Sense and sen­si­bil­ity

Finweek English Edition - - Creating Wealth - RUAN JOOSTE ru­anj@fin­week.co.za

treat your cold, called flu.

But all this doesn’t bring me any closer to the R800/month hospi­tal plan for my very healthy chil­dren. So I started looking for one that would cover them against ac­ci­dent in­juries re­quir­ing hos­pi­tal­i­sa­tion. There isn’t any­thing like it. It would be so cheap that un­der­writ­ers such as San­lam or Dis­cov­ery wouldn’t earn much out of it. For the in­sur­ance bro­kers who have to sell it there would be even less com­mis­sion – and we all know it’s com­mis­sion that sells prod­ucts.

There are good in­sur­ance poli­cies against ac­ci­dents. For as lit­tle as R135/ TAX PLAN­NING has be­come in­creas­ingly dif­fi­cult, with amend­ments to tax leg­is­la­tion be­com­ing a bian­nual oc­cur­rence and tax avoid­ance pro­vi­sions nip­ping most overzeal­ous tax schemes in the bud. How­ever, the im­por­tance of mak­ing sense of your tax po­si­tion amid an ar­ray of com­plex tax rules is em­pha­sised by the fact it can be­come a costly ex­er­cise if too lit­tle or too much is paid over to the South African Rev­enue Ser­vice (SARS).

Tax dodgers – or in many cases tax ig­no­rants – will be met with a 12,5% in­ter­est rate charged on out­stand­ing taxes, du­ties and levies and in­ter­est rates payable in re­spect of re­funds of tax on suc­cess­ful ap­peals and cer­tain de­layed re­funds. That doesn’t in­clude the new penal­ties im­posed by Rev­enue at the beginning of the year for var­i­ous non-com­pli­ance trans­gres­sions with an obli­ga­tion im­posed by the Tax and Value-Added Tax (VAT) Act. Monthly fixed penal­ties are levied be­tween R250 and R16 000, de­pend­ing on the tax­able in­come of the tax­payer in the pre­ced­ing tax year.

In ad­di­tion, over­pay­ing Rev­enue doesn’t en­sure the 8,5% in­ter­est rate quoted by Rev­enue, as it’s sub­ject to many con­di­tions and month a healthy 25-year-old can buy R1m of ac­ci­dent cover. It can be di­vided into two: half for death and half for the loss of limbs and sim­i­lar prob­lems. It’s a good prod­uct.

But such a pol­icy doesn’t mean any­thing for some­body who’s been in­jured in an ac­ci­dent and re­quires im­me­di­ate treat­ment. You’ll go to a State hospi­tal if you don’t have your Dis­cov­ery card for a hospi­tal plan with you. That costs R800/month.

It’s ac­tu­ally a pity our in­sur­ers don’t cre­ate a prod­uct cost­ing around R400 or R500/month that will give the in­sured – a in the process. How­ever, it’s not an easy task to grasp the work­ings of in­come tax, as the leg­is­la­tion cov­ers a very wide field, with dif­fer­ent as­pects of leg­is­la­tion of­ten in­tri­cately linked to each other and hav­ing a tax guru on speed dial isn’t al­ways an op­tion.

Ralph Metz’s lat­est ver­sion of Pay­ing Less Tax Made Sim­ple 2009 has re­cently hit the shelves and might be the an­swer for the many tax min­ions out there who don’t want to step on Rev­enue’s toes but who also don’t want to dish out their hard-earned cash if it isn’t nec­es­sary.

To fa­cil­i­tate the process of gain­ing an

healthy young per­son – the fol­low­ing: the ac­ci­dent: R1m. It’s just a pro­posal. Those who are so clever with fig­ures th­ese days re­ally should do a few sums and de­sign a prod­uct like that. Af­ter all, that’s what the 20-to 30-year-olds need (and the fathers who have to pay), es­pe­cially for chil­dren who strug­gle so much th­ese days to set­tle down by them­selves and earn their own in­come. is mostly ap­pli­ca­ble to the over­pay­ment of pro­vi­sional tax. Not to men­tion the im­pact of time de­lays of re­funds on your cash flow. Peo­ple are far bet­ter off in­vest­ing it else­where or ser­vic­ing debt.

It’s about find­ing the right bal­ance and util­is­ing the var­i­ous con­ces­sions and al­lowances pro­vided by Rev­enue to stim­u­late eco­nomic growth over­all pic­ture of tax leg­is­la­tion while also en­abling tax­pay­ers to ex­am­ine ev­ery in­di­vid­ual strand per­tain­ing to their spe­cific tax case, an ex­ten­sive gen­eral in­dex is pro­vided in ad­di­tion to the cross-ref­er­ences in­cluded in the text. Metz has also in­cluded a ref­er­ence in­dex that refers to the rel­e­vant sec­tion of SA’s In­come Tax Act deal­ing with a spe­cific is­sue.

Metz is a qual­i­fied at­tor­ney and ad­vo­cate of the High Court of SA. He has ex­ten­sive ex­pe­ri­ence in the le­gal and fi­nan­cial plan- ning fields, spe­cial­is­ing in per­sonal in­come tax, re­tire­ment plan­ning and health­care leg­is­la­tion. He’s a pop­u­lar speaker and lec­turer in fi­nan­cial plan­ning and has a knack for ex­plain­ing highly tech­ni­cal con­cepts in plain, un­der­stand­able lan­guage, mak­ing the in­for­ma­tion more ac­ces­si­ble to a wide au­di­ence.

This book is no dif­fer­ent. No hoity-toity jar­gon is used and most as­pects are un­der­stand­able. Metz also uses prac­ti­cal ex­am­ples to ex­plain var­i­ous con­cepts. In no way will this book make tax and its ap­pli­ca­tion thereof less in­tim­i­dat­ing but hope­fully it will em­power tax­pay­ers to make more in­formed de­ci­sions when deal­ing with the tax­man.

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