Taxing Unnuity...a sequistrated issue gone wrong

Since when is the 'customer no longer king'? Since 'he who holds your money can tell you what to do'! or at least give that impression of 'enjoy your journey...we have your money.'

So what gives rise to this? I'm sure many folk tell a sad tale of woe based on frustrated feelings...and yes, I'm one of them.

I bought into an annuity many years ago as my Defence Force pension was not that great and as a young married couple, we were concerned about our future. The monthly payments were small and so was the final payout...but at least it was a start towards some sort of 'old age' provisioning.

I allowed the annuity after a good several years to become paid up (by allowing the policy to lapse) and by taking larger ones with greater outputs. Old Mutual informed me that the policy would 'lie in state' until it maturation date, whereafter it would be paid out, after tax, of course.

Now herein lies the rub. In 2001/2 I arrived back from the States and discovered that my trip, which was deemed payable over 36 months was converted to 'immediate' or within a 30 day time frame AND my credit card which had expired while I was was in the States would not be renewed as it had this large amount owing for my family's flights now outstanding. I appealed and was granted 72 months to 'pay-off' the outstanding amount, which by the way, would accrue interest over the said period as well. The Credit Card was issued by Mercantile Bank and was in my opinion well-managed.

Thus the amount to pay to Mercantile was plus-minus 40,000.00 and coupled to this the business I was involved in took a hard knock and I became liable for that company cost as well. It has been said, that it never rains, but it pours! I did not complain and still do not about either of these situations, save to say that I took on the load to reimburse all loses amounting to well over R70,000.00 as well as only receiving stipend for a salary. Needless to say, this placed immense pressure on my family and yes, I succumbed to the recommended solution of undergoing sequestration. Now let me add, sequestration is not all its made out to be. it comes with penalties and liabilities....that are long lasting and which have a measured negative effect on both one's family as well as one's personal career and financial rehabilitation.

My sequestration was 'friendly' and the attorneys which carried it out were very professional as well as understanding. Were it not for their support during the post years years of sequestration, I would have had great difficulty in recovering. (Sequestration Case No:2005/18318 P/H No: 1000 dd 23 August 2005 before the Honourable Judge Horn. It was ordered that my estate was accepted as insolvent and that the estate was placed under sequestration in the hands of the Master of the High Court. So signed by order of the Court)

The Annuity with Old Mutual (mentioned earlier) continued to accrue interest, and was to 'lie in state' until its date of maturity.

Fast forward to October 2017. I logged on to the Old Mutual site and checked on the annuity which was to reach a date of maturity in November 2017. I informed Old Mutual that I wished the money to paid across to my account with Absa Bank upon maturation and i completed the forms which Old Mutual required for this. However, old Mutual also required a tax number, which I did not have. I also visited the SARS branch in Alberton and was informed by a very polite assistant, that as the Court Order was in place, I would not be able to register for a new number and that I was to continue as I was until a court order stated otherwise. I have thus done so.

Now to the case at hand. Realizing that I was between a rock and a hard place, I informed Old Mutual of the situation (albeit in an irritating manner due to the manner in which I believe my case was being dealt with). I was informed that without a tax number, Old Mutual could not proceed and that the programme used by Old mutual to expedite this was indeed a SARS programme and that even though my current company pays my tax into a non-number general SARS account, to fulfill my tax requirements, that they could not do so. Istated that I found it rather unbemusing to note that this could not be done and that somebody at Old Mutual should be able to do so. I was of course informed to the contrary, by which time I was irritated at what I construed to be somewhat of a story or just plain 'not wanting to assist.'

I did vent my frustration with the tele-operator and did inform her what I felt to be very poor service on the side of Old Mutual. I further sent an email to Old Mutual informing them of the situation regarding anon-tax number, my sequestration and my frustration. I received a reply to this which I include below and then will conclude my comments:

Good day

Thank you for your email, your enquiry was refered to our legal department. In response to our request, the following was a response received from our legal department regarding your oustanding income tax number.

"For income tax purposes, a new taxable entity comes into existence when a person's estate is sequestrated.

In addition, the natural person receives a new taxpayer identity from the date of sequestration. Three separate taxpayers will, therefore, be liable for tax, namely: 1- the insolvent person for the period before insolvency (that is, up to the date preceding the date of sequestration); 2- the insolvent estate (a new entity from the date of sequestration); and 3- the insolvent person for the period on and after the date of sequestration.

4- A separate tax return must be submitted for each of the periods identified above.

The estate of the person before sequestration and the person's insolvent estate are, however, deemed to be one and the same person for certain purposes, for example, the determination of the deductions and allowances the insolvent estate may be entitled to and the determination of a taxable capital gain or assessed capital loss in the insolvent estate. It also means there is no disposal for capital gains tax purposes when the assets pass from the insolvent to the insolvent estate."

The above extract confirms that the sequestrated member should have registered for a new tax number with SARS. Please request the sequestration order (if we have not received same) and contact the administrator the sequestrated estate if the member does not know their new tax number.

Please contact SARS and registered for a new tax number. On receipt of the above outstanding document our office will finalise this claim.

Kind regards

Angela Carelse | Administration Specialist

Document Admin Old Mutual Life Assurance Company (SA) Limited Licensed Financial Services Provider

***(telephone) | +27 (0)21 ********** (fax) ********** (email) | [CSCCA ********** 1] (reference)

www.facebook.com/OldMutualSA | www.twitter.com/OldMutualSA

Right, now to conclude: The above response sounds to me as, 'we're not paying you out...you're sequestrated' and the money must go in another direction. Now I'm no accountant and I'm certainly no legal boffin, but my understanding of a sequestration that is finalised, paid out and completed implies that any future monies I save, build, earn and accrue are due to me and that yes I will be liable to be taxed on any and all monies paid out to me....which I don't see happening (being paid out) in this case.

I have since contacted SARS (again) enquiring the provisioning of a new tax number (SARS ref no. (case No) 2 ********** 9 and was told to visit the centre with the following docs after which a new ID number MAY be provided upon finalising the query and establishing the Court order relevance and case. Thus my appointment with SARS is on 28th November 2017.

In the interim, I feel aggrieved with Old Mutual (and of course I may well be in the wrong) but will most certainly not recommend them to any other person / institution/ organisation wishing to invest or establish a financial partnership with such a concern.