Tuesday, 24 April 2012 - 20:00
Charts
Retirement Annuities as an Estate Planning Tool Whilst most people see Retirement Annuities (RA’s) as a vehicle to fund provision of capital for their old age, this isn’t always the case as I was recently shown an example by one of my colleagues whereby changes in the rules relating to RA’s have given certain individuals an opportunity to plan their estates a lot more effectively.
Previously, members of an RA were compelled to retire from that fund before the age of 70. This rule has now fallen away and it is now possible to join an RA after the age of 70 with no mandatory retirement age; you may ask yourself “Why on earth would anyone in retirement want to purchase an RA?” But the following example will illustrate its effectiveness as a retirement planning tool for certain individuals:
“Mr A is 80 years old and has more than enough income and capital to fund his lifestyle. He has R 3 000 000 invested in a Money Market account at a bank which he decides to invest into an RA. For ease of calculation, we will assume that none of the R 3 000 000 is allowed as a deduction in the tax year of contribution. We will also assume that the underlying portfolio in the RA is a Money Market Fund earning the same rate as what he would have earned outside the RA. Mr A dies and the growth of the RA at this point is R 300 000 (which is the same as if he had left it in the Money Market account).
“If he hadn’t used the RA, Mr A would have had to pay R 120 000 in income tax (40% on the R 300 000 income from the Money Market account) leaving a net payout of R 3 180 000. The Money Market Fund would also be an asset in Mr A’s Estate, and if we assume that his estate duty rebate has been used on other assets, estate duty of R 636 000 would be payable. Executors fees of R 126 882 would also be payable on this asset leaving a net (after income tax, estate duty, and executors fees) R 2 417 118.
“By investing into the RA the interest earned is not taxed, leaving a total value of R 3 300 000 (all growth in an RA is currently tax free). The RA is not an asset or a deemed asset in the estate and is dealt with as a taxable lump sum death benefit received from a Retirement Fund. All contributions made to a Retirement Fund, not previously allowed as a deduction, are allowed as a deduction when calculating the taxable portion of the death benefit. If we assume that Mr A has already used his R 315 000 tax free retirement benefit, then total tax of R 54 000 will need to be paid, leaving a net benefit after tax of R 3 246 000.”
One must bear in mind that by locking up capital in an RA, accessibility will be greatly reduced (only 1/3rd is available as a lump sum) so this is a tool which should only be used by individuals with a large amount of free capital which is not going to be used or required during their lifetime. Naturally this type of strategy doesn’t make sense for most investors, but for those that it does, the potential benefits should not be ignored.
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Kind regards,
Barry Hugo
info@seedinvestments.co.za
www.seedinvestments.co.za
021 9144 966
Tue, 24 Apr 2012
Top News
Revenue 9 3,4 2 517 754 2 434 233 . Gross profit (4,9) 515 761 542 336 . Full story
Royal Dutch Shell has agreed to buy Cove Energy for 1.12 billion pounds, lifting its offer to access East Africa's huge gas reserves, but failing to quell hopes of a bid battle for the Mozambique-focused explorer. Full story |
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South Sudan accused Sudan on Tuesday of mounting bombing raids on the newly independent country's oil-producing border region and President Salva Kiir said the latest hostilities amounted to a declaration of a war by his northern neighbour. Full storyNorth Korea has almost completed preparations for a third nuclear test, a senior source with close ties to Pyongyang and Beijing told Reuters, which will draw further international condemnation following a failed rocket launch if it goes ahead. Full storyThree Syrian military officers were killed in Damascus on Tuesday, state media and opposition groups said, and at least three people were wounded in a car bomb blast in the capital in further blows to a ragged U.N.-monitored ceasefire. Full story |
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Markets | U.S. stocks rose on Tuesday
after strong earnings from big manufacturers and AT&T, but the
Nasdaq declined on weakness from large-cap tech companies.. . . Full story | | Gold prices rose on
T uesday, following rallies in equities and industrial metals,
but selling pressure ahead of a U.S. option expiration and. . . Full story | | Britain's blue-chip shares rose
on Tuesday, rebounding from a Europe-wide rout the previous day
and helped by better-than-expected U.S. housing data which
boosted global. . . Full story | | European shares rebounded on
Tuesday when bullish company earnings updates lifted some of the
politics-driven gloom over equity markets.. . . Full story |
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| Global equities and the euro
rose on Tuesday on strong corporate earnings, while solid demand
at European government debt sales eased concerns about. . . Full story | | U.S. stocks rose slightly
after the open on Tuesday following steep losses in the previous
session, with gains capped by resurfacing worries about. . . Full story | | Hong Kong shares ended
slightly higher in choppy Tuesday trade, bouncing off an earlier
decline on strength in most Chinese banks after Bank. . . Full story | | Australian shares rose 0.2
percent on Tuesday as inflation data was more benign than
expected, giving the central bank the green light for. . . Full story |
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SA Business | South Africa's 2012/13 sugar output is estimated at 2.188 million tonnes, up from 1.82 million tonnes in the previous season, the South African Sugar Association (SASA) said.. . . Full story | | Miner Anglo American has sold the South African arm of steelmaker Scaw Metals for $440 million to an investment consortium in a long-awaited deal, bringing proceeds from its drive to divest. . . Full story | | South Africa's rand opened softer against the dollar on Tuesday and could remain under pressure because of fears of political uncertainty and sovereign debt risk in Europe.. . . Full story |
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| The rand touched its highest in almost three weeks against the dollar on Tuesday and was among the strongest-performing emerging currencies. . . Full story | | South African stocks edged up 0.5 percent on Tuesday, as shares of luxury good firm Richemont rose on strong watch Swiss. . . Full story | | The rise of the
middle-class Chinese working mother helps explain why Nestle
paid nearly $12 billion for Pfizer's baby food
business and could. . . Full story | | South Africa's Industrial Development Corporation (IDC), a state-owned financing institution, will raise 5 billion rand to invest in domestic green economy. . . Full story |
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| Canadian miner First Uranium Corp said it received an unsolicited offer for its Ezulwini mine in South Africa from Waterpan Mining Corporation and Transalloys Ltd.. . . Full story | | Virtually every day there is
news on how Iran's oil exports to Asia are being squeezed by
Western sanctions, but the question that still remains
unresolved is just how much pain is Tehran feeling.. . . Full story |
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Company News | Shareholders are referred to the announcement dated 23 April 2012 in which shareholders were advised of the posting of the circular. . . Full story | | Shareholders were advised that at the annual general meeting ("AGM") of Cenrand held at 11:00 on Tuesday, 24 April 2012 (UK. . . Full story | | Highlights:
*Quarterly production up 70% to 4 777 ounces ("oz").
*Surface mining extended from June 2012 to 31 December 2012.
*New surface. . . Full story | | First Uranium announced that on 17 April 2012, Fiuranium received an unsolicited expression of interest from Waterpan Mining Corporation ("WMC") and. . . Full story |
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| Anglo American plc ("Anglo American") announced the final stage of the USD1.4 billion Scaw Metals Group ("Scaw") divestment with the sale of Scaw South Africa (Pty) Ltd. ("Scaw South Africa"), a. . . Full story | | Fiuranium advised that the corporation has amended the record date and date on which the upcoming special meeting of shareholders for First Uranium Corporation will be held. The amended dates are. . . Full story | | Shareholders of JD Group Ltd ("JD Group") and Steinhoff were referred to the joint announcement released by JD Group and Steinhoff on SENS on Friday, 30 March 2012 relating to the. . . Full story |
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Company Results | Contract revenue declined to R272.9 million (R386.6 million). Gross profit decreased to R29.1 million (R43.8 million) and operating profit more than halved to R5.9 million (R18.7 million). Net attributable profit slumped. . . Full story | | Revenue increased to R25.9 million (R24 million). Operating profit rose to R18.3 million (R17.7 million). Profit after tax improved to R13.6 million (R12.6 million). In addition, headline earning per share grew. . . Full story | | Net revenue for the interim period jumped to R217.6 million (2011: R179.4 million). Operating profit increased to R21.7 million (2011: R12.7 million), while profit attributable to equity holders of the parent. . . Full story |
World Markets (Spot Prices)
Name | Time | RP | Move | % Move | JSE Overall | 17:00 | 33820.87 | 117.66 | 0.35% | JSE Top 40 | 17:00 | 29823.88 | 137.76 | 0.46% | JSE Gold | 17:00 | 2176.07 | -2.11 | -0.10% | JSE Financial | 17:00 | 24709.94 | -11.13 | -0.05% | JSE Industrial | 17:00 | 38383.14 | 255.26 | 0.67% | JSE Indust 25 | 17:00 | 32307.26 | 273.39 | 0.85% | JSE Resource | 17:00 | 48893.62 | 76.33 | 0.16% | DJ Futures | 19:56 | 12960.00 | 77.00 | 0.60% | DJ Ind | 19:45 | 13001.79 | 74.62 | 0.58% | SP 500 | 20:00 | 1370.12 | 3.18 | 0.23% | Nasdaq | 20:00 | 2955.08 | -15.37 | -0.52% | FTSE 100 | 17:35 | 5709.49 | 43.92 | 0.78% | DAX | 18:06 | 6590.41 | 67.41 | 1.03% | CAC40 | 18:06 | 3169.32 | 70.95 | 2.29% | Nikkei | 08:32 | 9468.04 | -74.13 | -0.78% | Shanghai | 09:26 | 2388.83 | .25 | 0.01% | Hang-Seng | 10:26 | 20677.16 | 52.77 | 0.26% | All Ords | 08:42 | 4433.90 | 3.60 | 0.08% | NZSE 50 | 08:32 | 3519.86 | 6.41 | 0.18% |
| | Name | Time | RP | Move | % Move | Gold | 19:59 | 1641.80 | 3.76 | 0.23% | Gold/Rand | 20:00 | 12824.92 | -18.10 | -0.14% | Gold/R kg | 20:00 | 412321 | 1801 | 0.44% | Silver | 19:58 | 30.7660 | -.0140 | -0.05% | Platinum | 19:59 | 1541.20 | -11.30 | -0.73% | Palladium | 19:59 | 663.75 | .55 | 0.08% | R157 | 17:06 | 6.48 | -.04 | -0.61% | R204 | 17:06 | 7.30 | -.06 | -0.82% | Brent Crude | 19:56 | 118.00 | -.20 | -0.17% | Rand / Dollar | 19:59 | 7.8115 | -0.0286 | -0.36% | Rand / Pound | 19:55 | 12.5640 | -0.0559 | -0.44% | Rand / Euro | 19:55 | 10.3026 | -0.0161 | -0.16% | Rand / NZD | 19:58 | 6.3359 | -0.0418 | -0.66% | Rand / AUD | 19:55 | 8.0338 | -0.0595 | -0.74% | Yen / Dollar | 19:59 | 81.1700 | 0.0470 | 0.06% | Euro / Dollar | 19:55 | 0.7575 | -0.0023 | -0.30% | Dollar / Euro | 19:59 | 1.3193 | 0.0037 | 0.28% | Pound / Dollar | 19:55 | 0.6195 | -0.0004 | -0.06% |
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Click here for the Sharenet Spot Price page
The JSE Today
Trading Statistics
Date | Adv. | Decl. | Unch. | Actives | Volume | Value | Trades | Orders |
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24/04/2012 | 171 | 133 | 82 | 386 | 220,159,159 | R10,394,423,085 | 80692 | 2346008 | 23/04/2012 | 88 | 243 | 71 | 402 | 204,113,275 | R11,320,174,796 | 82413 | 2858692 | 20/04/2012 | 195 | 119 | 93 | 407 | 269,085,600 | R14,135,784,647 | 101126 | 2688673 | 19/04/2012 | 168 | 151 | 76 | 395 | 229,816,222 | R13,336,662,825 | 96441 | 2527578 | 18/04/2012 | 203 | 118 | 80 | 401 | 199,632,859 | R12,760,927,679 | 82566 | 1477805 |
* Includes all listed instruments on the JSE
Index Summary Index Name | RP | Move | % Move | Top 40 | 29,823.88 | 137.76 | 0.46% | Industrial | 38,383.14 | 255.26 | 0.67% | Mid Cap | 48,707.79 | -49.41 | -0.10% | Small Cap | 35,920.57 | -245.12 | -0.68% | Resource 20 | 48,893.62 | 76.33 | 0.16% | Industrial 25 | 32,307.26 | 273.39 | 0.85% | Financial 15 | 9,283.06 | -1.63 | -0.02% | Financial & Ind. 30 | 35,568.99 | 225.14 | 0.64% | All Share | 33,820.87 | 117.66 | 0.35% | Oil & Gas | 27,485.00 | -18.92 | -0.07% | Mining | 31,412.90 | 51.99 | 0.17% | Gold Mining | 2,176.07 | -2.11 | -0.10% | Platinum Mining | 56.18 | .50 | 0.90% | GENERAL MINING | 8,127.71 | 5.87 | 0.07% | Oil & Gas Producers | 14,778.18 | -10.17 | -0.07% | Basic Materials | 26,954.57 | 65.07 | 0.24% | Chemicals | 15,196.58 | -5.19 | -0.03% | Forestry & Paper | 14,048.12 | -18.03 | -0.13% | Industrial Metals | 30,570.00 | 625.97 | 2.09% | Industrials | 32,842.65 | 26.42 | 0.08% | General Industrials | 89,002.60 | 594.91 | 0.67% | Consumer Goods | 33,144.01 | 207.73 | 0.63% | Automobiles & Parts | 6,046.10 | .00 | 0.00% | Household Goods | 183.37 | 2 | 0.90% | Health Care | 42,722.82 | 72.47 | 0.17% | Beverages | 111.71 | .72 | 0.65% |
| | Index Name | RP | Move | % Move | Food Producers | 59,993.93 | -80.18 | -0.13% | Personal Goods | 471.82 | 8.29 | 1.79% | Consumer Services | 67,330.95 | 901.05 | 1.36% | General Retailers | 54,818.68 | 437.30 | 0.80% | Travel & Leisure | 3,817.79 | -13.84 | -0.36% | Media | 102.23 | 2.46 | 2.47% | Support Services | 2,397.17 | -.56 | -0.02% | Telecommunications | 67,090.47 | 211.67 | 0.32% | Financials | 24,709.94 | -11.13 | -0.05% | Banks | 47,081.69 | 103.38 | 0.22% | Non-life Insurance | 43,283.11 | -428.78 | -0.98% | Life Insurance | 19,257.08 | -38.59 | -0.20% | General Financial | 2,338.45 | 14.75 | 0.63% | Technology | 28,361.18 | 13.83 | 0.05% | SHARIAH TOP40 | 3,011.46 | 14 | 0.47% | FTSE/JSE SHARIAH ALL | 3,133.12 | 12 | 0.39% | COAL MINING | 27,279.82 | 271 | 1.00% | FTSE JSE Fledgling | 5,422.90 | 14 | 0.25% | FTSE/JSE Alt X | 1,252.30 | -18 | -1.46% | SA LISTED PROPERTY | 414.29 | | -0.22% | CAPPED PROPERTY | 336.05 | | -0.06% | RESOURCE | 26,940.59 | 35 | 0.13% | DIVIDEND PLUS | 196.61 | 0 | 0.13% | FTSE/JSE RAFI 40 | 7,012.89 | 20 | 0.28% | Capped Top 40 | 15,739.09 | 76 | 0.48% | Capped All Share | 17,108.14 | 60 | 0.35% | JSE TABACO | 5,072.83 | -113 | -2.17% |
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Click here for the Sharenet Index Summary page
Latest Consensus Changes** Code | Company Name | Status | Updated | NED | NEDBANK GROUP LTD | HOLD | 20 Apr | SBK | STANDARD BANK GROUP LIMIT... | SELL | 20 Apr | AIP | ADCOCK INGRAM HLGS LD | HOLD | 20 Apr | IPF | INVESTEC PROPERTY FUND LT... | HOLD | 20 Apr | LHC | LIFE HEALTHCARE GRP HLDG ... | BUY | 20 Apr |
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Results Expected** Expected | Company Name | Fin. Date | 25 Apr 2012 | ALTECH | February 2012 (Final) | 25 Apr 2012 | CMH | February 2012 (Final) | 25 Apr 2012 | CMH PREF | February 2012 (Final) | 25 Apr 2012 | DELRAND | March 2012 (Q) | 25 Apr 2012 | MAS | November 2011 (Q) |
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Recent Dividends** Share Name | Dec-Date | LDT | Pay-Date | Amount | PREMIUM | 12-04-19 | 12-05-11 | 12-05-21 | R 0.6000 | OCTODEC | 12-04-19 | 12-05-11 | 12-05-21 | R 0.7120 | PHUMELELA | 12-04-19 | 12-05-18 | 12-05-28 | R 0.2500 | PIKWIK | 12-04-18 | 12-06-01 | 12-06-11 | R 0.5257 | PICKNPAY | 12-04-18 | 12-06-01 | 12-06-11 | R 1.0835 |
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Ex Div** Share Name | Dec-Date | LDT | Pay-Date | Amount | LIB-HOLD | 12-04-02 | 12-04-19 | 12-04-30 | R 2.2100 | TRUWTHS | 12-04-03 | 12-04-19 | 12-04-30 | R 1.6900 | SANLAM | 12-03-08 | 12-04-19 | 12-05-09 | R 1.3000 | SHOPRIT | 12-04-02 | 12-04-19 | 12-04-30 | R 1.0900 | A-V-I | 12-04-02 | 12-04-19 | 12-04-30 | R 0.8300 |
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Upcoming AGMs** Code | Company Name | Date | Status | ABSP | Absa Bank Ltd. | 24/04/2012 | Confirmed | JSE | JSE Ltd. | 25/04/2012 | Confirmed | ZSA | Zurich Insurance Company South Africa Lt... | 25/04/2012 | Confirmed | IDEP | Ideco Group Ltd. | 26/04/2012 | Confirmed | IDE | Ideco Group Ltd. | 26/04/2012 | Confirmed |
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