The end of the tax year is around the corner and the past few months have, unfortunately, provided South African investors with several potentially large capital losses. The silver lining to this cloud is the value of those losses when offset against current or future capital gains. The window to take advantage of this situation closes at the end of February 2018. The Steinhoff debacle of December and the recent strong selloff in certain property shares are good examples of stocks in which many investors may be sitting on potential capital losses.
Anchor, in partnership with Hollard, has an investment solution to maximise the benefit of capital losses. The solution is a 0% tax rated endowment – clients can invest into the structure and all gains from this investment are tax free*.
By realising losses before the end of the current tax year, investors can offset those losses against any capital gains (either in this tax year or over the next three years). By then transferring money into the Zero Tax-Rated Endowment, clients are benefiting from the current loss and ensuring that future capital gains from this investment are tax free. Investors can transfer both cash and shares into the endowment. Transferring shares into the structure will amount to change of beneficial owner and therefore is a taxable event that will realise any available loss.
Should you wish to discuss the structure please contact your portfolio manager or contact Anchor at firstname.lastname@example.org.
*with the exception of Dividend Withholding Tax. Anchor does not provide tax advice and investors should consult with their tax advisors should they require tax advice.