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more reason to take your money offshore ... really stupid idea ... guess this is just another way for them to increase the tax rate, without actually increasing the tax rateWhere can we move to though?
Any feedback Patrick?Quote(2) Where the value of a tax free investment is determined with reference to any
index of listed shares, the value of shares issued by any company may not exceed
an amount of 120 per cent of that company’s weighting in that index, subject to a
maximum of 35 per cent of the market value of the tax free investment.
I just do not understand that at all. And English is my first language.
What that says to me is that the weighting of a share in an index must be closely alligned to the index. Of course ETFs don't match an index perfectly, as they have to buy and sell in the real world, but that line says they are only allowed to fudge by up to 20%.
The limit there also sounds like it's been upped to 35% per company rather than 10%, which is why many of those ETFs seem to qualify.
I'm still going to call though, just a little busy at the moment.
Quote(2) Where the value of a tax free investment is determined with reference to any
index of listed shares, the value of shares issued by any company may not exceed
an amount of 120 per cent of that company’s weighting in that index, subject to a
maximum of 35 per cent of the market value of the tax free investment.
I just do not understand that at all. And English is my first language.
What that says to me is that the weighting of a share in an index must be closely alligned to the index. Of course ETFs don't match an index perfectly, as they have to buy and sell in the real world, but that line says they are only allowed to fudge by up to 20%.
The limit there also sounds like it's been upped to 35% per company rather than 10%, which is why many of those ETFs seem to qualify.
I'm still going to call though, just a little busy at the moment.
It's bringing horrid flashbacks of the law courses I studiedQuote(2) Where the value of a tax free investment is determined with reference to any
index of listed shares, the value of shares issued by any company may not exceed
an amount of 120 per cent of that company’s weighting in that index, subject to a
maximum of 35 per cent of the market value of the tax free investment.
I just do not understand that at all. And English is my first language.
QuoteComposition of tax free investment
Requirements in respect of composition of certain tax free investments
14. (1) Where any part of the value of a tax free investment is determined
directly or indirectly with reference to any financial instrument that is a share, not
more than 10 per cent of the value of that tax free investment may be derived from
shares in any single company.
(2) Where any part of the value of a tax free investment is determined directly or
indirectly with reference to any commodity, not more than 10 per cent of the value of
that tax free investment may be derived from that commodity.
(3) Where any part of the value of a tax free investment is determined directly or
indirectly with reference to any financial instrument issued by—
(i) any public entity that is listed in Schedule 2 or 3 to the Public Finance
Management Act, 1999 (Act No. 1 of 1999);
(ii) a municipality as defined in section 1 of the Local Government Municipal
Finance Management Act, 2003 (Act No. 56 of 2003); or
(iii) any foreign government which has been assigned a foreign currency sovereign
rating lower than that of the Republic of South Africa,
not more than 30 per cent of the value of that tax free investment may be derived
from any one of those financial instruments.
(4) This regulation does not apply in respect of any financial instrument in
respect of a collective investment scheme.
Bolded part maybe?
Easy equities called me yesterday, apparently the 10% applies to unit trusts not ETFs. I'll post more info soon.That would make sense as the ETF tracker can't control what's in it really, it just follows the market . Unit trust can change is holdings manually.
Got an email today from Easy Equities. They've launched their tax free savings accounts. Looks like the best of the bunch so far. They seem to be offering a very wide range of investments, including it seems my favourite, the satrix indi. The reason I'm rating them above Satrix though is that there are NO account fees, and NO management fees (other than for the underlying etf). All you pay for is the usual and very low 0.25% brokerage commision, and the normal statutory fees.In regards to the greater than 10% issue. I dont see it on SARS website. Where does this restriction come from?:
They even have a nice little take on their site showing how much cheaper they are than the rest which I've attached here. If you're investing R250 a month they're a whopping 5% cheaper than Satrix themselves, and 1.6% cheaper than Standard banks offering. Of course if you're doing R2500 like everyone should in my view, then the difference will shrink, but remember fees compound so even a small amount is best avoided!
I'm still trying to get a listing of which ETFs they offer, because if I read the rules right then the Indi shouldn't be allowed as I thoughtthere was a restriction that the fund couldn't old more than 10% in any one company, and the Indi has 17% NPN at the moment. I've asked for clarification on this so I'll update you as things move along.
*Note I'm still not getting paid by either Satrix or Easy Equities, I just think they're the best options we have in SA at the moment!
Edit:
Here's the list they're making available to the TFSA, I'll still wait to hear on the > 10% issue. Now to decide which ETF to go for, as on one hand you want to make the most of the tax free benefit, but on the other capital growth is usually better for returns than dividends/interest. Thoughts?
Bettabeta Be Green ETF (BGREEN)
Bettabeta Equally Weighted Top 40 (BBET40)
DB X-Trackers Col in Japan ETF (DBXJP)
DB X-Trackers Col in USA EF (DBXUS)
DB X-Trackers Col in WLD ETF (DBXWD)
DB X-Trackers DJ Euro Stoxx 50 ETF (DBXEU)
Db X-Trackers FTSE 100 ETF (DBXUK)
Erafi Overall SA Index ETF (RAFISA)
Erafi SA Financial 15 Idx ETF (RAFFIN)
Erafi SA Industrial 25 Idx ETF (RAFIND)
Erafi SA Resource 20 Idx ETF (RAFRES)
Grindrod DivTrax ETF (DIVTRX)
Grindrod LowVol Trax ETF (LVLTRX)
Grindrod Property Index Tracker Closed Fund (PREFTX)
Grindrod Property Index Tracker SAPY ETF (PTXSPY)
Grindrod Property Index Tracker Top Ten ETF (PTXTEN)
Mapps Protect (MAPPSP)
Newfunds Equity Momentum ETF (NFEMOM)
Newfunds Govi ETF (NFGOVI)
Newfunds Ilbi ETF (NFILBI)
Newfunds Mapps Growth ETF (MAPPSG)
Newfunds NewSA Index ETF (NEWFSA)
Newfunds Shariah To40 ETF (NFSH40)
Newfunds Swix 40 ETF (NFSWIX)
Newfunds TRACI 3 Month ETF (NFTRCI)
RMB Mid Cap ETF (RMBMID)
RMB Top 40 ETF (RMBT40)
Satrix 40 Trust (STX40)
Satrix Div Plus Portfolio (STXDIV)
Satrix FINI Index Tracker Fund (STXFIN)
Satrix INDI Index Tracker Fund (STXIND)
Satrix Rafi 40 Total (STXRAF)
Satrix Resi Portfolio (STXRES)
Satrix Swix Top 40 ETF (STXSWX)
Stanlib SA Property ETF (STPROP)
Stanlib Swix40 ETF (STANSX)
