth clients will have to
ensure that planning for these increases
has been done.
It has become even more important to
ensure that wealthy clients with estates
in excess of R30 million have sufficient
liquidity to cater for estate expenses
which will now include an increased
estate duty liability.
Remember that any life insurance
policy implemented in order to provide
liquidity to the estate, if made payable to
the estate as a nominated beneficiary, will
not only potentially attract higher estate
duty but will also have the knock-on effect
of attracting executor's fees.
Accordingly it is important to increase
proceeds to cater for estate duty at 25%
in estates that exceed R30 million and
executors fees at 3,5% plus VAT of 15%.
The effect of section 7 C of the Income
Tax Act also has to be considered more
carefully as the deemed donation where
no interest was levied, could increase
substantially for these amounts. Over
and above this it seems that the official
interest rate applicable to these loan
accounts has also been increased from
repo plus100, currently at 7,75, versus the
new rate which will be the prime rate, in
Standard Bank's case this is 10,25%. This
will increase the effect even more.
CONCLUSION
Due to the positive response to the polit-
ical developments in recent times, a cul-
ture encouraging progressive, ethical and
decisive leadership insists that a culture
of tax morality must be created.
In light of this, tax avoidance and tax
evasion will not be tolerated and mech-
anisms like a "checks and balances"
system between SARS and the Minister
of Finance will be created, which will
include the strengthening of the Office
of the Ombud as well as the establish-
ment of a Commission of Inquiry into Tax
Administration and Governance at SARS.
The automatic exchange of information
between countries will ensure that SARS
receives its piece of the pie from a tax
perspective, be it in respect of individuals
or companies.
SENWES SCENARIO | AUTUMN 2018
53