uitgeselde vergoedingspolisse/deffered compensation policies

Admin wrote:

Dankie vir die uiteensetting. Netjies en duidelik.
Wat stel jy voor m.b.t. uitgeselde vergoedingspolisse wat al 'n paar jaar loop?

Bydraes ten opsigte van UV polisse sal steeds ingevolge art. 11(w)(i) in die hande van die werkgewer aftrekbaar wees, maar die premies sal nou by die bruto imkomste van die werknemer getel moet word en werknemers sal dus voortaan op bydraes ten opsigte van UV polisse belas word.

Admin wrote:

Quick question. I have a client who has a deferred comp policy that is due to mature on the 1st of June. I am aware that there was an error with regard to the grace period for ceding these policies and that it should be changed to be within 2011.

However, i have been advised to cede it to the client now before maturity as with the new changes the policy will be taxed in the companies hands on maturity without being able to write off the amount then given to the client.

Please advise.

I would like to leave it until sars have cleared up the grace period admin error but want to avoid the income tax in the companies hands.

You are partially correct.
During the window period, employers will be allowed to cede the deferred compensation policies to their employees. Employees will not be taxed on the cession value of the policy (income tax and CGT). Treasury is of the opinion that the eventual proceeds should be tax free, except for either the cession value, or the premiums deducted by the employer. Par. (mA) will be amended during 2011 to clarify this position.
During ASISA's November 2010 meeting with Treasury it was however established that the intention of Treasury when unwinding deferred comp arrangements is, amongst others, that par. (mA) is incapable of interpretation as it is incapable of being interpreted in line with the policy intention. At best it provides the opposite of what was intended, i.e. it purports to tax the full proceeds and provides a concession for certain premiums which did not qualify for deduction.

Quick question. I have a client who has a deferred comp policy that is due to mature on the 1st of June. I am aware that there was an error with regard to the grace period for ceding these policies and that it should be changed to be within 2011.

However, i have been advised to cede it to the client now before maturity as with the new changes the policy will be taxed in the companies hands on maturity without being able to write off the amount then given to the client.

Please advise.

I would like to leave it until sars have cleared up the grace period admin error but want to avoid the income tax in the companies hands.

Dankie vir die uiteensetting. Netjies en duidelik.
Wat stel jy voor m.b.t. uitgeselde vergoedingspolisse wat al 'n paar jaar loop?