Tax vs your investments: Which will come out on top in 2022?

2022/01/18 20:05:00

[ADVISOR VIEW] Tax vs Investment 2022 - the only difference between tax and death is that death does not get worse every time the government meets: Ruan Breed - @BrenthurstSA. #Moneyweb #Tax #Investments

Moneyweb, Tax

[ADVISOR VIEW] Tax vs Investment 2022 - the only difference between tax and death is that death does not get worse every time the government meets: Ruan Breed - BrenthurstSA. Moneyweb Tax Investments

In life, there are only two certainties: death and taxes. The only difference between them is that death does not get worse every time the government meets. And by the way, you don’t pay taxes – the government takes taxes. At this time of the year and with the tax season around the corner, most

The only difference between them is that death does not get worse every time the government meets. And by the way, you don’t pay taxes – the government takes taxes.At this time of the year and with the tax season around the corner, most of us are trying to balance all our New Year’s resolutions while, in the back of our minds, doing some tax planning for our businesses and personal financial life. When reviewing your investment portfolio, the tax effects and structures of your investment vehicle should also be properly investigated and understood, as the taxman can and will stake his claim on your portfolio growth. The saying ‘Give to Caesar what belongs to Caesar’ is not in vain.

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In life, there are only two certainties: death and taxes.CEO optimism around global economic factors is at its highest in a decade, with 77% of 4 446 CEOs surveyed predicting improving conditions while only 15% expect the economy to worsen.to sustain multi-year broad rising trend in capitalisation rates The recovery of the global economy subsequent to 2020’s hard lockdown-related recession, coupled with major global supply chain disruptions to the supply side of the economy, has unleashed a surge in inflationary pressures.16 January 2022 - 20:44 Lindiwe Tsobo Despite global stock markets getting off to a rocky start to 2022 as investors fretted about the prospects of multiple interest rate hikes in the US this year, analysts are counting on a long rally in commodity stocks to counter any pullback.

The only difference between them is that death does not get worse every time the government meets. And by the way, you don’t pay taxes – the government takes taxes. Despite undesirable market conditions such as rising inflation, disruptions in the supply chain and relentless Covid-19 whirlwinds, the report reveals that CEO optimism for 2022 is in fact a tick higher than the 76% optimism level from a year ago and fully 54 points higher than 2020 when more than half of CEOs predicted a declining economy. At this time of the year and with the tax season around the corner, most of us are trying to balance all our New Year’s resolutions while, in the back of our minds, doing some tax planning for our businesses and personal financial life.5% by November, with petrol and food prices being key influencing factors. When reviewing your investment portfolio, the tax effects and structures of your investment vehicle should also be properly investigated and understood, as the taxman can and will stake his claim on your portfolio growth. “There is nothing ‘normal’ about the world we are working in, but we are getting used to it,” he adds. The saying ‘Give to Caesar what belongs to Caesar’ is not in vain..

Tax can get technical and there are many different rules that apply to different income earned.” Views vary geographically While there is general optimism among CEOs for economic growth in 2022, this view varies across individual countries and territories.25% level to 8% by year end. Investors are particularly wary of capital gains tax (CGT) on their investment portfolios. Tax and your investment portfolio: Many investors begrudgingly pay taxes, CGT in particular, as they often feel their taxes are not being spent efficiently or on the government services they would prefer for their [personal] circumstances. “The Covid-19 pandemic has pushed many organisations in Africa to rethink the way they operate and how they build trust and deliver sustained outcomes,” says Dion Shango, territory senior partner at PwC Africa. Consequently, they sometimes select investments that will deliver lower returns and thus attract lower CGT.9% in May 2013, the monthly average long bond yield ended the year 2021 three percentage points higher at 9. The question to ask is – would you be happier being invested in a portfolio with exceptional growth which will result in paying higher taxes, or will you be happier in minimising the tax burden and being invested in a portfolio with sub-par returns? The growth in an investment portfolio is positively correlated with the tax burden incurred on this growth once the asset is sold. They’re optimistic – and realistic – about the challenges and opportunities ahead.

If investments have shot out the lights, expect Sars to knock at your front door. For the average individual, two main taxes apply: Before you select the more average returns, fearing tax, have a look at the following investor scenarios: Investor 1 and Investor 2 each inherited R1 million. The same perspective is seen in countries such as Japan (plus 16 points to 83%, from 67% last year), United Kingdom (up five points to 82%), Italy (reached 89%, up 18 points from a year ago), and France (soaring 25 points to 85%).    Average capital value per square metre on commercial property expected to stop falling in nominal terms in 2022, but not in"real" inflation-adjusted terms. Both have a marginal tax rate of 18% and decided to invest it in two different investment portfolios with two different wealth managers. Both had the same investment time horizon of five years, being January 2015 to December 2019. The trend is the same for Brazil (down seven points to 77%), China (down nine points to 62%), and Germany (down four points to 76%). Let’s review their performance together with their tax implications: Investor 1: Investor 2: Investor 2 has more than four times the tax liability of Investor 1. However, rising cap rates and weak net operating income growth is expected to keep average capital values in"real" declining territory, in other words the low capital growth that may be experienced is not expected to keep pace with the general price inflation rate in the economy.

However, Investor 2 is R500 000+ better off than Investor 1. While US CEOs may be less hopeful about the global economy, they are comparatively confident about their own companies’ growth prospects, with 40% stating that they are extremely confident about achieving revenue growth in 2022. Here is the important thing to remember: you can’t have your bread buttered on both sides i.e. Threats According to the report, cyber and health risks rank as the leading global potential threats that could impact on companies’ overall performance – 59% of CEOs in financial services cite cyber attacks as a key threat, while manufacturing (40%) and consumer (39%) CEOs displayed lower concern levels despite those sectors’ high attack volumes.5% as at the first half of 2021, according to MSCI data. achieve growth and minimise tax. As mentioned, the amount of CGT payable is positively correlated to growth in your portfolio. In Africa, health risks and macroeconomic volatility rank as the leading threats, followed by cyber risks.

Far too often investors complain about the tax burden and having to pay a substantial amount of tax when withdrawing capital or doing switches within the portfolio after achieving excellent returns. So, while actual valuations have dropped far less, in real terms (the proper way to assess a correction) the cumulative decline in the MSCI All Property Average Capital Value has been a significant -29% from the first half of 2016 to the first half of 2021. Even though the example above is a simplified scenario (there are many other factors to consider), the core aspect remains: be happy with paying more tax for exceptional growth or be happy with an underperforming portfolio and putting less money in your pocket. In addition, 43% of CEOs (South Africa: 37%) are either very or extremely concerned about the potential impact of inflation, fluctuations in GDP and labour market issues in the coming year. The tax advantage of investing directly offshore vs feeder funds: There are two ways of being invested in offshore assets: There is one small tax advantage that investors are not always aware of. When investing capital in feeder funds (Option 1), the depreciation of the rand and the growth of the asset will both effectively be taxed. “When CEOs look at the next 12 months, they are understandably concerned about potential threats to short-term performance that could result from disruptions, including macroeconomic volatility, cyber and health risks,” adds Moritz. While much economic activity has normalised as lockdown regulations have been eased, three major challenges face the battling hotel property class. When investing capital in the same assets directly offshore, the CGT is only calculated on the growth of the underlying asset that is bought.

You are not taxed on the depreciation of the rand to the dollar.” Listen to this MoneywebNOW podcast with Simon Brown: Content hosted by iono. This is an illustration to show that being liable for CGT in your investment portfolio, means that you have made the right choices in selecting assets to invest in. Thirdly, South Africa has been plagued by limitations on foreign travellers to the country. A fine is a tax for doing wrong. jQuery(document). A tax is a fine for doing well. You will be liable for one of these; it’s up to you to decide which one.preventDefault(); jQuery('html, body'). By October 2021, average hotel occupancy rate had risen to only 31.

jQuery(document).on('click', 'a[href*="#to-comments"]', function(event){ event.attr(this, 'href')).preventDefault(); jQuery('html, body').8% of October 2019, while total hotel income for October 2021 was still 32.animate({ scrollTop: jQuery( jQuery.top }, 500); }); jQuery(document).attr(this, 'href') ).

offset().bind('click', function () { jQuery(this.   More employees expected to work from the office in 2022, but not at levels sufficient to end the rising office vacancy trend yet.top }, 500); }); jQuery(document).ready(function() { /* The following handles lightbox expansions of images in the article */ var lightbox_path=lightbox_path||"";!function(a){a.lightBox({ imageLoading:"https://www.fn. This major class is expected to see its national average vacancy rate continue to climb in 2022, as many companies revise their office space needs down.lightBox=function(b){function d(){return e(this,c),!1}function e(c,d){a("embed, object, select").co.

css({visibility:"hidden"}),f(),b.imageArray.gif", imageBtnPrev:"https://www. But we believe the level of full time office working won’t go back to the same levels as before the lockdowns, and as technology continues to improve, so the multi-decade trend towards greater remote work levels will resume (following the initial"back to the office" move after the lockdown spike).length=0,b.activeImage=0;var h,e=!1;if(b.co.grouping&&(h=c. This means that, even without any increase in remote work, there are less employees in these services sectors, which would normally imply less office space needed.

getAttribute("rel"))&&(e=d,d=[],e.png", imageBtnNext:"https://www.each(function(a,b){h==b.getAttribute("rel")&&d.co. Gone are the days therefore, when every employee had a desk reserved for themselves, meaning a large portion of desks standing empty much of the time.push(b)})),1==d.length){if("gallery"==b.png", }) }); function getSelectedText() { if (window.

captionPosition)var i=jQuery(c). But we believe that this is only a partial offset of the above, leaving the office market under pressure in 2022 with its average vacancy rate rising further.parent().getSelection(); return range.next().html();else var i=c.selection. Retail property performance improved in 2021, but 2022 will likely make further improvement tough going.getAttribute("title");b.

imageArray.selection.push(new Array(c. Real Household Disposable Income is projected to grow further, but at a very low rate of +0.getAttribute("href"),i))}else for(var j=0;j1){if(d[j-1].text } } } function createTweetLink(text, e) { var oldTweetLink=document.getAttribute("href")==d[j].getAttribute("href")||jQuery(d[j-1]).parentNode. Real disposable income growth is expected to be constrained by very weak employment growth, companies often attempting to use labour productivity improvement instead of employing, as they rebuild balance sheets.

parent().parent().createElement("a"); newTweetLink.children(). In a financially constrained consumer environment, we would thus expect retail centres focused more on high frequency essentials, and less on luxuries and low frequency purchases, to outperform.children().com/intent/tweet?text=" + encodeURI(text) +"&url=https://www.attr("href")!=jQuery(d[j]).

parent().co.    Industrial Property Market to remain the outperformer.parent().children().id="tweetLink"; newTweetLink.children(). In addition, it appears set to benefit in the coming years from increased online retail focus.attr("href")){var i=jQuery(d[j]).innerHTML=' Tweet'; var appendedTweetLink=document.

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parent().getElementById("textParagraph"); if (textParagraph) { textParagraph.parent().children(). TPN’s national average vacancy estimate has declined from a peak 13.children().attr("href"),i))}}else{var i=jQuery(d[j]).

parent().4% year-on-year in the 3rd quarter after having dipped into moderate negative territory in prior quarters.next().html();b.imageArray. Interest rate hiking typically curbs the 1st time buyer rush to buy homes that interest rate cutting brought from 2020 onward, that rate cut-driven buyer demand surge having helped to leave a"gaping hole" in the rental market.push(new Array(jQuery(d[j]).

parent().parent().    Residential development market to peak.children().children().attr("href"),i))}for(;b. This leads to our expectation that we should see the number of residential units plans passed peak in the near term in 2022, and residential completions to follow suit with a mild lag.

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