In this third edition of our Private Client publication, Personal Perspectives, we share key insights into the current trends impacting high net worth (HNW) individuals and families.
It is an established principle that investing money leads to wealth creation over time, allowing you to fulfil basic needs and to meet long-term goals for your family and your business. Investment diversification is believed to be effective because various assets in a diversified portfolio react differently to the same economic event. Risk is also lower, when a portfolio is diversified, because it is rare that the entire portfolio would be wiped out by any single event.
Despite diversifying your investment portfolio, you also need to manage the tax compliance in respect of the returns from the investments making up the portfolio. For HNW individuals and families, the ‘Wealth Tax’ report1 issued by the Davis Tax Committee in March 2018 provides for two key interlinked considerations: “Wealth inequality in South Africa is extremely high…” and “More work is needed to ensure that the tax is well designed and will yield more revenue than it costs to administer.”
With this in mind, KPMG Enterprise’s global study on the tax cost of transferring a family business becomes increasingly relevant with its alarming results for South Africa.