presentation to future events- rnx - showme · rbsi or investec investment(s) dead member...
TRANSCRIPT
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CRS- Why tax planning shouldn’t be postponed!
CONFIDENTIAL | Copyright @ 2017 Sovereign Group All Rights Reserved
By Richard Neal Director
Sovereign Trust (SA) Limited
17th Floor, GreenPark Corner
3 Lower Road, Morningside, Sandton
AGENDAAGENDA
• About Sovereign
• Why tax planning shouldn’t be
postponed
• FATCA
• Common Reporting Standards (CRS)
• Notice 212
• The DTC
• The answer-
Conservo International Retirement Plan
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Introduction to the Sovereign Group
Established in 1987
26 fully manned offices worldwide
Sovereign’s core business is setting up and managing companies, trusts and other structures to meet the specific personal/business needs of our clients. Typically these needs would include tax planning, wealth protection, foreign property ownership and facilitating cross-border business
Licensed and regulated Trust Companies in:Grand TurkIsle of ManGibraltarMonaco and Guernsey
Key client service centres: Gibraltar, Hong Kong, Dubai, Isle of Man and Guernsey. And an office in Cyprus (in Limassol)!
Over 13,000 vehicles under administration and management
Why tax planning shouldn’t be postponed
PRAVIN GORDHANFINANCE MINISTER
Business Day Live – 6 April 2016
“The world is systemically narrowing the scope for those who want to hide their offshore assets and avoid paying their taxes due to the South African fiscus”.
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• Enacted in 2010.
• aimed at foreign financial institutions (FFIs) to prevent tax
evasion by US citizens and residents through use of offshore
accounts.
• if a FFI does not enter into an agreement with the IRS, all
relevant US-sourced payments subject to a 30% withholding
tax payable to IRS.
• SARS reported to IRS on 30 September 2015.
• IRS reporting to SA in turn (and 33 other countries) on South
Africans with accounts in the US.
FATCA
Common Reporting Standard (CRS)
• Arises out of FATCA, developed by the OECD (2014)
• To date 100 jurisdictions signed up to share information
automatically – not on request
• Who will report- Financial Institutions (any account)
• 1 January 2016 “go live” date for early adopter countries.
• May 2017 commencement of reporting to local tax
authorities.
• September 2017 commencement of reporting between
countries.
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CRS- What is a reportable account?
Include accounts held by:
• Individuals; and
• Entities, including trusts and foundations.
• Gibraltar, Guernsey, Isle of Man entities: GBP250 000 threshold
(pre 2016).
• Individual accounts: no threshold.
• The standard includes a requirement to look through passive entities in order to report on the relevant controlling person.
CRS- Information to be reported
• Interest earned/received.
• Dividends earned/received.
• Account balance or value.
• Income from certain products.
• Sales proceeds from financial assets.
• Payments made with respect to the account.
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CRS- First Adopters
Anguilla Argentina Barbados Belgium Bermuda
BVI Bulgaria Cayman Islands Colombia Croatia
Curacao Cyprus Czech Republic Denmark Dominica
Estonia Faroe Islands Finland France Germany
Gibraltar Greece Greenland Guernsey Hungary
Iceland India Ireland Isle of Man Italy
Jersey Korea Liechtenstein Latvia Lithuania
Luxemburg Malta Mauritius Mexico Montserrat
Netherlands Niue Norway Poland Portugal
Romania San Marino Seychelles Slovak Rep Slovenia
South Africa Spain Sweden Trinidad Turks & Caicos
UK
CRS- Second Group of Adopters
Albania Andorra Antigua & Barbuda Aruba Australia
Austria Bahamas Belize Brazil Brunei
Dar Es Salaam Canada Chile China Costa Rica
Ghana Grenada Hong Kong Indonesia Israel
Japan Macao Marshal Islands Malaysia Monaco
New Zealand Qatar Russia St Kitts & Nevis Samoa
St Lucia St Vincent &
Grenadines
Saudi Arabia Singapore St Maarten
Switzerland Turkey UAE Uruguay
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Notice 212
Government Gazette - 16 March 2015Issued ito Sec 35(2) and 36(4) of the Tax Administration Act
Offshore trusts:
An arrangement ito which a
(i) SA tax resident makes a contribution to a non-resident trust
AND
(ii) Resident making the contribution is a beneficiary of the trust
AND
(iii) Value of the contribution or the interest of the beneficiary in the trust is
R10 million or more.
Notice 212
Who Reports?
- Promoter: “a person who is principally responsible for
organising, designing, selling, financing or managing the
arrangement.”
- Participant: “a Promoter or a person who directly or indirectly
will derive or assumes that the person will derive a ‘tax benefit’
or ‘financial benefit’ by virtue of the arrangement.”
When to Report?
• Within 45 business days of the date on which arrangement
becomes reportable
OR• If a person becomes a participant in an arrangement that is
reportable, within 45 days of the person becoming a
participant.
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Notice 212
Penalties?
• Participant: R50 000 per month
• Promoter: R100 000 per month
Anticipated tax benefit exceeds R5 million: penalty doubled!
Tax benefit exceed R10 million: penalty tripled
The Davis Tax Committee:
• 2 July 2013: Minister of Finance 2013announced this tax reform committee.
• Various sub – committees on VAT, estate duty,e- commerce, corporate tax, relationshipbetween, labour/business and others.
• Estate Duty: intention withdraw spousalexemption.
• Offshore trusts: tax all payments as income(even though capital) – been referred back toTreasury.
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What is the solution?
A structure which is reportable
but doesn’t trigger a tax liability
Retirement trust in:
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Conservo- Our Guernsey Retirement
Savings Plan
• Works well for South African tax residents
• Is a 40(ee) unapproved Scheme- 0% Guernsey tax
• We have high level tax opinion on the Plan- local
• Amazingly cost effective vs its closest relative
• Tax efficient contributions
• Flexible and tax efficient Estate Planning
Conservo- Why do we like Guernsey so
much?
British Crown Dependency
Politically stable
Highly regulated
Lily white reputation
Zero tax for non-residents of Guernsey
All ties into the rationale for setting up a Conservo Plan
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Conservo- Contributions
Conservo- Taking Benefits
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Conservo & Death of Member
Conservo International Retirement Trust
Cash and assetscontribution from
member
Bank account: RBSI or Investec
Investment(s)
Dead member
Beneficiaries
Discretionary Trust
Guernsey
No estate duty
Conservo- SA Tax Considerations
• Donations tax: NO (pension rights from age 50; not a gift to trust).
• Tax on lump sums received in SA: NO (return of capital).
• Tax on growth of investment: Only when paid to the Member:
• 40% of the capital gain taxable at the investors marginal tax rate when
vested.
• No CGT in the plan.
• Tax on income: Only when paid to the member: taxed at marginal rate.
• Estate duty on death: NO.
• No tax deduction for contributions to the Conservo (Not registered under
the SA Pension Funds Act).
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Conservo- Benefits to the Member
• Tax free growth on investment.
• Better control of a retirement plan, freedom to decide
where to invest.
• Pension plan in hard currency, i.e. GBP, USD, EUR.
• Can receive benefits from as early as 50.
• Part (or all) of funds can be taken as a lump sum on
retirement – consider tax consequences!
• Cost effective & transparent.
• Flexible: may convert structure to another structure when
Member relocates.
BahamasTel: +1 242 322 5444
BahrainTel: +973 17 1515 71
British Virgin IslandsTel: +1 284 495 3232
Cayman IslandsTel: +1 949 7555
China, BeijingTel: +86 10 6582 0268
China, ShanghaiTel: +86 21 5211 0068
CuraçaoTel: +599 9 465 2698
CyprusTel: +357 25 733 440
DubaiTel: +971 4 270 3400
GibraltarTel: +350 200 76173
RegisterAnAircraft.comTel: +350 200 76173
RegisterAYacht.comTel: +350 200 51870
Sovereign Accounting Services (Gibraltar) Limited
Tel: +350 200 [email protected]
Sovereign Asset Management
LimitedTel: +350 200 41054
Sovereign Insurance Services Limited
Tel: +350 200 [email protected]
GuernseyTel: +44 1481 729 965
Hong KongTel: +852 2542 1177
Isle of ManTel: +44 1624 699 800
MaltaTel: +356 21 228 411
MauritiusTel: +230 244 3210
The NetherlandsTel: +31 20 428 1630
PortugalTel: +351 282 340 480
SeychellesTel: +248 4321 000
SingaporeTel: +65 6222 3209
South Africa, Cape Town Tel: +27 21 418 2170
South Africa, JohannesburgTel: +27 11 305 7480
SwitzerlandTel: +41 21 971 1485
Turks & Caicos IslandsTel: +1 649 946 2050
United KingdomTel: +44 20 7389 0555