Premiums & Problems 2020, 121e (eBook)


Available
    Edition: 121st Edition
  • Format: eBook
  • ISBN: 9781485136781
  • Language(s): English
  • Published:
  • Category: Law, Financial Services

R425.00



Premiums & Problems Edition 121, 2020 provides an information service and a forum for the discussion of problems in financial planning. Updated annually, it keeps readers abreast of new developments in the Financial Planning discipline.

Over the years, this publication has become an invaluable source of reference for financial advisers and students, specifically and, generally, for those interested in financial planning.

Premiums & Problems is endorsed by the Financial Planning Institute (FPI) and is recommended as a study reference guide for those aiming to attain their Post Graduate Diploma in Financial Planning (CFP® designation), Higher Certificate in Financial Planning, Advanced Certificate in Financial Planning or Bachelor of Commerce (with a major in Financial Planning).

This edition has been updated in accordance with the Budget Speech delivered in February 2020. Certain interpretations are based on the editors’ understanding of the Budget Speech and correspondence with the Commissioner for Inland Revenue.

Highlights include:

  • Updates on the latest FAIS: Fit & Proper requirements
  • All the new tax rates as proposed in the budget speech 2020
  • Updates subsequent to the Taxation Laws Amendment Act of 2019
  • Amendments pertaining to divorce and GEPF members as provided for in the Financial Matters Amendment Act of 2019
  • Various other updates as it applies to financial planning and the financial services environment

A - INCOME TAX, DIVIDENDS WITHHOLDING TAX AND CAPITAL GAINS TAX

General Notes

  1. Introduction
  2. Residence-based tax
  3. The taxpayer
  4. Employees’ Tax and Provisional Tax
  5. The steps in calculating the tax liability of a natural person
  6. Gross income
  7. Exempt income
  8. Basic steps to be followed in determining the exemption
  9. Deductions
  10. Calculating the tax liability
  11. Income tax rates for natural persons & special trusts
  12. Income Tax Calculation Sheet

Spouses

  1. Income deemed to have accrued to the spouse – section 7(2)
  2. Spouses married in community of property

Dividends Withholding Tax

  1. Regulated Intermediary (RI)
  2. Exemptions (s 64F, read with s 64FA(2), 64G(2) & s 64H(2)(a), Income Tax Act)
  3. Generic Product Examples
  4. Impact of DWT on companies and shareholders

Capital Gains Tax

  1. Who is liable for CGT?
  2. What is capital gain?
  3. Assets
  4. Disposals
  5. Exclusions
  6. Determining the base cost
  7. Attribution of capital gains
  8. Aggregate capital gain or aggregate capital loss
  9. Capital losses
  10. Record-keeping

Summary of capital gains tax liability calculation

B - INVESTMENT PLANNING

General Notes

  1. What is investment planning?
  2. The investment planning process

Factors Affecting Investment Strategy

  1. Risk
  2. Liquidity
  3. Taxation
  4. Inflation

Miscellaneous Investment Formulae

  1. Bank acceptances
  2. Values of gilts (e.g. Eskom stock) in phases of rising and falling interest rates
  3. Calculation to determine return on redemption of existing debt (e.g. bond on house or motor vehicle lease)
  4. A guide to interest rate calculations using basic interest tables
    Bond Redemption Table (8.5 – 12%)
    Bond Redemption Table (12.5 – 15%)
    Bond Redemption Table (15.5 – 18%)

Investment Planning Worksheet

  • Step 1: Financial data
  • Step 2: Income growth objective
  • Step 3: Determine investor’s marginal rate of tax
  • Step 4: Determine whether debt should be repaid from capital available
  • Step 5: Invest the capital required for emergency purposes at the best available call rate
  • Step 6: Provide for future capital needs
  • Step 7: Determine income deficit in year 6
  • Step 8: Determine the amount to be invested in an income portfolio
  • Step 9: Determine future cash flows
  • Step 10: Determine total annual income from income portfolio
  • Step 11: Incorporating the figures determined in steps 7 to 10, do a comprehensive cash flow analysis
  • Step 12: Investment of balance of capital

Investment Comparison

Collective Investment Scheme

  • What is a collective investment scheme?
  • Benefits of CIS
  • Classification of South African regulated collective investment portfolios
  • Categories of unitised investment products

Tax Free Investments

  • Tax implications
  • Estate duty
  • Contribution limits
  • Fees
  • Comparison with Life and LISP Products

Offshore Investments

  • Introduction
  • Diversifying risk
  • Exploiting international markets and enhancing returns
  • Selecting an offshore centre
  • Offshore investment options for SA residents
  • Estate planning & tax implications
  • Exchange control odds & ends

C - RETIREMENT PLANNING

Retirement Planning Worksheet

Notes To Retirement Planning Worksheet

Table A: Capital Preservation

Table B: Annuity Rates

Retirement Planning Vehicles: A Comparison

Preservation Funds

  1. Regulations
  2. Contributions
  3. Eligibility
  4. Translocation benefits
  5. Retirement benefits
  6. Disability benefits
  7. Withdrawal benefits
  8. Emigration and Preservation Fund

Severance benefits

Comparison between defined benefit and defined contribution funds

Allowable Deductible Retirement Fund contribution calculation sheet

Calculating the tax payable when retiring from more than one retirement fund (after 1 October 2007)

Calculating the tax payable when retiring from a retirement fund (or upon death, redundancy/retrenchment or when receiving a severance benefit) after having taken previous lump sums and/or severance benefits

Calculating the tax payable when withdrawing from a retirement fund after having taken previous lump sums and/or severance benefits

Techniques to Reduce Income Tax at Retirement

  1. Introduction
  2. Investment of capital in investments generating tax-free returns
  3. Limiting lump sums to tax-free amount
  4. Preserve retirement fund benefits upon withdrawal
  5. Retire later from retirement annuities

Divorce Order Awards from Retirement Funds

Divorce Orders and the Government Employees Pension Fund (GEPF)

Commutation of a Retirement Annuity Policy on Retirement

Commutation of Living Annuities (GN18 or Fund Owned Annuities)

D - BUSINESS ASSURANCE

Business Entities: A Comparison

Business Entities: Advantages and Disadvantages

  1. Sole Proprietorship
  2. Partnership
  3. Close Corporation
  4. Company

Companies Act 71 of 2008 - New Structure of Companies

  1. Non-profit companies
  2. Types of profit companies
  3. Close corporations

Company Owned Policies - Summary of Tax Implications

  1. Paragraph (m) of the definition of gross income
  2. Paragraph (d) of the definitions of gross income
  3. Deductibility of premiums - Section 11(w)
  4. Exemptions
  5. Summary of developments
  6. Other considerations

Deferred Compensation

  1. Definition
  2. Income tax implications
  3. Estate duty implications
  4. Capital gains tax implications

Keyperson Assurance

  1. Definition
  2. Income tax implications
  3. Estate duty implications
  4. Capital gains tax implications
  5. Keyperson valuation
  6. Keyperson valuation guideline
  7. Calculation of cover required where policies are owned by third parties

Preferred Compensation

  1. Definition
  2. How the plan works
  3. Income tax implications
  4. Estate duty consequences
  5. Important considerations
  6. Capital gains tax implications

Buy-and-sell Agreement

  1. Definition
  2. The elements of a buy and sell agreement
  3. How the plan works
  4. Income tax implications
  5. Estate duty implications
  6. Capital gains tax implications

Income Tax Implications of Restraint of Trade Payments

  1. Implications for the company
  2. Implications for the employee

Loan Account Cover

  1. Debit loan accounts
  2. Credit loan accounts

Loan Account Redemption Plan

  1. Introduction
  2. Income tax implications
  3. Estate duty implications
  4. Capital gains tax implications

Business Contingency Plan

  1. Introduction
  2. Working of the plan
  3. Income tax implications
  4. Estate duty implications
  5. Capital gains tax implications

The Balance Sheet: Business Assurance Leads

  1. Introduction
  2. Assurance leads
  3. Redeemable preference shares
  4. Long-term liabilities
  5. Directors’ loan accounts (by the directors to the company)
  6. Fixed assets
  7. Investments: loans (i.e. made to outsiders)
  8. Directors’ loans (loans by the company to directors)
  9. Debtors
  10. Directors’ emoluments
  11. Contingent liabilities
  12. Employee assurance - keyperson policies
  13. Valuing Business Interests
  14. Employee assurance - keyperson policies

Valuing Business Interests

  1. Introduction
  2. Assumptions used in business valuations
  3. Valuation methods

Financial Ratios

  1. Introduction
  2. Categories of financial ratios
  3. Interpretation of financial ratios

E - ESTATE PLANNING

Estate Planning

  1. Introduction
  2. Methods to save estate duty
  3. Estate Planning: Capital gains tax and Income Tax
  4. Taxation of trusts

Donations Tax: Exemptions

Estate Pegging Worksheet Comparison of Costs and Benefits

Costs Involved in Transferring Assets

Costs Involved in the Setting up and Administration of Trusts

The Taxation of Trust Income

Interest Free Loans

  1. Income and donations tax considerations
  2. Section 7C of the Income Tax Act
  3. CGT consequences

Anti-tax Avoidance Measures

  1. Section 7
  2. Sections 54 - 64 (donations tax)
  3. Section 80A
  4. Section 103(5) (cession of interest)

Tax Implications of Retaining Control in Trusts

  1. General
  2. Companies: Unquoted shares

Limited Interests

  1. Tax implications
  2. Valuing limited interests for estate duty purposes: Deaths before and after 1 April 1977
  3. Valuation of limited interests: Examples

Tables for Valuation of Limited Interests

Estate Duty: Rebate of Duty on Successive Deaths

Calculation for Apportionment of Estate Duty

Estate Duty Worksheet: Marriage out of Community of Property

Marriage out of Community of Property Residue is Bequeathed to the Surviving Spouse

Estate Planning Liquidity Analysis: Marriage out of Community of Property

In Community of Property Marriage Estate Duty Worksheet

In Community Marriages Where Residue is Bequeathed to Surviving Spouse Estate Duty Worksheet

Liquidity Analysis: Marriage in Community of Property

Capital Needs Analysis Worksheet

Calculation Of Shortfall and Capital Needs in Estate

Trust Worksheet - Income Tax Saving

Calculation of Accrual in Terms of the Accrual System

Life Assurance and Estate Planning

Retirement Fund Lump Sums

Retirement Funds and Estate Duty

Intestate Succession

  1. The surviving spouse
  2. Descendants

The Wills Act, No. 7 of 1953 - The Signing of Wills

  1. Where testator has died before 1 October 1992
  2. Where testator has died after 1 October 1992

F - GENERAL

Report Writing

  1. Introduction
  2. Areas of concern
  3. Objectives
  4. Possible courses of action and their appraisal and evaluation
  5. Conclusion

Exchange Control Guidelines

  1. Capital transactions
  2. Portfolio investments by South African institutional investors
  3. Emigration
  4. The single discretionary and other allowances for private individuals
  5. Credit and debit cards
  6. Estates and transfers to beneficiaries

Section 54 of the Long-Term Insurance Act

  1. Definitions
  2. Provisions relating to policies (excluding annuities)
  3. Provisions relating to annuities

Basic Interest Calculations on a Financial Calculator

  1. Introduction
  2. Valuation of market value of long-term gilts (e.g. Eskom stock)
  3. Nominal and effective rate of interest
  4. Debt repayments
  5. Resultant rate

Life Expectancy Tables

Compound Interest Tables

Present Value Tables

Medical Schemes

  1. Introduction
  2. Purpose of the Act
  3. Role players
  4. General
  5. Duties and obligations of the broker
  6. Penalties

Money Laundering

  1. Introduction
  2. Prevention of Organised Crime Act 121 of 1988 (POCA)
  3. Financial Intelligence Centre Act 38 of 2001 (FICA)

Compliance in terms of the Policyholder Protection Rules (Long-term Insurance Act 52 of 1998)

The Financial Advisory and Intermediary Services Act

  1. Introduction
  2. Pertinent definitions
  3. Licensing
  4. Key individuals
  5. Representatives
  6. Competence requirements
  7. Summary of the requirements of Board Notice 194 (Qualifications, Regulatory Examinations And CPD)
  8. Compliance officer
  9. General Code of Conduct for FSP’s and Representatives
  10. Record keeping
  11. Offences and penalties
  12. Retail Distribution Review
  13. Conduct of Financial Institutions (COFI) Bill

  • Lecturers
  • Faculty Heads  
  • Financial Planning Program Directors
  • Tax Advisors
  • Certified Financial Planners ®
  • Financial Planners
  • Financial Planning Students
  • Legal Advisors

This product does not have any reviews yet - be the first to write one.

Premiums & Problems Edition 121, 2020 provides an information service and a forum for the discussion of problems in financial planning. Updated annually, it keeps readers abreast of new developments in the Financial Planning discipline.

Over the years, this publication has become an invaluable source of reference for financial advisers and students, specifically and, generally, for those interested in financial planning.

Premiums & Problems is endorsed by the Financial Planning Institute (FPI) and is recommended as a study reference guide for those aiming to attain their Post Graduate Diploma in Financial Planning (CFP® designation), Higher Certificate in Financial Planning, Advanced Certificate in Financial Planning or Bachelor of Commerce (with a major in Financial Planning).

This edition has been updated in accordance with the Budget Speech delivered in February 2020. Certain interpretations are based on the editors’ understanding of the Budget Speech and correspondence with the Commissioner for Inland Revenue.

Highlights include:

  • Updates on the latest FAIS: Fit & Proper requirements
  • All the new tax rates as proposed in the budget speech 2020
  • Updates subsequent to the Taxation Laws Amendment Act of 2019
  • Amendments pertaining to divorce and GEPF members as provided for in the Financial Matters Amendment Act of 2019
  • Various other updates as it applies to financial planning and the financial services environment

A - INCOME TAX, DIVIDENDS WITHHOLDING TAX AND CAPITAL GAINS TAX

General Notes

  1. Introduction
  2. Residence-based tax
  3. The taxpayer
  4. Employees’ Tax and Provisional Tax
  5. The steps in calculating the tax liability of a natural person
  6. Gross income
  7. Exempt income
  8. Basic steps to be followed in determining the exemption
  9. Deductions
  10. Calculating the tax liability
  11. Income tax rates for natural persons & special trusts
  12. Income Tax Calculation Sheet

Spouses

  1. Income deemed to have accrued to the spouse – section 7(2)
  2. Spouses married in community of property

Dividends Withholding Tax

  1. Regulated Intermediary (RI)
  2. Exemptions (s 64F, read with s 64FA(2), 64G(2) & s 64H(2)(a), Income Tax Act)
  3. Generic Product Examples
  4. Impact of DWT on companies and shareholders

Capital Gains Tax

  1. Who is liable for CGT?
  2. What is capital gain?
  3. Assets
  4. Disposals
  5. Exclusions
  6. Determining the base cost
  7. Attribution of capital gains
  8. Aggregate capital gain or aggregate capital loss
  9. Capital losses
  10. Record-keeping

Summary of capital gains tax liability calculation

B - INVESTMENT PLANNING

General Notes

  1. What is investment planning?
  2. The investment planning process

Factors Affecting Investment Strategy

  1. Risk
  2. Liquidity
  3. Taxation
  4. Inflation

Miscellaneous Investment Formulae

  1. Bank acceptances
  2. Values of gilts (e.g. Eskom stock) in phases of rising and falling interest rates
  3. Calculation to determine return on redemption of existing debt (e.g. bond on house or motor vehicle lease)
  4. A guide to interest rate calculations using basic interest tables
    Bond Redemption Table (8.5 – 12%)
    Bond Redemption Table (12.5 – 15%)
    Bond Redemption Table (15.5 – 18%)

Investment Planning Worksheet

  • Step 1: Financial data
  • Step 2: Income growth objective
  • Step 3: Determine investor’s marginal rate of tax
  • Step 4: Determine whether debt should be repaid from capital available
  • Step 5: Invest the capital required for emergency purposes at the best available call rate
  • Step 6: Provide for future capital needs
  • Step 7: Determine income deficit in year 6
  • Step 8: Determine the amount to be invested in an income portfolio
  • Step 9: Determine future cash flows
  • Step 10: Determine total annual income from income portfolio
  • Step 11: Incorporating the figures determined in steps 7 to 10, do a comprehensive cash flow analysis
  • Step 12: Investment of balance of capital

Investment Comparison

Collective Investment Scheme

  • What is a collective investment scheme?
  • Benefits of CIS
  • Classification of South African regulated collective investment portfolios
  • Categories of unitised investment products

Tax Free Investments

  • Tax implications
  • Estate duty
  • Contribution limits
  • Fees
  • Comparison with Life and LISP Products

Offshore Investments

  • Introduction
  • Diversifying risk
  • Exploiting international markets and enhancing returns
  • Selecting an offshore centre
  • Offshore investment options for SA residents
  • Estate planning & tax implications
  • Exchange control odds & ends

C - RETIREMENT PLANNING

Retirement Planning Worksheet

Notes To Retirement Planning Worksheet

Table A: Capital Preservation

Table B: Annuity Rates

Retirement Planning Vehicles: A Comparison

Preservation Funds

  1. Regulations
  2. Contributions
  3. Eligibility
  4. Translocation benefits
  5. Retirement benefits
  6. Disability benefits
  7. Withdrawal benefits
  8. Emigration and Preservation Fund

Severance benefits

Comparison between defined benefit and defined contribution funds

Allowable Deductible Retirement Fund contribution calculation sheet

Calculating the tax payable when retiring from more than one retirement fund (after 1 October 2007)

Calculating the tax payable when retiring from a retirement fund (or upon death, redundancy/retrenchment or when receiving a severance benefit) after having taken previous lump sums and/or severance benefits

Calculating the tax payable when withdrawing from a retirement fund after having taken previous lump sums and/or severance benefits

Techniques to Reduce Income Tax at Retirement

  1. Introduction
  2. Investment of capital in investments generating tax-free returns
  3. Limiting lump sums to tax-free amount
  4. Preserve retirement fund benefits upon withdrawal
  5. Retire later from retirement annuities

Divorce Order Awards from Retirement Funds

Divorce Orders and the Government Employees Pension Fund (GEPF)

Commutation of a Retirement Annuity Policy on Retirement

Commutation of Living Annuities (GN18 or Fund Owned Annuities)

D - BUSINESS ASSURANCE

Business Entities: A Comparison

Business Entities: Advantages and Disadvantages

  1. Sole Proprietorship
  2. Partnership
  3. Close Corporation
  4. Company

Companies Act 71 of 2008 - New Structure of Companies

  1. Non-profit companies
  2. Types of profit companies
  3. Close corporations

Company Owned Policies - Summary of Tax Implications

  1. Paragraph (m) of the definition of gross income
  2. Paragraph (d) of the definitions of gross income
  3. Deductibility of premiums - Section 11(w)
  4. Exemptions
  5. Summary of developments
  6. Other considerations

Deferred Compensation

  1. Definition
  2. Income tax implications
  3. Estate duty implications
  4. Capital gains tax implications

Keyperson Assurance

  1. Definition
  2. Income tax implications
  3. Estate duty implications
  4. Capital gains tax implications
  5. Keyperson valuation
  6. Keyperson valuation guideline
  7. Calculation of cover required where policies are owned by third parties

Preferred Compensation

  1. Definition
  2. How the plan works
  3. Income tax implications
  4. Estate duty consequences
  5. Important considerations
  6. Capital gains tax implications

Buy-and-sell Agreement

  1. Definition
  2. The elements of a buy and sell agreement
  3. How the plan works
  4. Income tax implications
  5. Estate duty implications
  6. Capital gains tax implications

Income Tax Implications of Restraint of Trade Payments

  1. Implications for the company
  2. Implications for the employee

Loan Account Cover

  1. Debit loan accounts
  2. Credit loan accounts

Loan Account Redemption Plan

  1. Introduction
  2. Income tax implications
  3. Estate duty implications
  4. Capital gains tax implications

Business Contingency Plan

  1. Introduction
  2. Working of the plan
  3. Income tax implications
  4. Estate duty implications
  5. Capital gains tax implications

The Balance Sheet: Business Assurance Leads

  1. Introduction
  2. Assurance leads
  3. Redeemable preference shares
  4. Long-term liabilities
  5. Directors’ loan accounts (by the directors to the company)
  6. Fixed assets
  7. Investments: loans (i.e. made to outsiders)
  8. Directors’ loans (loans by the company to directors)
  9. Debtors
  10. Directors’ emoluments
  11. Contingent liabilities
  12. Employee assurance - keyperson policies
  13. Valuing Business Interests
  14. Employee assurance - keyperson policies

Valuing Business Interests

  1. Introduction
  2. Assumptions used in business valuations
  3. Valuation methods

Financial Ratios

  1. Introduction
  2. Categories of financial ratios
  3. Interpretation of financial ratios

E - ESTATE PLANNING

Estate Planning

  1. Introduction
  2. Methods to save estate duty
  3. Estate Planning: Capital gains tax and Income Tax
  4. Taxation of trusts

Donations Tax: Exemptions

Estate Pegging Worksheet Comparison of Costs and Benefits

Costs Involved in Transferring Assets

Costs Involved in the Setting up and Administration of Trusts

The Taxation of Trust Income

Interest Free Loans

  1. Income and donations tax considerations
  2. Section 7C of the Income Tax Act
  3. CGT consequences

Anti-tax Avoidance Measures

  1. Section 7
  2. Sections 54 - 64 (donations tax)
  3. Section 80A
  4. Section 103(5) (cession of interest)

Tax Implications of Retaining Control in Trusts

  1. General
  2. Companies: Unquoted shares

Limited Interests

  1. Tax implications
  2. Valuing limited interests for estate duty purposes: Deaths before and after 1 April 1977
  3. Valuation of limited interests: Examples

Tables for Valuation of Limited Interests

Estate Duty: Rebate of Duty on Successive Deaths

Calculation for Apportionment of Estate Duty

Estate Duty Worksheet: Marriage out of Community of Property

Marriage out of Community of Property Residue is Bequeathed to the Surviving Spouse

Estate Planning Liquidity Analysis: Marriage out of Community of Property

In Community of Property Marriage Estate Duty Worksheet

In Community Marriages Where Residue is Bequeathed to Surviving Spouse Estate Duty Worksheet

Liquidity Analysis: Marriage in Community of Property

Capital Needs Analysis Worksheet

Calculation Of Shortfall and Capital Needs in Estate

Trust Worksheet - Income Tax Saving

Calculation of Accrual in Terms of the Accrual System

Life Assurance and Estate Planning

Retirement Fund Lump Sums

Retirement Funds and Estate Duty

Intestate Succession

  1. The surviving spouse
  2. Descendants

The Wills Act, No. 7 of 1953 - The Signing of Wills

  1. Where testator has died before 1 October 1992
  2. Where testator has died after 1 October 1992

F - GENERAL

Report Writing

  1. Introduction
  2. Areas of concern
  3. Objectives
  4. Possible courses of action and their appraisal and evaluation
  5. Conclusion

Exchange Control Guidelines

  1. Capital transactions
  2. Portfolio investments by South African institutional investors
  3. Emigration
  4. The single discretionary and other allowances for private individuals
  5. Credit and debit cards
  6. Estates and transfers to beneficiaries

Section 54 of the Long-Term Insurance Act

  1. Definitions
  2. Provisions relating to policies (excluding annuities)
  3. Provisions relating to annuities

Basic Interest Calculations on a Financial Calculator

  1. Introduction
  2. Valuation of market value of long-term gilts (e.g. Eskom stock)
  3. Nominal and effective rate of interest
  4. Debt repayments
  5. Resultant rate

Life Expectancy Tables

Compound Interest Tables

Present Value Tables

Medical Schemes

  1. Introduction
  2. Purpose of the Act
  3. Role players
  4. General
  5. Duties and obligations of the broker
  6. Penalties

Money Laundering

  1. Introduction
  2. Prevention of Organised Crime Act 121 of 1988 (POCA)
  3. Financial Intelligence Centre Act 38 of 2001 (FICA)

Compliance in terms of the Policyholder Protection Rules (Long-term Insurance Act 52 of 1998)

The Financial Advisory and Intermediary Services Act

  1. Introduction
  2. Pertinent definitions
  3. Licensing
  4. Key individuals
  5. Representatives
  6. Competence requirements
  7. Summary of the requirements of Board Notice 194 (Qualifications, Regulatory Examinations And CPD)
  8. Compliance officer
  9. General Code of Conduct for FSP’s and Representatives
  10. Record keeping
  11. Offences and penalties
  12. Retail Distribution Review
  13. Conduct of Financial Institutions (COFI) Bill

  • Lecturers
  • Faculty Heads  
  • Financial Planning Program Directors
  • Tax Advisors
  • Certified Financial Planners ®
  • Financial Planners
  • Financial Planning Students
  • Legal Advisors

This product does not have any reviews yet - be the first to write one.