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The offshore investment guide

Aimed at empowering financial advisers, this guide seeks to simplify offshore investing, and the daunting aspects associated with it. It includes four case studies to illustrate how offshore investments can meet specific client needs by reducing investment risk through diversification.

About this guide

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Why invest offshore:
Conversations with your client

By opting to invest offshore, your clients not only benefit from opportunities that aren't available locally, they're also able to reduce and spread their risk, while hedging against a weakening currency. An offshore investment can also be a great financial plan for possible future migration, or overseas studies.

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How to invest offshore

If you're a South African individual, older than 18, you get a discretionary annual allowance of R1 million that you can exchange for foreign currency. In addition, you get an offshore investment allowance of R10 million. To use this allowance , investors need a tax clearance certificate from Sars. Momentum Investments also provides offshore alternatives for investors who with no offshore allowances.

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How different entities can invest offshore with Momentum Investments

Momentum Investments helps simplify your decision on the right product and platform for your investment. By considering each client or entity's needs and preferences, we aim to provide clients with customised solutions, tailored to their goals, needs and legal requirements.

Four ways your clients can invest offshore

The idea of offshore investing often seems challenging. We believe that with a little extra knowledge, it doesn’t have to be. Our case studies help simplify the offshore investment process, by making it easier to understand for everyone.

Local is lekker

Thabang is as South African as can be. However, he wants to get exposure to different, faster growing economies that are less dependent on the state of the South African economy and its cycles.

The Mathosa Trust

The Mathosa Trust is a South African trust. Its trustees want to change the trust's investment strategy from a purely local focus, to getting more offshore exposure.

The Kruger family

The Kruger family wants to emigrate. The husband, Frank, has been working in Australia for a few months of the year on projects for an international company he is working for. Frank and his wife Elly have decided to only emigrate once their son Matthew has completed school.

Consolidating matters

Nomfundo wants to invest into an international outcome-based fund. These funds, investment managed by Momentum Global Investment Management (MGIM), have been appealing to her since she first heard about them from her family's financial adviser.

Want to know more?

Why is the International Endowment Option (IEO) tax efficient?

All interest, dividends and capital gains will be taxed in the individual policyholder fund, taxed at a marginal tax rate of 30% and an effective capital gains tax rate of 12%. Furthermore When the policy proceeds pay out to the policyholder, no further income tax is payable. This could be beneficial depending on the policyholder’s individual tax rate. Check the guide for a detailed example.
What is situs tax?

It is a type of tax equivalent to South African estate duty and is levied in many other jurisdictions depending upon the “situs” of the assets. The word situs simply refers to the source or location of that asset.
What does grant of probate mean?

The probate process is supervised by a court to determine the validity of a will and to settle disputes over who is to inherit when an executor is distributing assets. It is an additional process to the duties of the South African executor. It also takes time and involves additional cost that can be avoided. Read the guide for more info.
When should I consider an offshore will for my client?

An advantage of having a separate will for offshore assets is that the executors in the different jurisdictions may act independently of one another and may proceed without delay. In South Africa, there is freedom of testation, which means that an individual can specify what must happen to his assets after his death.

However, there are jurisdictions that apply forced heirship, which may override the terms of the will with regard to how certain assets are distributed. It is important to get advice from experts in the jurisdictions where the assets are situated to understand these possible unintended consequences.
When should I consider an offshore trust for my client?

Offshore trusts are more complicated and also a matter of personal preference. Essentially, the reasons for establishing an offshore trust are similar to those for establishing a local trust; namely, asset protection and wealth transfer. These benefits need to be weighed up against the costs of administering the structure and the additional complexity from a tax perspective.

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