While one should review their estate plan annually, here are some key events which should ring a bell for an estate planner to revise their estate plan:
The Wills Act states that except where expressly otherwise provided, a bequest to a divorced spouse will be deemed revoked if the testator dies within three months of the divorce. This provision is to allow a divorced person a period of three months to amend their Will, after the trauma of a divorce. Should he/she fail to amend their Will within three months after their divorce, the deemed revocation rule will fall away, and the divorced spouse will benefit as indicated in the Will
In addition, review beneficiary nominations on any policies, retirement annuities, and trust deed provisions (all subject to the divorce order)
Sale or donation of asset specifically mentioned in Last Will and Testament or Inter vivos trust
Birth of a child or grandchildren: If children are minors the estate planner needs to ensure that the assets they inherit are protected through his Will.
Minor child reaching age of majority (18 years of age)
Estate planner acquires significant property
Downturn in estate planner’s financial position
New business ownership: Provide for business succession planning in the partnership, shareholders or association agreement(s).
Change in legislation having an impact on the estate plan For example annual Budget speech announcements and tax legislation amendments.
The estate planner will need to decide whether it is practical and viable to merely amend current documents or create entirely new documents to account for any changes.
Important notes to bear in mind
A Last Will and Testament only deals with property in the deceased’s name at the time of his death.
In regard to business interests, an association agreement between members of a Close Corporation, or a shareholder’s agreement in regard to a private company, may prescribe how a deceased’s interest should be dealt with.
When a testator is married in community of property, they must remember that it is only half of the joint estate that they are able to bequeath in terms of their Last Will and Testament. The other half belongs to spouse in consequence of the marriage.
Trust assets do not fall within the testator’s estate at death. Trust assets are dealt with in terms of the trust deed. Estate planners should not mistakenly believe that an asset held and owned in a discretionary trust will vest in beneficiaries upon the trust founder’s death.
A badly worded Last Will and Testament may lead to unintended consequences, and even the disinheritance of a loved one that the testator did not intend to disinherit.
The estate planner should also take note of making provision for their social media accounts – most social media platforms do have policies in place regarding the profiles of users who may have passed away. The estate planner should indicate their wishes regarding their social media accounts, to their next-of-kin.
Careful consideration of all the principles and legal implications should be exercised by the estate planner and discussed with a professional adviser before taking any course of action.
Should you require professional advice in this regard please do not hesitate to contact our offices.
Extension Of The Expanded Employment Tax Incentive Age Eligibility Criteria And Amount Claimable
Despite the recent relaxation of the national lockdown, various businesses and employees are still negatively impacted by the COVID-19 pandemic. These negative impacts are further exacerbated by the impacts of the recent unrest in the country that destroyed businesses and infrastructure. The Government, therefore, wishes to provide additional assistance to those who continue to be adversely affected by COVID-19, as well as assisting in the process of reconstructing businesses. Moreover, this support measure is aimed at supporting employment in the most vulnerable sections of the labour market.
As a result, it is proposed that the expansion of the ETI be reinstated for another limited four-month period, following the design implemented in 2020:
A R750 increase to the maximum monthly amount of ETI allowable. Therefore, the maximum allowable values will be increased in the following manner:
Employees are eligible under the current ETI Act from R1 000 to R1 750 in the first qualifying twelve months and from R500 to R1 250 in the second twelve qualifying months
Allowing a monthly ETI claim in the amount of R750 during these four months for employees from the ages of 18 to 29 who are no longer eligible for the ETI as the employer has claimed ETI in respect of those employees for twenty four months, or they were in the employer’s employ before 1 October 2013
Allowing a monthly ETI claim in the amount of R750 during these four months for employees from the ages 30 to 65 who are not eligible for the ETI due to their age
Formulae will apply to calculate the value of the incentive relative to remuneration received, to introduce the incentive at a positive rate for wages between R0 and R2 000 per month, at a constant value for wages between R2 000 and R4 500 per month, and a declining rate for wages between R4 500 and R6 500
Since the requirement for social distancing may result in employees working significantly reduced hours, coupled with the businesses that are being reconstructed being unable to trade as normal at the moment, both of which would impact the monthly remuneration actually paid, the proposal allows for the calculation of the ETI claim based on actual remuneration paid in that month where the employee worked less than 160 hours a month (the remuneration paid to the employee would not need to be grossed-up)
As the contractual agreement entered into at the beginning of the employees employment with the employer will not be altered, the extent of the ETI claimable in instances where the employee was employed for less than 160 hours a month would still be impacted by the hours employed and paid for in that month (the incentive claimable will bear the same ratio that the number of hours the employee was remunerated bears to 160 hours – the incentive would need to be grossed-down)
The inclusion of an anti-avoidance measure aimed at limiting potential abuse where an employer claims the incentive despite having significantly reduced the employee’s wages. This anti-avoidance measure will apply to wages below R2 000
Accelerating the ETI reimbursements from twice a year to monthly as a means of getting cash into the hands of tax compliant employers as soon as possible
To qualify for this relief, the employer must be tax compliant and registered with the South African Revenue Service (SARS) as an employer by 25 June 2021
Effective Date: The proposed measures will apply for four months and will come into operation on 1 August 2021 and end on 30 November 2021.
Implementing An I.T System
Implementing a new IT system for your business can be a daunting task. Many people find it difficult to initiate and cope with change, as well as to agree with colleagues on what the best way forward can be. Yet, it is important for every modern-day business who wants to maintain a competitive advantage within their market to implement and continuously improve upon their systems and processes. This challenging task requires buy in from all employees but must be driven by managers with a wholistic view of the business. Here are a few important points to take note of when implementing new systems:
Communicate effectively between all stakeholders. Communication is imperative as there needs to be a uniform understanding of why the system is being implemented and how the perceived value of the system will be derived. Communication will also help to ensure a smoother, less disruptive implementation process
Understanding user-requirements. When implementing a new system, it is important to discuss any and all requirements that a user might need to ensure that they can use the system effectively. This is best done through continuous discussions with many different types of users. Even if a system solves all of your internal problems, if a user finds it difficult to use, or too cumbersome, then they will not want to use it
Create a contingency plan. There are always risks which can be realized when implementing new systems. It is important to identify all of these risks, rank them in terms of severity and likelihood of occurring, and ensure that for each risk there is an adequate contingency plan in case something goes awry
Train users and offer support. To ensure that users get the best value out of the system, upskill your staff with training on how to properly use the system. Not only will this help ensure the system is operated smoothly, it also helps to boost the confidence of the users as well as increases their morale. Support will also be necessary in case users need additional help post the training period. For this, you can either hire a new dedicated support staff or upskill one of your current employees to assist others
It is important to remember that systems implementation can be an iterative process. There are always new technologies being released and better ways to optimize processes. Thus, it is important to keep your eyes open for any new opportunities that might come about and keep your ears open to any feedback from users as to how they believe the system can be improved.
Crypto Assets & Tax
A crypto asset is a digital representation of value that is not issued by a central bank, but is traded, transferred and stored electronically by natural and legal persons for the purpose of payment, investment and other forms of utility, and applies cryptography techniques in the underlying technology.
Do I need to pay tax on crypto assets?
Yes, normal income tax rules apply to crypto assets and affected taxpayers need to declare crypto assets’ gains or losses as part of their taxable income.
The onus is on taxpayers to declare all crypto assets-related taxable income in the tax year in which it is received or accrued. Failure to do so could result in interest and penalties.
How will it work?
Following normal income tax rules, income received or accrued from crypto assets, transactions can be taxed on revenue account under “gross income”. Alternatively, such gains may be regarded as capital in nature, as spelt out in the Eighth Schedule to the Act for taxation under the Capital Gains Tax (CGT) paradigm. Determination of whether an accrual or receipt is revenue or capital in nature is tested under existing jurisprudence (of which there is no shortage).
Taxpayers are also entitled to claim expenses associated with crypto assets accruals or receipts, provided such expenditure is incurred in the production of the taxpayer’s income and for purposes of trade.
Base cost adjustments can also be made if falling within the CGT paradigm. Gains or losses in relation to crypto assets can broadly be categorised with reference to three types of scenarios, each of which potentially gives rise to distinct tax consequences:
Crypto assets can be acquired through so called “mining”. Mining is conducted by the verification of transactions in a computer-generated public ledger, achieved through the solving of complex computer algorithms
Investors can exchange local currency for a crypto asset (or vice versa) by using crypto assets exchanges, which are essentially markets for crypto assets, or through private transactions
Goods or services can be exchanged for crypto assets. This transaction is regarded as a barter transaction. Therefore, the normal barter transaction rules apply
If you require professional advice with regards to the above please do not hesitate to contact our offices in this regard.