Local or offshore? How to choose an investment platform

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Choosing correctly is important when investing outside of SA due to the taxes, charges and fees involved

Choosing correctly is important when investing outside SA due to the taxes, charges and fees involvedBuying all your investments on a single platform has several advantages but when it comes to investing outside SA, choosing the correct platform is even more important.

When you invest in an offshore-domiciled platform you use your foreign exchange allowance of up to R11m a year to take money out of the country. For many local investors this mitigates political risks, he says. He says you should choose a platform in a country with good laws and strong regulation, which can demonstrate how it will secure your investment and personal data. It is for this reason that the Isle of Man, Jersey and Guernsey are so popular with South African investors, he says.

Using a South African platform allows you to monitor all your holdings in one place and on a consistent basis, Van Tonder says. The tax rates applicable to South African endowment wrappers is likely to be slightly lower than if you hold the investment directly. High-earning South African taxpayers pay income tax at an effective rate of 45% on income, whereas income tax on endowment assets are taxed at 30%. You pay capital gains tax at rates up to 18%, whereas life companies pay 12%.

 

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