SARS would to remind taxpayers of their obligation to submit outstanding tax returns. Taxpayers who do not submit their returns are charged a penalty, which can range from R250 to R16 000 per month, depending on the taxable income of the taxpayer. It is a criminal offence not to submit a return, and continuous non-compliance will lead to criminal prosecution. SARS’ responsibility is to collect tax and customs duties on behalf of the country, and is committed to ensuring that each and every taxpayer pays their fair share towards the growth of our country. The Revenue Authority will be taking a tougher stance on those who do not submit their returns and deliberately seek to avoid their tax obligations. If you have any queries on your personal or business tax, contact our Finance Department, email [email protected], tel (011)658-1333 Source: SARS
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When it comes to annual contract renewal time, short-term insurance policyholders will often receive a notification from their insurance company of a premium increase. Understanding the reasons why a premium increases can better equip a policyholder to negotiate a lower premium increase. This is according to Christelle Fourie-Colman, Chief Executive Officer of MUA Insurance Acceptances, who says the short-term insurance market has become increasingly competitive over the past few years and consumers are now spoilt for choice when it comes to providers. “As a result, renewal of a policy is a time when South Africans traditionally shop around, but it is important to understand the difference between inflationary increases on sums insured and actual premiums increases, in order to avoid inadequate cover from a cheaper provider.” Inflationary increases on sums insured, such as a home, its contents and all risks (the belongings the policyholder carries with them outside of the home e.g. a mobile phone or laptop) is not technically a premium increase, she explains. “The cover for these belongings is heavily influenced by the Consumer Price Index (CPI) and the reason why insurers have to increase the sum insured (the value of the cover) is that these items will cost more to replace or repair a year later due to inflation.” She says sum insured increases will typically give the policyholder more cover at the same rate. “For example, the insurer will increase the policyholder’s building value by 6% and then the monthly premium for building will also go up by 6%. This is done to ensure the policyholder has adequate cover and that they will not be subjected to the average condition when submitting a claim.” The value of items such as jewellery are very important to adjust upwards as these belongings are greatly influenced by fluctuations in cost of precious metals and stones as well as the impact of Rand, she adds. When it comes to premium increases at contract renewal time, insurance companies will review the frequency, severity and type of claims experienced by the insured during the past year and then the premium or insurance rate will be adjusted upwards according to this data. “This can result in a higher premium being paid for the same amount of cover, especially if the insured has claimed quite often during the period,” she says. It is a good idea for policyholders to ask how their premium will be affected at renewal before submitting smaller claims, as often it is not worth claiming when considering the annual increase in premium as a result, she says. “In addition, insurers will more often than not also impose an inflationary increase on the actual rate to ensure premiums remain adequate to cover projected claims.” Often an increase due to claims as well as an increase in property sum insured value can compound the effect of the increase, says Fourie-Colman. “This is why it can seem as if the increase is above inflation but in real terms it is not the case.” When it comes to motor insurance, policyholders often find this aspect of insurance often most confusing, as the market value of cars typically reduce but premiums tend to increase at renewal, she says. “Insurers do take the value of the vehicle into account when calculating a premium, but it is by no means the only factor which determines the premium. The majority of claims paid (as much as 80% of total claims paid) are for accidents and not write-offs or stolen vehicles. So one of the main factors in determining motor premiums is the actual cost of repairing the vehicle. The cost of parts and repair are heavily influenced by fluctuations in the Rand due to the fact that most motor parts are imported from foreign countries. The prices of the parts also constantly increase with inflation.” As a result, we have to increase our premiums every year, regardless of whether the insured claimed or not, to cater for the increase in the cost of repairing accident damage, explains Fourie-Colman. She says most insurers will be prepared to renegotiate renewal increases if a good client is not happy with the increase proposed. “If the policyholder looks after their insurance claims record, they will be in a position of power to successfully negotiate increases down, without having to change insurers. However, policyholders must make sure they are not confusing sum insured increases where they get more cover with actual rate increases. “Another word of caution, not all insurance policies are created equal. Typically by paying less, the policyholder will have less cover and it is therefore vital to do a proper comparison of cover. Check excesses, driver restrictions, policy cover and limits of extensions. When in doubt, it is always a good idea to ask a broker for help,” states Fourie-Colman. Finally, Fourie-Colman provides the below list of tips for consumers to evaluate whether they are paying an optimal insurance premium; • Review your policy and shop around when it comes to renewal time; • Be sure to compare apples with apples; • Only consider dealing with insurance providers who are prepared to guarantee your insurance premium for the annual term, regardless of claims filed; • Consumers should not claim for every single little loss as most insurers also consider the frequency of claims that the client submit, even though it is for small amounts; • Do revalue and adjust the value of jewellery in the insurance policy at times when the rand is under pressure. This will ensure that the increased replacement value is adequately catered for; • Do not move insurance providers for a small saving in premium. Rather ask your current insurer to reconsider and adjust your premium if needs be. A long standing relationship with your insurance company can come in very handy when experiencing challenging times; • It is always worthwhile to deal with a broker who could add weight to negotiating premiums. To get price comparison when you have a renewal, please contact Jan or Po-Lin in our Short Term department [email protected] tel no: (011) 658 – 1333 Source: FA News Choosing medical cover for your parents is no easy matter. There are several factors to consider such as their medical needs, their financial situation, the facilities close to them and what level of cover would be appropriate.Medical cover for a parent can cost anything between R1 000 and R5 000 per month, not taking into account late-joiner penalties. It depends on the level of cover (hospital plan or full medical scheme) you choose, and the specific option on the scheme. Many people who are healthy all their lives suddenly need extensive medical care when they become elderly. Private healthcare is enormously expensive, and few can afford to foot that bill themselves, even if they are wealthy. In fact, fewer than 10% of retired South Africans can afford to maintain their lifestyle post-retirement, and often high medical scheme contributions is one of the first casualties. Q. Can I put my parents on my scheme as dependants? A. Yes, you can. In fact, any member of your family can qualify as your dependant if you can prove that they are financially dependent on you and that you are liable for family care and support.This includes spouses/partners, parents, grandparents, children, step-children, the child of a spouse, grandchildren and in-laws. Once a child has left home and is self-sufficient and working, they can no longer be registered as a dependant. Q. Is a hospital plan enough for a retired person? A. It’s not ideal, but it is a lot better than no cover at all. Most really expensive medical treatments take place in hospital, and a hospital plan will cover your parents for 270 prescribed minimum benefits, which cover 90% of hospital procedures. But as one grows older, medication costs and certain out-of-hospital expenses can become substantial. Q. What is the principal difference between a full medical scheme and a hospital plan? A. A full medical scheme covers in-hospital and portions of out-of-hospital treatment, whereas most hospital plans only kick in once you are admitted to hospital. That means visits to the GP and all day-to-day medical treatment, as well as acute medication costs, will be for your own pocket.But the monthly contributions for hospital plan membership are also substantially lower than those for full medical scheme membership, which may be a consideration if your parents are under financial pressure. Q. Can a medical scheme refuse to accept my parent as a member? A. No, they can't, but they can subject them to waiting periods before they can claim: usually a three-month general waiting period, and also a 12-month condition-specific exclusion for the treatment of certain pre-existing conditions. Q. What is gap cover and how does it work? A. This pays a multiple of the difference between what your scheme pays, and what a private doctor or specialist charges in a hospital. This is an insurance product, and your parents need to belong to a scheme in order to qualify for gap cover. Just check, as some gap cover products have a cut-off age for applications. It is not expensive, and can make a real difference in a medical crisis. Q. What does it mean when it says a plan covers 100% or 200% of the medical fund rate? A. That is the rate that a scheme will pay for certain doctors, specialists or procedures. It might be substantially less than the rate private doctors or hospitals charge, so if you can afford it, take the 200% of medical fund rate, otherwise you could be landed with large co-payments for your parents. Q. How does the payment for chronic medication work? A. There are 25 chronic conditions for which all schemes (hospital plans included) have to pay. They usually have a medicines formulary listing the medications for which they will pay. These are often generics, which are much cheaper than brand medications – but they are equally effective.Some schemes have a fixed amount they will pay per condition. You need to register your parents with the scheme if they have been diagnosed with any of these chronic conditions before they can claim for this medication. Q. Does a full medical scheme pay for all medical treatment? A. No. If your medical savings account for day-to-day expenses has run out, you could find yourself in a self-payment gap. Until then, a scheme will pay for treatment at registered healthcare providers either partially or in full, depending on your option. Some schemes have above-threshold benefits if you have gone through your self-payment gap. Q. What is a designated service provider and how will it affect the choice of scheme? A. These healthcare providers (hospitals and private doctors) are on a network and undertake to charge the medical fund rates. So if you use network hospitals and doctors, there should be no co-payments. Healthcare providers outside this network could charge substantially more, and this will be for your own pocket. Check to see if there are any DSPs in the area where your parents live – there is no point in paying for medical scheme membership if they are unable to access the care. Q. What if they have never belonged to a scheme? A. If your parents have never belonged to a scheme, they can be made to pay up to 75% of the scheme contribution as an ongoing late-joiner penalty. Q. What if there has been a break in their medical scheme membership? A. The scheme will calculate the late-joiner penalty based in the number of years that your parents did/did not belong to a scheme. They will need to have the paperwork to prove their membership. Q. Does it cost anything to change schemes? A. No, it doesn't. The only possible costs are if you have to pay for something while your parents are subjected to a waiting period. Q. Do pensioners pay more or less on contributions than other medical scheme members? A. Pensioners pay the same as everyone else. A small number of options take income into account when calculating contributions – proof of income will have to be provided. Q. Do my parents’ former employer/s subsidise their medical scheme contributions? A. Some do (such as GEMS), but this is becoming rare in the private sector where, increasingly, your scheme contribution is part of your total cost-to-company package. Check whether your parents receive a subsidy from former employers – they could lose that if you put them onto your scheme. Q. Are my parents’ medical expenses tax deductible? A. Yes, if you are supporting them entirely. But this is not the case if they are furnishing their own tax returns (in which case they will probably not qualify as dependants on your scheme anyway). To get a quotes for suitable medical aid options please contact Namhla or Tammy or in our health and wellness department email :[email protected] tel no: (011) 658 - 1333 Source : Finance 24 Discovery Balanced Fund is a flagship fund offered by Discovery Invest. It is only available on the Discovery Invest platform. It is managed by Chris Freund of Investec Asset Management, a very experienced and successful portfolio manager. He manages investments using an earnings revision approach. Discovery Balanced Fund has attracted a lot of inflows, in fact the fastest growing balanced fund in South Africa, thanks to clients and advisors' support, benefiting from the integration and unique features of a range of Discovery Invest products. Discovery Balanced has been a consistent top-quartile performer in the high-equity balanced fund sector, with the (annualised) performances figures as follows: 10 years: 10.14% 5 years: 11.52% 3 years: 8.05% 1 year: 11.34% This fund has a high cost, with a Total Investment Charge (TIC) of 2.12%. This makes it one of the most expensive balanced funds to invest in. I question this high fund management fee, even given its good performance figures. Were it not for various integration and fee reduction structures offered by Discovery Invest for investing in a Discovery fund, this will erode net returns to investors over the long term. Discovery Balanced Fund is suitable for general long-term investment. Being Regulation 28 compliant, it is suitable for use in a retirement product. Below is the link to download Discovery Balanced Fund's fund fact sheet as at end December 2017.
Around this time of the year, we would like to remind you to consider topping up your retirement annuity fund. According to the current legislation, you may contribute up to 27.5% of your taxable income (strictly speaking, non-retirement funding income) to a retirement annuity fund and enjoy tax deductions. As 28 February is the end of the tax year, you must calculate and pay the additional amount to your retirement annuity prior to this date, in order to qualify for tax deductions and tax refunds.
Below is an example of topping up your retirement annuity: Mr Jackson has a monthly salary of R50,000. In December he received a bonus of R100,000. Every month he contributes R3,000 to a personal retirement annuity fund. His annual income is then R50,000*12 + R100,000 = R700,000. The maximum tax-deductible contribution to retirement annuity is R700,000 * 27.5% = R192,500. Over the year he has contributed the following to a retirement annuity fund: R3,000 * 12 = R36,000 The additional amount he may top up in his retirement annuity (RA) is R192,500 Less R36,000 R156,500 He can expect a tax refund of R156,500*39% = R61,035 from his additional retirement annuity contributions. Should you require assistance to calculate the retirement annuity top-up amount, please contact Su-Lan or Su-Chin, (011)658-1333, email [email protected] Fund Managers Trust Index 2018
I have created a Fund Managers Trust Index, based on my own interactions with fund managers, research and market events. The fund managers I would trust to manage my money and risks. Out of 10, 10 being total trust, 0 being no trust whatsoever. Allan Gray/Orbis - 10 Prudential - 9 PSG - 9 Coronation - 8 Rezco - 8 Marriott - 7 Truffle - 7 Nedgroup Investments - 7 Investec - 6 Foord - 6 Old Mutual - 6 Discovery - 5 Satrix - 5 Stanlib - 4 Firstly, let me dedicate this report to my Lord and Saviour Jesus Christ, may honour and glory be to Him forever and ever! As a Financial Advisor with actuarial qualifications, I am particularly fascinated by investments. I have spent lots of time over the last 21 years studying the subject of investment. I have learnt and analysed all kinds of financial instruments, including shares, unit trusts, CFDs, futures, warrants and ETFs. Over the years the investment markets have taught me a lot of things. It has taught me to be humble. It has taught me to be a ready student, to continue to learn, think and reflect. In the past I have written about share analysis, technical analysis, and general investment advice. This is the first time I write and share a comprehensive report on unit trusts. Over the years I have appreciated the way good unit trusts, or Collective Investment Schemes, has helped me and my clients grow my wealth. They have provided many investors an excellent way of investing in a diversified portfolio of assets, that over the long term have demonstrated significant real returns. This first comprehensive report on unit trusts focuses on high-growth unit trusts. I share this report with my fellow financial advisors in the hope of helping you help your clients make better, independent, informed investment decisions. If you like this report and think this report has helped you, please like it on LinkedIn and share it with financial advisors. Please also comment on this report, so that I can know whether I am on the right track, and how I can continue to refine my investment thinking. Click the link below to download the report.
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