Official NEWS


Disability Cover for Life 09/2012

From:Insurance Industry News 04/2014

Divorce Settlement Sanlam(Saunders vs Eskom Provident Pension Fund)


In light of the above case it is vital that, when drafting divorce orders or settlement agreements, one first establishes whether or not the member spouse has become entitled to a benefit, or will become entitled to one on, or prior to, the date of divorce. If the member has already become entitled to a benefit prior to divorce, the non-member spouse will have no claim to the "pension interest” as contemplated in the Divorce Act.

Common law principles and the division of matrimonial assets cover pension benefits that have already accrued to a member at the time of divorce, for example where a member has retired from a fund and has been paid a lump sum benefit.


This has far reaching implications to any side that has a similar siuation....

Disability Cover Extended 
....beyond 65!...can be enjoyed,protected and priced for Life!

Wow, what a refreshing idea. We are able to offer this benefit to our clients now. In the past, it was regulated that Disability Cover is to TERMINATE at age 65, but due to the recession, the need for individuals to be economically active beyond this age, industry laws were forced to be adjusted.

Pse contact your adviser to discuss this new benefit available. It might be that this adjusted benefit can be added onto your RISK PLAN with very little additional costs.

Remember that you do NOT AUTOMATICALLY receive this adjusted benefit onto your contract, you must still opt for it.


Our industry is in its ever-changing status. Compliance to regulation is of utmost importance for our industry to go forward.

Yet, the consumer does not realise how much maintenance there is in his portfolio, and it would be extremely difficult in the future to give any reduced fees through to the consumer as a result of profit margins being cut and legislation is forcing the industry to PROOF an after-sales service validation. This is despite the fact that the consumer cannot see a need for an AFTER SALES- Service.

Below then, Swanevelder Advisors keeps you in the loop concerning movement and industry-related issues.



Old Mutual completes sale of Nordic business

Source: SMW

Old Mutual has completed the sale of its Nordic business to Skandia Liv for a net cash consideration of SKr22.4bn.

Payment of the special dividend of 18p per share (or its equivalent in other applicable currencies) is now unconditional and will be made on 7 June to shareholders on the register at the close of business on 20 April.

Old Mutual group chief executive Julian Roberts said: "I am delighted that we have completed this transaction, which creates value for both our shareholders and for Skandia Liv's policyholders."


Old Mutual

Questor says - BUY!

The financial conglomerate had scrapped its dividend after running into difficulties linked to an overzealous acquisition drive and looked set for a tough few years as it grappled with a complex, sprawling structure.

Since then, the FTSE 100 group's management team – led by chief executive Julian Roberts – has slimmed down the business, exited markets and taken steps to pay down debt.


                                                                                    22 February 2012

  “The work done last year indicates that if we continue to grow reasonably well, we will begin to write a new story about South Africa—the story of how, working together, we drove back unemployment and reduced economic inequality and poverty.


It is beginning to look possible.

We must not lose this momentum.” 

- President Jacob Zuma, State of the Nation Address (2012)



This circular only includes budget changes and proposals which are relevant to the financial planning environment.  

1.    Personal Income Tax   

The Minister proposed welcome but restrained personal income tax relief. The table below illustrates the adjusted tax rates applicable to individual taxpayers for the 2012/2013 tax year. 

Tax rates for natural persons and special trusts – 2012/2013 tax year.

Taxable Income

Rate of tax

R0 - R160 000

18% of taxable income

R160 001 - R250 000

R28 800 + 25% of taxable income above R160 000

R250 001 - R346 000

R51 300 + 30% of taxable income  above R250 000

R346 001 - R484 000

R80 100 + 35% of taxable income  above R346 000

R484 001 - R617 000

R128 400 + 38% of taxable income  above R484 000

R617 001

R178 940 + 40% of taxable income  above R617 000

Tax Rebates


2011/2012 Tax Year

2012/2013 Tax Year

Primary Rebate

R10 755

R11 440

Secondary Rebate (applicable only to taxpayers aged 65 and over)

R6 012

R6 390

Tertiary Rebate (applicable only to taxpayers aged 75 and over)

R2 000

R2 130


Tax thresholds   


2011/2012 Tax Year

2012/2013 Tax Year

Below age 65

R59 750

R63 556

Age 65 and over

R93 150

R99 056

Age 75 and over

R104 261

R110 889


This means that a taxpayer younger than 65 and earning a taxable income of ­­­­­­­­­­­­­­­­­­­­­­­­­­­ R63 556 or less per annum, or a taxpayer older than 65 but younger than 75 and earning a taxable income of R99 056 or less per annum, or a taxpayer of 75 years and older and earning a taxable income of R110 889 or less per annum, will not pay any income tax in the 2012/2013 tax year.   

These examples below demonstrate the tax savings for individuals (younger than 65) in terms of the proposed changes:


Taxable Income (R)

Tax payable 2011/2012 Tax Year (R)

Tax payable 2012/2013 Tax Year (R)

Tax Reduction (R)

Tax Reduction (%)

150 000

16 245

15 560



200 000

28 745

27 360

-1 385


250 000

41 995

39 860

-2 135


300 000

56 995

54 860

-2 135


400 000

90 745

87 560

-3 185


500 000

127 095

123 040

-4 055


750 000

225 495

220 700

-4 795


1 000 000

325 495

320 700

-4 795



2.    Interest and Foreign Dividend Exemption  

The interest and foreign dividend exemption threshold has not been revised.  The domestic interest income and foreign dividend exemption for the tax year 2012/2013 will remain unchanged at: 

·         R22 800 per annum for taxpayers under the age of 65,

·         R33 000 per annum for taxpayers aged 65 years and older,  

·         R3 700 per annum of which is in respect of foreign dividends.  

The current exemptions for interest will possibly be phased out.   

To encourage greater savings, tax-preferred savings and investment accounts are proposed to be introduced by April 2014, as alternatives to the current tax-free interest-income caps as above. This will encourage a new generation of savings products.   

Whilst returns generated within these savings and investment vehicles (including interest, capital gains and dividends) and withdrawals will be tax exempt, it is unclear what the impact will be on interest earned in other investment vehicles, given the review of the above mentioned tax-free interest income caps.   

It is proposed that a cap of R30 000 per year (with a lifetime limit of R500 000) per taxpayer be placed on aggregate annual contributions, to ensure that high net-worth individuals do not benefit disproportionately. The design and costs of these savings and investment vehicles may be regulated to help lower-income earners to participate.


3. Taxation of Small and Micro Businesses 

These tax rates are applicable to small business corporations (annual turnover under R14 million).  This table will be effective for years of assessment ending on or after 1 April 2012 are as follows:  

Taxable Income (R)

Rate of Tax (R)

R0 – R63 556


R63 557 – R350 000

7% of the amount above R63 556 but less than R350 000

R350 001 and above

R20 051 + 28% of the amount above R350 000







4.  Dividend Withholding Tax  

With effect from 1 April 2012, the Secondary Tax on Companies (STC) regime is to be replaced by a Dividends Withholding Tax (DWT) regime. In anticipation of this, the STC rate was lowered from 12.5% to 10%. Whilst dividends withholding tax was expected to be introduced at 10%, the 2012 budget unexpectedly proposed to introduce dividends tax at 15%. Section 64E of the Income Tax Act provides for a rate of 10% and it is unlikely that legislation to amend this rate would be passed by April 2012.

Foreign dividends are also taxed at the maximum DWT rate, subject to applicable exemptions or reduced rates. 

The introduction of DWT is likely to see an increased administrative burden on both the taxpayer and companies but will bring South Africa in line with international best practice and is likely to make the country more investor–friendly.  

It is important to note that South African corporates and retirement funds are exempt from DWT. 

The corporate tax rate in South Africa is now finally simplified at a maximum of 28%.


 5.   Medical Aid contributions and expenses

For taxpayers under the age of 65, the medical tax credit regime replaces the previous medical aid contribution deduction. This will be effective as from 1 March 2012.  

The new tax credit system will bring about greater equality across income levels in terms of tax relief for medical aid contributions.  

This tax credit system will only apply to taxpayers under the age of 65.  Taxpayers who are 65 years and older will, for the time being, continue to enjoy a full deduction for all their medical related expenses.  

As it stands, the tax credit for the taxpayer and the first dependent is R230 and R 154 for each additional dependent.  The way in which this works is that the “credit” will be deducted from the taxpayers’ final liability in the same way in which the tax rebates are treated.


In addition to this:

·         taxpayers under the age of 65 may deduct their out of pocket medical expenses plus the amount of their medical scheme contributions that exceed four times the medical tax credit to which they are due, as, in aggregate, exceed 7.5% of the taxpayers’ taxable income.    

·         taxpayers with disabilities (including their spouses or children with disabilities) may deduct their full out of pocket expenses as well as the amount of their medical scheme contributions that exceed four times the medical tax credits to which they are due. 


6.    Social Security  

In an effort to ensure that poverty reduction continues, social grants have been increased to keep up with inflation. The new grants are as follows: 






Disability and Old Age Grants (Below 75)

R1 140

R1 200

Old Age Grants (Over 75)

R1 160

R1 220

Child support Grant

R 265

R 280


7. “Sin Taxes” and Fuel Levies  

The following increases are proposed: 

·         Tax on a packet of 20 cigarettes increases 58c

·         Tax on a 340ml can of beer increases by 9c

·         Tax on a bottle of wine increases by 17.5c

·         Tax on a bottle of spirits increases by R6  

Government proposes to increase the general fuel levy by 20c/l on both petrol and diesel effective from 4 April 2012. The Road Accident Fund levy will be increased by 8c/l.


8. Capital Gains Tax (CGT)   

Government proposes an increase to the capital gains tax inclusion rates amounts as follows, with effect from 1 March 2012: 




For Individuals and Special Trusts



For Other Persons (Companies and Other Trusts)




The effect of these above amendments is that the highest effective capital gains tax rate applicable to:

·         Individuals and Special Trusts are increased from 10% to 13.32%

·         Companies are increased from 14% to 18.65%.

·         Trusts from 20% to 26.64%

Government proposes an increase to the capital gains tax exclusion amounts as follows, with effect from 1 March 2012:  

·       For individuals and special trusts the annual exclusion is increased from R20 000 to R30 000

·       On death, during the year of assessment, the annual exclusion increases from R200 000 to R300 000

·       The primary residence exclusion on capital gains increases from R1.5 Million to R2 Million 

·       On the disposal of a small business the exclusion on capital gains increases from R900 000 to R1.8 million, provided  the business owner is over 55 or where the disposal is in consequence of ill health, other infirmity, superannuation or death. The maximum business asset value has been increased from R5 million to R10 million, and the asset must have been held for a continuous period of 5 years.  

·       With effect from 10 January 2012, pure risk policies (policies with no cash or surrender value) and employer owned policies exempt from tax in the hands of the employee under Sec 10(1)(gG) or 10(1)(gH) will be exempted from CGT.  This means that when a policy owner is changed on such a policy no CGT is payable.


9.  Employer owned policies  

A new taxation regime for employer owned policies will take effect from 1 March 2012.   

The new taxation regime provides for: 

·       The fringe-benefit taxation (in the hands of the relevant employees covered) of all employer paid premiums in respect of policies which will benefit either the employee or their surviving spouse or dependents. 

·       Employer paid premiums in respect of these policies are then deductible if the premium was fringe benefit taxed. 

·       Unapproved group life policies: Fringe benefit tax on the employer paid premium and proceeds are tax free. 

·       Unapproved group disability income policies: Fringe benefit tax on the employer paid premium but a reciprocal deduction for the employee which can be processed on their monthly payroll so as to produce a tax-neutral effect for the employee.  The income protection benefits produced by these policies are then taxable at the marginal rates of the recipient. 

·       Employer owned key man policies: The introduction of an elective deduction regime for these policies-

-     For existing policies, the employer policyholder needs to advise the insurer whether or not they want the premiums to be deductible after the 1st of March 2012. If the policyholder does require this, the policy needs to be endorsed prior to the 31st of August 2012.

-     All policies issued after 1 March 2012 must indicate that the employer policyholder wishes to claim a deduction for the premiums paid.

·       The budget proposed no amendments to the above, other than to indicate that there is an intention to make it clear that premiums for business contingency policies will not be deductible as SARS’s view is that they fund a capital loss rather than a business operating loss. 

10. Proposed amendments:   

Retirement funds  

The following changes have been proposed:

·       Employer contributions to retirement funds to be fringe benefit taxed. [Proposed effective date: 1 March 2014]


·       Individual member taxpayer deductions for pension, provident and retirement annuity funds are to be consolidated with the following caps: Contribution deductions will be capped at 22.5% of the higher of employment or taxable income and with a maximum rand amount of R250 000 for those below age 45 and 27.5 per cent with a maximum rand amount of R300 000 for those above 45. These contribution limits will include the risk benefit and administration cost component of the contributions.  Any employer contributions that have been fringe benefit taxed will be included in these caps. [Proposed effective date: 1 March 2014]  

·       Minimum monetary threshold: Low income earners will be entitled to deduct    R20 000 even in cases where their contributions do not warrant this when applying the deduction scales.  For example where a taxpayer's taxable income is R80 000, in the normal course of events the taxpayer would be entitled to a total deduction of R18 000 (R80 000 x 22.5%).  The minimum deduction referred to above would allow this taxpayer a deduction of R20 000 if he in fact contributed an amount of R20 000 to retirement funds in total.  [Proposed effective date: 1 March 2014]  

·       Contributions not deducted: Where a contribution is not deductible (i.e. over 22.5%) in any year of assessment, these may be rolled over in all retirement funds for later use (e.g. at retirement against the lump sum or against the annuity income). Previously disallowed contributions were allowed against retirement lump sums in all cases and against annuity income only in the case of retirement annuity funds. [Proposed effective date: 1 March 2014]  

·       Uniform approach to retirement fund withdrawals: Currently lump sum withdrawals upon retirement from pension and retirement annuity funds are restricted to a maximum of one-third of accumulated savings, whereas this restriction does not apply to provident funds. Consultations are to be held with interested parties on a uniform approach to retirement fund withdrawals, taking into account the legacy issues pertaining to provident funds in particular.


11. Additional Tax Proposals   


·       The 2011 Budget proposed a withholding tax on gambling winnings above       R25 000. After broader consultation, a national gambling tax based on gross gambling revenue will be introduced. This tax, effective from 1 April 2013, will take the form of an additional 1% national levy on a uniform provincial gambling tax base. A similar tax base will be used to tax the national lottery.


12. Future Developments  

·       The four funds approach applicable to long term insurers, will be revised in 2013.  A short paper on long term insurers will be circulated for comment in mid-2012. 

·       Retirement reform: The proposal is to establish a mandatory statutory fund to provide pension, life insurance and disability benefits.  In this regard there will be consultations with trade unions and other industry parties during 2012. 

·       National Health Insurance: It is intended that this will be phased in over a period of at least fourteen years.  There has been much speculation over the funding of this initiative.  The minister indicated that over the medium term, general taxes will be the primary funding mechanism and that over the longer term funding options could include a pay roll tax, a higher value added tax (VAT) rate or a surcharge on taxable income or some combination of these.


13.  Conclusion 

The Budget Speech 2012, highlighted:

Government’s continued commitment to: 

  • Accelerate growth and job creation through the launch of a huge infrastructure campaign
  • Alleviate poverty
  • Eliminate inequality

“Growing inequalities in income and wealth have undermined economic growth and social wellbeing.  The difficult task of moderating and reversing inequality requires active government intervention.  Unregulated capitalism is clearly in crisis.”

 Pravin Gordhan, Budget Speech of 2012


 Swanevelder ' comments on the Budget Speech:

This years' speech was designed to tax the Ultra Wealthy extremely hard. The general middle class individual has a lot of extra leway to use. If he/she uses all the offerings, he/she should have more money in his provide for his Future, Medical Expenses and to create opportunities/work etc.The issue of dividends to be taxed in the Asset Managers' hands, and Individuals is a watershedding moment. This would have a MAJOR effect on individuals that were previously using Dividends as a MAJOR SOURCE of INCOME.

a Solution to this issue is to make more use of the FUND of FUNDS approach...where the asset Manager rather would use CONSERVATIVE SHARES as a point of growth to continue providing stable income and also choose the correct funds with regard to their mandate where an asset class should be allocated to.

Feel free to contact either JC or Myself with regards to more info.

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Trevor Atherton Jones | Reply 16.11.2016 10.47

Very inspirational & motivating.

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Latest comments

16.11 | 10:47

Very inspirational & motivating.

12.04 | 19:56

Ek Callie swanevelder Dane is baie lief vir jou.

11.02 | 10:54

This Wealth inflation rate has escalated to 12 to 14 % over the past 3 years in SA.Take note, inflation is a very personal and customised issue...

02.02 | 15:04

Hey Petrie

Dankie vir al jou hulp maat.


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