Tributum Newsletter #10
Hello
Arigato to the Boks. They sure did South Africa proud by winning the World Cup. They played well, almost and unexpected game plan, and they brought the Webb Ellis trophy home. Under captain Siya Kolisi they also inspired a nation, showed what believing in the guy next to you can achieve and that working towards a common goal can bring unity into action. It surely is a feel-good story, and as prince Harry said in the change room afterwards – South Africa needed it.
Even with the euphoria of the rugby World Cup coursing through our veins, South Africans faced a strike at SAA that, according to SAA itself, cost it around R50m a day. However, the costs going forward may be much more if travelers vote with their wallets and decide not to support the beleaguered airline in the future. The Auditor General’s report on State Owned Entities again told the sad story of poor financial performance, adding that audit readiness and quality of audited financial records were poor and even worse than previous years. The lack of accountability is shocking.
If I sound negative, consider the R3 000 000 000 000 (R3 trillion) national debt that is estimated to become R4 500 000 000 000 (4.5 trillion) over the next 3 years. At around 60million South African citizens that amounts to R50 000 currently owed by every citizen…
Cryptocurrency has been a buzzword for some time and there are varying views on how to tax these transactions. This is even more important as people play the exchange rate arbitrage. This is done by opening a crypto account on a foreign platform where crypto is bought, say at R15/US$. The crypto is then immediately sold on a different platform, say at R15.5/US$. Effectively you are playing the arbitrage between the buy and sell rate of the Rand to the US$.
In the above example your return is 50c (3.33%) on the R15/US$. Easy money, but limited by South Africa’s foreign exchange provisions. If you continue to do this with your whole R11m annual foreign exchange allowance (R1m discretionary and R10m investment) then you can net a cool R366 666 per year for doing pretty much nothing. However, this is speculation and will be fully taxable in your hands.
If I lost you that is OK, it took me a couple of explanations before I got the jist of it. Now I just need to get my hands on R11m…the Reserve Bank has confirmed that you cannot pool funds in order to do this so you cannot borrow R11m from your rich second cousin to make this play.
This will be our last newsletter for 2019. No-one will want to read a newsletter on Friday the 13th during the mad scramble to get that last emails done so they can go on leave. Have a great festive season, travel safely if you do and may the best of 2019 be the worst of 2020. Chat again next year.