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28th April 2021

1 Year later

1 May 2021

1 Year later

Here we are one year later, through ‘high’ and ‘low’ lockdowns. Covid-19 and its permutations are ever present….but South Africa and the world adapted. Despite initial setbacks in the second and third quarter of 2020, the global fight-back has resulted in exploding markets, lowest interest rates, low inflation and a severely damaged Gross Domestic Product (GDP). Sustainability is the big question that we should all be aware of and asking.  The ‘bubble’ has grown enormously and is vulnerable. 

Rumours of “re-set” is the order of the day….a New World Order is on its way and we are all going to have to learn how to adapt to a new lifestyle, a new economic environment, and most of all, a major adjustment to our expectations both now and in the future. No-one will escape the knock-on effects of the pandemic and no-one should ignore the need to re-educate oneself, get up, get dusted, and climb on the ladder – Never Give Up

From our cautiously optimistic January predictions, we have been the recipients of the first positive Budget for the last decade.  

As longsuffering taxpayers and investors we have experienced consecutive years of deterioration in our disposable income and severely poor returns on our hard-earned investments. 

All the signs now point to South Africa’s economy having bottomed out….

  • No interest rate increases or decreases – STABLE
  • No increase on Dividend tax
  • No increase on Capital Gains tax
  • No increase on Estate Duty taxes
  • No Vat increase

More good news – the income bands for Income Tax have been increased, which for most people means a lower tax liability, which will provide some much-needed disposable income. All rebates and deductions have been left intact. 

So where is the government going to get its taxes from, which the country sorely needs? 

  1. SARS can be expected to sharpen its pencils, and tax evasion and tax avoidance will be highly scrutinised to ensure compliance. Be sure that you, and your accountants where applicable, regularise your tax positions immediately and be squeaky-clean to avoid any unhappy events. Expect questions, enquiries and audits from SARS on any transactions that fall within the scope of their authority.  Policing is going to be massively increased, efficiency will be improved and there will be no prisoners taken.  So if you are challenged in any way, you must be able to prove your situation. This leads to accurate paper management….KEEP YOUR RECORDS UP TO DATE. 
  2. There are going to be three major Government Bond issues of approx. R500 billion each between now and 2024.  This amounts to approx. R1.5 trillion.
  3. The taxpaying base has shrunk. SA has lost many high-income earners to emigration. Many more are externalising their funds through legitimate processes.  
  4. As South Africa goes back to work, the unemployment figures will hopefully drop and the GDP will break through positively and may even reach 3% to 3.5% over the next 18 months.  This will of course increase the tax revenue significantly. The increased disposable income should fire the economy as peoples’ positive mental attitudes lead to a greater spend.  This will in turn lead to growing inflation.
  5. As the world’s economy begins to regenerate, our high demand exports of resources will earn the much-needed dollars required to fill the coffers.
  6. As our dependency on oil begins to transit to other power sources, such as natural gases of which we will shortly have plenty, and increasing solar power and wind power into the grid, this will enable industry to regain its footing and many joint private/public ventures are on the cards.

As the pandemic recedes and herd immunity improves, we believe that productivity will be the beneficiary of a nation united in making South Africa and its economy a success. 

So, pay attention! It is time to wake up from your hibernation caused by the stresses of Covid and general economic conditions.  Your wealth and retirement investments will have been affected negatively over the last few years.  I have 40 years’ experience in professional investment management and am located in Knysna in the Garden Route, but am able to deal with anyone in South Africa and abroad electronically. Allow me to review and fix your investment portfolios. 

Call me for a no-obligation interview on 083 250 9632. Please visit the website www.safinco.co.za 

There are significant changes in the 4th Schedule of the Tax Act regarding retirement funding which may affect you.  SA and the world are on the move. Please call me for expert Professional Investment Advice.

Our Lifestyle Management Program should be ready by mid-year and is structured as a ‘coaching program’ which should provide enjoyable and useful opportunities to self-develop your skills and persona, at your pace.

Take care and stay safe!

 

THE TEAM

SAFINCO