“Street Notes” – March 2021
Quote of the Month
“If I cannot do great things, I can do SMALL things in a great way.”
– Martin Luther King JR
We enter the third month of the year with improving Covid-19 figures, a relaxation in lockdown levels and optimistic equity markets. In SA, the annual budget delivered on the 24th of February by Tito Mboweni, provided some welcome positive news as the tax take was better than expected. The improvement in the fiscal situation and the likely reduction in bond issuance will be positive news for SA bonds over the next few months. The key risk remains the wage negotiations for public servants and the upcoming Constitutional Court challenge over the non-payment of last year’s wage increases. As we are in a local government election year, expect things to get heated. The success of the budget will depend on the political will shown at this juncture, as the government is in desperate need of reducing the huge public servant bill so funds can be spent in other critical areas to get growth going in our economy and to also provide assistance to the less fortunate in our society.
Overall, the SA equity markets were very strong in February and the Rand spent most of the month in a strengthening environment but lost steam and ended flat at month-end. The return that offshore investors would have received on the JSE All share index in US$ would have been almost 3 times the return they received for investing in the MSCI World Index in US$. This is certainly a short-term reversal of what we have experienced over the last 5 years.
On the global front, all eyes were on the rise of US Treasury yields and what it means for equities. There was some heavy selling in tech stocks and global bonds slipped. However, the Dow passed 32,000 after the Federal Reserve reiterated that it had no plans to raise interest rates.
Return on Life
At ABWM, we have recently launched a retirement coaching program called EPIC Retirement (EPIC Retirement) for those close to retirement or those already in retirement, but are experiencing a few bumps along the way.
The main thrust of our program is that retirement planning is not just about building a plie of money. One of the phrases I like to throw around, around this topic is that we need to do 2 things to retire well. One is, we need to have enough purpose to get up in the morning and two, is we need to have enough money to sleep at night. So, it’s about money and it’s about purpose.
We want to help people recognise that the 2nd half of life can mean a second wind, not just a breeze but a gust to fill our sails. It’s a time to contribute, learn and try new things.
The story below which I picked up on Radio 702 last week, taken from an article by Jake Massey says it all:
After 35 years working in the automotive industry, Jack Warner was well within his rights to spend his retirement with his feet up, watching TV and eating custard creams. But the great-grandad decided to launch an acting career instead – and he’s never looked back. Watch him in action here:
As a young LAD, Jack loved acting, but his parents dissuaded him from this line of work, telling him to get a ‘proper job’ instead.
Now, the octogenarian is proving it’s never too late to pursue your dreams.*
Speaking to LADbible, he says: “I noticed that a few of my retired friends were happy to sit and take life easy and I thought, ‘There’s no way I’m doing that.’
“Knowing how much I enjoyed acting, my wife of 63 years encouraged me to speak to an agent. So I grabbed the bull by the horns.
“I was amazed how quickly I got a gig and I haven’t looked back – my job has taken me all over the world and to a host of impressive venues that I could only dream of visiting.
“I thought I might be too old but the agent said this is a business for all ages – the most important ingredient is enthusiasm – and I have plenty of that.”
Since launching his second career, Jack has landed roles in films such as The Phantom of the Opera and Wimbledon, as well as featuring in music videos for Robbie Williams, Jamie Cullum and The Hoosiers, and working as an ambassador for Oak Tree Mobility.
Asked if he enjoyed working as an actor as much as he’d envisioned, Jack says: “More! I thoroughly enjoy what I do playing varied roles.
“Going to places, locations that I would not otherwise have been able to and working with wonderful people of all ages – many of them are young which in turn keeps me young.”
However old you are, Jack reckons you should spend the time you do have looking forwards, not back.
He says: “I thoroughly enjoyed my many years in the motor trade, but often wonder if I had made a career in acting, where I might be today. But I have no regrets.
“It’s never too late, being active keeps me healthy and of course health is the number one factor in being able to continue an active life.
“Age is definitely a mindset – you mustn’t sit down and give in to it. My philosophy is ‘keep young and carry on’, which I intend to do for many more years to come.”
* Obviously, this is a sweeping statement; if Jack’s dream was to be an Olympic swimmer, then he probably would’ve left it a bit late at this stage. But you get the idea – people tend to underestimate what they can achieve if they really go for it. That’s essentially what I’m getting at. ‘It’s never too late to pursue your dreams’ is just a bit more emotive and snappy.
Source: Article published by Jake Massey on Radio 702 website
If you would personally like to explore the EPIC Retirement program in more detail, please email Adam at [email protected] to schedule a consultation.
Pic of the month –
Finally, a bit of peace!”
This magnificent photo was submitted by ABWM client Barry Morris. This photo of a lioness was taken in the Serengeti. These lions have learnt to climb trees in East Africa to escape the dreaded tsetse fly.
Before the world went into a Covid frenzy, Barry went to Tanzania last March. He visited the Serengeti/Ngorongoro Conservation Area. Barry says that at that time of the year, Wildebeest (more than 3 million according to his guide), are calving in the southern Serengeti and Ngorongoro Conservation Area. While Barry took 100’s of photos of the wildebeest and their calves, together with the zebra, none of the photos closely resembled the actual scene. “The animals are literally “wall to wall” as far as the eye can see – without doubt the most magnificent wildlife scene I’ve ever witnessed. Invariably close by are cheetah and hyena.
But there’s so much more!
The Ngorongoro crater is breathtakingly beautiful. I also got to see close-ups of the “famous” tree climbing lions of East Africa. They apparently have learnt to tree climb as an escape from the tsetse flies.
To anybody with an interest in wildlife – this has to be on your bucket list!”
Thanks so much Barry!! Please be in touch with me if you would like to submit your pics for our newsletter.
Tip of the Month – Do the work-from-home tax benefits apply to you?
The hard lockdown imposed last year saw most companies implement a “work from home” policy. While this new balance for people has come with many challenges and also benefits, I thought it would be worthwhile taking you through a recent article by Sentinel International (https://www.sentinelinternational.co.za/2021/03/08/work-from-home-tax-benefits/) which deals with this situation for salaried employees. More generous allowances do apply to commission earners and independent contractors.
Sentinel International state that as a salaried employee, you can claim certain expenses incurred on your home office, provided that certain requirements in the Income Tax Act are met.
How do you qualify?
Here is a brief explanation of the conditions that salaried employees need to meet to claim home office expenses:
- The home office must be occupied only for trade purposes
- The home office must be specifically equipped for trade purposes
You cannot use your dining room or lounge as your office, you need a room that is equipped exclusively for trade purposes.
- The office must be regularly and exclusively used for purposes of trade.
- The duties must be performed mainly in that office.
More than 50% of the duties must have been performed in that office. This means you must have worked in that office for more than 6 months in the year of assessment.
What expenses can you claim?
If the above requirements are met, you can claim the following expenses that have been incurred in your home office:
- Interest on bond
- Cost of repairs to the premises
- Phones, stationary, rates and taxes
- Cleaning, office equipment
- Wear and tear on equipment used for trade purposes e.g laptop
- Any expenses in connection with the premises
It’s important to note that the above expenses can’t be claimed on the square footage of your residence, but only the portion of the residence used for trading purposes. For example, if your office comprises 10% of your residence, you can only claim 10% of the interest on the bond. For the full list of prohibited expenses, please refer to Section 23(m) of the Income Tax Act.
The downside of claiming home expenses is that it impacts your capital gain in the future. Using part of your primary residence as an office will have a negative impact when you decide to sell the house.
How this works is the following; there is a R2milion CGT exemption on the sale of your primary residence. But choosing to use part of your home as an office reduces this exemption. If, for example, the office takes up 15% of the house’s footprint, the exclusion will be changed to 85% of R2million – or R1.7m.
The bottom line is that if you are part of this work-from-home situation that you speak to tax advisor on the best way to go forward.
Content courtesy of article written by Khathushelo Lugisani of Sentinel International