The national budget 2017 – More tax on the horizon

National budget 2017 Wouter Fourie CFP®on RSG geldsake

Wouter Fourie CFP® & director of Ascor® Independent Wealth Managers[spacer height="20px"]

The national budget and effects on individuals

Wouter Fourie of Ascor® Independent Wealth Managers chat to Andries van Zyl of RSG Geldsake about the national budget 2017.  In the discussion, Wouter touches on the changes to the national budget 2017 and how that affects individuals.

Also in the discussion, Wouter and Andries chats about the new 45% tax rate for individuals earning more than R1.5 million. They touch on the increased tax rate on trusts and how that affects future investment plans, when compared to the effective tax rate in companies.

Lastly, Wouter chats about the options available to individuals to best structure their investments and income.  Listen to the podcast or read more about the discussion below….[spacer height="20px"]

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The national budget 2017, so eloquently delivered by Minister Pravin Gordhan yesterday in parliament, has left very little room to manoeuvre for high net worth individuals, but all is not lost.

High income individuals taxed more

One of the most commented announcements made from inside parliament, was that the South African Revenue Service will in future collect 45% of the income of individuals earning over R1.5 million in annual income.

While an increase was expected by many, its impact on high net worth individuals was made more acute by the increase in the tax rate on trusts, from 41% to 45%. Many high net worth individuals and families often use trusts to manage their tax expenses and protect assets.

Trusts as a tax vehicle

At Ascor Independent Wealth Managers, we have always cautioned against using trusts as a tax vehicle. Trusts remain a very powerful tool to manage assets and protect assets from any business failure ­– for entrepreneurs – or to transfer assets outside of a deceased estate – for families.

However, if you use a trust for tax purposes, the increase to 45% makes it a less efficient tax vehicle than a company, which has an effective tax rate of 42.4% if you consider the company tax rate of 28% and the additional increased rate on dividends.


At Ascor Independent Wealth Managers, we recommend that individuals, regardless of their net worth, seek professional financial advice from an FPI CERTIFIED FINANCIAL PLANNER®. Such a planner can structure your income and expenses in a way that will protect as much income as possible and use the existing tax breaks, such as tax free retirement annuities and the tax-free savings scheme (which has been increased to R33 000 annually) to best effect.

A CERTIFIED FINANCIAL PLANNER®will also help you to invest funds in the correct asset classes, such as balanced mutual funds, that will give one the best possible exposure to international growth markets and foreign currency.

So, while the national budget 2017, tax structure has become stricter, there is hope for individuals. Use professional and independent financial advice to streamline your investment portfolio, while also using all available tax benefits to retain and nurture as much income as possible.

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