The future of farming and wealth preservation in South Africa is under increasing pressure due to political uncertainty, tax burdens, and succession risks.
Most farmers believe their current structures (trusts, companies, or personal ownership) will protect them, but in reality, these structures often leave wealth exposed, overtaxed, and at risk of erosion.
The good news is that something can be done about this. The solution is to implement a structure in South Africa that is linked to a foreign business structure, which will create protection against possible asset value lost to adverse legislation, less overall tax on wealth, and increased net wealth over time. If you do not protect your wealth, nobody else will.
With the right business structures, you can achieve the objective to move, over time, capital growth assets from your estate to a corporate structure, and eventually have your offshore structure owning your South African companies. This will open a channel to take profits offshore and invest them in more stable and safer currencies and global investments.
An individual can only take R10m per annum offshore, while with the suggested corporate structure, you can take up to R1bn out. Loans or equity subscriptions can bring some capital back if required.
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By comparison, if you leave your profits invested in wealth for the future in South Africa, the average tax rate on your wealth in a typical company – family trust structure, is about 33%, while the same amount of wealth via a restructured corporate structure in South Africa linked to an offshore structure, like Mauritius, is about 8% in total tax. In addition, with the implementation of long-term lease agreements in the corporate structure, and utilising the Bilateral Investment Treaty between SA and Mauritius, you will be sure of being paid full market compensation for your farm at expropriation by the State.
Most business structures do not fit the objectives that each farmer would want to achieve. Many farms are still registered in the individual’s name or a family trust. These structures will erode the preservation of the family's future wealth preservation.
A short questionnaire has been designed to help you reflect on your current situation and highlight areas where you may be missing out on opportunities to protect your farm, reduce tax, and secure your family’s future. It takes less than 2 minutes to complete, and your answers may surprise you.
You will have the option to a free online consultation with a experienced commercial attorney who specialises in farm and wealth protection structures.
Answer honestly and see if your structure is working for you—or against you.
Gideon Robbertse, B Comm, LLB, H DIp Tax Law, is a commercial attorney wit extensive experience in this field and is member of the Agri X Panel of Advisors.
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