What is a Cardonio Crypto Credit Card?

Crytocurrency entered human consciousness only in the past few years and yet has grown phenomenally due to its revolutionary nature, being a currency tool that is practically unregulated by any formal financial institution other than the “underground” purveyors of the currency who resided online in the virtual world. In short, it introduced a convenient way to hold money, save money and spend money that was invisible but was as efficient as real fiat money itself. It was a radical idea that was quite liberating for the individual. And the fact that it was a growing phenomenon at the very outset brought many to dip their fingers into the sumptuous pie.

It did not take long before the financial regulatory agencies sought to look into this new tool. Recent reports related to cryptocurrency highlighting its supposed failures and abuses, has not prevented many to put their money into this new currency mode. We can practically say with enough confidence that cryptocurrency, just like the gold coin in the ancient world of barter trading, is here to stay.

Considering the nature of cryptocurrency being what it is, making use of it to one’s best advantage requires having easy access to it in the same way that the Automatic Teller Machine (ATM) did to savings banking for the ordinary consumer. Cardonio brought it a step further for people who use foreign currency around the world by coming out with an efficient payment card for those who hold Ether, Bitcoin and other Cryptocurrency accounts.

This solution targets people within the Cryptocurrency community and allows them “to secure instant lines of credit using nothing more than their existing Crypto holdings as security”. This gives immense power to a person, as if he or she virtually owns the world’s banking systems, giving one “complete liquidity of their Cryptocurrency assets, because if the price of their Crypto increases during the 90-day period, they receive the benefits of all upside gains”.

Moreover, every customer can choose whatever percentage they set their “stop loss limits up to a maximum of 35%, meaning even in the event the value of their crypto holdings drops, they are protected at the level they chose”. This assurance gives the individual the confidence that Cardonio stands behind every individual transaction entered into at any location in the world at any time.

One great benefit derived from using a Cardonio Card is that any time a purchase is made, for example, for $10,000 which, let us just say, is worth 1BTC, when the due date comes for paying for that transaction after 90 days, the BTC price might go above $12,000. We can easily see that a savings of more than of 20% has been gained. This leveraging on the potential growth of cryptocurrency may not appear so different from existing currency or price inflation which is but an opposite effect; however, it builds on the innovative idea that cryptocurrency acts in a generally positive curve, whereas conventional currencies act on a generally negative curve. It is no different from the practice of medicine which tries to address symptoms while the new paradigm in wellness and new health protocols depends on nutrition and positive living – in short, positive growth vs. loss of value.

The guardians of conventional currencies may not be so pleased with what is happening. But now, any person can have a better choice through what Cardonio offers.

Cardonio allows the customer

September 10, 2018
by Morgan Wellman

Bowman Offshore Bank Transfers on Moving Funds Offshore: Navigating through SA’s tax clearance, allowance rules

JOHANNESBURG — When it comes to moving your money offshore, there are several options. But each option needs to be considered seriously as it triggers off allowance and tax clearance rules. Missing a step could mean that you’d have to repatriate your funds back to South Africa and, at worse, possibly pay penalties. In this podcast, Esmerie Pienaar — a certified financial planner at Brenthurst Wealth Management — runs through several of the options and the rules thereof. It’s key advice for anybody looking to move money abroad. – Gareth van Zyl

This special podcast is brought to you by Brenthurst Wealth Management. With me on the line is Esmerie Pienaar, a certified financial planner at Brenthurst Wealth. Esmerie, now amid the current slump in the South African economy, many South Africans will be looking to move their wealth offshore. On what basis can a SA resident transfer funds?

Good day Gareth, thanks for taking the time for our interview. Obviously, there’s a few bases upon which you can take out funds. Individual SA residents are allowed two types of allowances that they can effectively take their funds out on. You have your single discretionary allowance that is limited to R1m per calendar year. That is available to all SA residents who are 18 years and older, and in possession of a valid green bar-coded SA ID document or a Smart ID document card. This dispensation may be used for any legitimate purposes, at the discretion of the individual without any documentary evidence. Meaning you don’t have to apply for approval through the SARS, effectively.

Then you also have a R10m allowance per calendar year, of which you need SARS approval through a tax clearance for that R10m. You also have, for example, your travel allowances, your study allowances. In terms of travel allowances, which form part of your single discretionary allowance, you also have the option for people who are under the age of 18. They will have a travel allowance not exceeding R200 000 per calendar year. But when you use your travel allowance, you have to provide documentation showing that you are, in fact, travelling and that travel allowance may not be availed for more than 60 days prior to your departure. So, those are effectively, the ways in which you can transfer. Then you also have your immigration allowance, but that involves a whole set of rules and procedures.

Have you found that that there’s been an uptick from clients who are looking to utilise some of these allowances?

Yes, we have a lot of clients because we’re in the investment industry. We obviously, have a lot of clients predominantly taking funds out for investment purposes but I also deal with clients that are moving abroad temporarily. They use their allowance to move funds to their personal bank accounts obviously for spending where they live in the foreign country. But, yes, they mostly do it for investment purposes. Then, there a few clients on our side who are moving abroad or going on holiday. But there’s been quite an uptick for us because there’s also this fear of government clamping down on allowances or cutting the allowances quite significantly, which can happen at any point in time. So, I think this is also a key reason for why we are having an uptick in funds being moved offshore.

Now, the single discretionary allowance is an interesting one. Can you expand a little bit more on what that entails exactly?

Yes, as I said previously, your single discretionary allowance of R1m per calendar year is an amount that you can take out without prior approval to SARS. Within that, you can then effectively use that for any purpose, be it for travel allowance, be it for investment purposes, be it for your study allowance. This is because these spending categories all fall within that single discretionary allowance, which I think a lot of times clients forget. They think that your single discretionary is a separate thing to your travel allowance, which is separate to your study allowance. That all forms part of your single discretionary allowance. So, if you don’t take note or keep track of moving funds on a travel allowance and now you want to move R1m for investment purposes, for example, you will effectively, go over your R1m allowance. That could cause a few problems, so that’s basically the single discretionary allowance – your R1m that you can take, without getting prior approval through SARS, and you can move those funds for investment purposes, travel allowances, study allowances, payment for weddings, donations etc.

Effectively, with these allowances, you are also limited by how much you can move in a single calendar year, correct?

Yes so, these allowances are all per calendar year. Initially, the set allowances were for your lifestyle and as we moved on they changed that to per calendar year — it’s from January to December and not per tax calendar year. If you take out, for example, your full allowed R11m in December, come next year January, you again have your R11m total allowance for the next calendar year.

What about the tax clearance application procedure? What does that involve?

Yes, tax clearance, which now comes part of your R10m allowance where you have to get approval to move more than your R1m allowance within your R10m limit. That’s quite a tricky procedure. SARS has become so strict on who they give approval to and the procedure has become a bit of a headache with SARS because obviously they’re trying — or we feel that they’re trying — everything in their power to limit the funds being moved offshore. You then have your allowances but as far as they can limit it, according to their regulations, we feel that is what is currently happening.

With tax clearance applications in the past, which were quite an easy procedure, you just had to do your relevant documents, provide the relevant supporting documents and if all your tax affairs were in order, SARS would give you approval. But at the moment, it’s very difficult. They ask for a lot of documents and the timeframe, from submitting to getting approval, extends every month and every case is a different scenario. It’s literally case-by-case. At the moment when you do a tax clearance application, you have to get certain documents in order. SARS wants, firstly, to see that you do in fact have the funds in your personal capacity that you’re applying for. So, you can’t apply for your full R10m if you, for example, only have R5m capacity to use and to take offshore so, you can’t. Just the fact that you have your R10m allowance and apply for a tax clearance, you have to provide proof of the funds in your personal name.

Secondly, and actually the big important factor, is that they want proof of the source of funds. You must show documentary proof of where these funds came from. A lot of the time it might be funds received from a Trust or it’s dividends declared from your company, or its profits taken from the company, or it’s a bonus that you received. Whatever the case is, and where the funds came from, it might be a local investment in your personal capacity that you’ll redeem for the foreign investment, for example, and then you’ll use those documents. And each case has a different set of documents that they require. For example, if it’s a loan they need X, Y, and Z documents. We can go through all of them but it’s such a big list and it depends on a case-by-case basis such as: where did you get your funds from that you’re intending to transfer out on this allowance.

They also want your last three years assets and liability statements. It’s also the type of procedure that SARS use to update their records to make sure that a taxpayer wanting to move funds offshore has everything in order on SARS’ side, on that client profile. If you have any funds outstanding on SARS’ side — or any audits running on a previous tax return — they will decline your application until you’ve resolved those issues and then you can reapply. So, yes, it’s quite a tedious process, but if you have everything in order and you know your SARS’ profile is effectively in order and everything is paid, you don’t have any outstanding audits or any problems on SARS’ side, and you provide all the correct and relevant documentation the first time around, then there is no reason why they would not approve your application.

What are the penalties if you go over your allowances without the relevant SARS’ approval?

Effectively, you are allowed to utilize funds over the allowances but you will then have to do further applications and give quite an extensive explanation as to why you want to go over your allowances. But going back to the question, if you don’t have the relevant allowances to go over your set total of R11m allowance that you have per calendar year — and you have gone over, even its just by R50 000, even a small amount — the SA Reserve Bank will pick up on that on their system because that’s where it’s actually collated. They will see your profile, so, the fact that you use different authorised dealers to move funds, each individual authorized dealer might not know of any other transfers that you’ve done.

You now take out your full allowance with this one authorized dealer but during the beginning of the year, you might have moved more funds through another authorized dealer and that is all collated at the Reserve Bank. They will then pick up that you’ve gone over your allowances. You’ll be obliged to then bring back the amount that you’ve gone over your allowance and you can be penalized up to 40% on the amount that you’ve gone over your allowance. So, if you’ve gone over by R1m, 40% of that you’ll have to pay to SARS as a penalty for going over your allowances. We always say, ‘make 100% sure,’ because we, at Brenthurst, who are dealing with transfers for clients – we’ll only know of the transfers that you’re doing through us. If you don’t declare to us saying, ‘please note, I have travelled I’ve used X-amount on my credit card,’ or, ‘I’ve used another authorized dealer and we moved X-amount.’ So that we can make sure that you don’t go over your allowance because you don’t want to go through that problem with the Reserve Bank, where they say, ‘bring back the funds and you pay a penalty, of up to 40% on that amount.’ You don’t want to go through that.

Is SARB and SARS quite effective at spotting if you’ve gone over that amount? How quickly can they identify that?

Yes, you see the thing is that in the past, it wasn’t quickly picked up. That would have been picked up if they did an audit on your profile or if something was flagged. But I think recently, I’ve noticed that with the bank, it’s as if everybody linked in a way because I have had transactions where we wanted to move the full R1m allowances, without the approval, and the bank came back and said that they’ve picked up that this client has moved X-amount of funds. Whether that’s the set case, and that is in place, the banks will pick it up then. I’m not sure how far they are in that process but I have picked up one transaction like that, where the bank said that they can see he has moved funds out. And you don’t want to say, ‘let’s try it and see, maybe they won’t pick it up,’ because they will tell you to bring it back and then pay the penalty. You don’t want to go that route and just say, ‘let’s do a coin transfer and see, maybe they’ll pick it up or maybe they won’t.’ I wouldn’t go that route.

What happens if you then formally immigrate and once you’re on the other side?

We have a lot of people working overseas, who haven’t formally emigrated. Formal emigration is saying, ‘you’re cutting your ties with us, SA. You’re leaving; you’re taking up permanent residency in another country.’ If that’s the case, you basically start the procedure of declaring all your assets and everything that you have is declared to SARS. You work through or you choose your relevant authorized dealer, and authorized dealers are typically banks. So, you would probably go to your relevant bank and they will start the procedure of your formal emigration.

On formal emigration you will have foreign capital allowances of up to R20m per calendar year. After all your liabilities, including the cost of relevant passenger tickets has been paid for; you have that allowance per family unit. So, your allowance is a bit more when you formally emigrate. If you are a widow or a widower, or a single parent with an accompanying dependent, you are also regarded as a family unit. So, you will have that R20m allowance. If you are only a single person you will only have up to R10m per calendar year, after all your liabilities and costs have been paid.

So, you will work through your authorized dealer. You submit quite a few documents to SARS to get that approval which states you are emigrating and that’s the basis of why you’re moving your funds out. Be it funds or your physical property so, it’s basically a coalition of all your assets reported to SARS. If you also, for example, have a living annuity here, and you’re still going to earn an income from that living annuity — that income that you want to now move to the country that you live in – all of that happens through the authorized dealer. So, if you’ve formally emigrated any further and going forward, transactions that you do to move funds out has to happen through that authorized dealer. For example, if you have formally emigrated and you’ve chosen Absa, for example, we can’t move funds for you in that case. You will have to work through your authorized dealer within your relevant allowances per year.

Which destination or country in the world are you seeing South Africans mostly transfer their funds to? Are there any particular countries that stand out?

Most of the transfers we do, if it’s for foreign investment purposes, it’s mostly buying Dollars but then it goes to a specific investment house. I have clients that moved temporarily to Australia; we have a few clients that have moved there that we transfer funds for. They have not gone through the formal emigration process so, they’re treated more as people being temporarily abroad. On that basis, you just fall in the regular R1m – R10m allowances, and it’s taken up on that basis. Yes, Australia is the country that I, personally, move a lot of funds to. I have one that’s British Pounds to England or UK but, yes, most of the clients that I’ve dealt with are predominantly transferring to an Australian currency and clients moving to Australia.

Just on the topic of Forex transactions. What are some of the costs involved there?

Sometimes you’ll get these adverts saying, ‘we’ll do your Forex transaction at no cost.’ I actually, just want to say that there’s no way that there’s no cost. There’s always an administration cost. There might be a way that they’re not adding a margin but the costs will be made up on the back-end where you pay administration costs. There’s a cost to physically do the payment of the funds out, basically like a transaction cost. With our transactions that we deal with, we work on the basis of adding a margin to the exchange. For example, if you look at the current USD – ZAR exchange rate, which is on about $13.49. When I talk about margin, it’s a few cents that is added to that live rate, which is usually in the region of 0.75% and up to 1% on that live rate. That’s the only costs on our side that you’ll have for your transaction. There’s no additional admin costs saying, ‘okay, after this transaction you also have to pay X-amount (in Rands) for the transactions.’ There’s no costs involved in moving the funds out. Within the exchange, the margin that is loaded on the live exchange rate: that’s where all the costs are for a foreign transaction. That’s about all the costs that you can look at, the admin costs, margins, and then bank charges to move funds out of SA so, the physical payment of the relevant currency to the relevant bank account.

Just as a final question, for anybody who wants to look to transfer funds overseas. What kind of advice would you give them? Where should they, ideally, start and what kind of brief points should they consider before embarking on this journey?

They’ll basically just have to contact an authorized dealer and get all the relevant documents in order to process the transaction offshore. They have to ask themselves: ‘Why do I want to move my funds offshore?’ The first point, I would say, is just getting in contact with either a direct, authorised dealer, be it directly through the bank or a foreign exchange company, or through the service that we offer at Brenthurst, for the clients. From thereon, they will then indicate the documents that we will require for your specific reason that you need to move funds offshore. When you know that you’re moving funds out that is above the R1m single discretionary allowance, and you will have to apply for tax clearance. Always make sure that your whole profile at SARS is in order, that all taxes are paid and that you don’t have any outstanding audits on any previous returns. If that’s in order, from the beginning, the process just runs so much smoother to move your funds offshore. But because you get so many different ways and reasons why funds would be moved offshore, it’s easier to just contact someone dealing with foreign transactions and say, ‘this is my reason – what is the procedure and options that I’m looking at to move my funds offshore?’

May 7, 2018
by Morgan Wellman

Bowman Offshore Bank Transfers: Ten Things to Know About Offshore Bank Accounts

If you are a U.S. citizen or resident and maintain an undisclosed foreign bank account, beware. As numerous prosecutions trumpeted by the IRS make clear, the stakes have never been higher and the potential liabilities can be staggering. Why worry?

The vaunted secrecy of Swiss and other tax havens turns out not to be so secret after all. They've already named names to the IRS and more are on the way. Although the UBS case was most publicized, HSBC, Credit Suisse, and many other banks are in the mix now, as are many foreign countries besides Switzerland. So putting your head in the sand won't work in the long term.

The IRS had a special "Voluntary Disclosure Program" to bring violators into the fold, but the cutoff for participating in it was Oct. 15, 2009. If you are in that program, you are probably still slogging through filings and disclosures to the IRS. But if you missed that deadline--and many thousands did--beware. Sooner or later you'll have to address this problem one way or another.

Here's what you need to know:

1. You Must Report Worldwide Income

You must report your worldwide income on your U.S. income tax return. Plus, you must check "yes" (on Schedule B) if you have an interest in a foreign bank or financial account. Worldwide income means everything, including interest, foreign earnings, wages, dividends and other income. Even if the foreign income is taxed somewhere else, you still must report it to the IRS. You might be entitled to a foreign tax credit, or if you are living and working abroad, you may be entitled to an exclusion from U.S. tax for some or all of the income you earn abroad. But you still must report it.

2. Tax Return Disclosure Isn't Enough

Tax return filing alone isn't enough. All U.S. persons with foreign bank accounts must also file annually a Treasury Department Form, TD F 90-22.1 Report of Foreign Bank and Financial Accounts--commonly called an FBAR. The FBAR is due each June 30 for the preceding year. You must file an FBAR if the aggregate value of your foreign financial accounts exceeds $10,000 at any time during the year. All your foreign accounts are aggregated, so if you have two small accounts, say one in Germany with $5,000, and one in England with $6,000, you need to file an FBAR. If your foreign account balances at all times during the year total less than the equivalent of $10,000 U.S., you do not need to check the box on your tax return or file an FBAR, but you must still report any account earnings on your tax return.

3. There Are Big Tax Penalties

If you don't comply with one or both sets of obligations the penalties are severe. You sign tax returns under penalties of perjury, so if you fail to report your worldwide income--or even fail to check the box disclosing you have a foreign account--it can be considered tax evasion and fraud. The statute of limitations on such criminal acts is six years. Plus, the statute of limitations never expires on civil tax fraud, so the IRS can pursue you 10 or 20 years later for back taxes, interest and penalties. If you failed to report income, your civil liability to the IRS can include a 20% accuracy-related penalty or a 75% civil fraud penalty.

4. FBAR Penalties Are Even Bigger

The penalties for failure to file an FBAR are even worse. Failing to file an FBAR can carry a civil penalty of $10,000 for each non-willful violation. But if your violation is found to be willful, the penalty is the greater of $100,000 or 50 percent of the amount in the account for each violation--and each year you didn't file is a separate violation.

5. You Can Go To Jail

Filing a false tax return is a felony, while failing to file is only a misdemeanor--think of it as the Wesley Snipes rule. A person convicted of tax evasion can face a prison term of up to five years and a fine of up to $250,000. Filing a false return can mean up to three years in prison and a fine of up to $250,000. A person who fails to file a tax return can face up to one year of prison and a fine of up to $100,000. Failing to file FBARs can be criminal too, and the penalties are even more severe. The monetary penalties can be up to $500,000 and the potential prison term is up to ten years.

6. Voluntary Disclosure Is Still an Option

If you admit your failures to the IRS and say you want to make it right, you've made a "voluntary disclosure." Don't confuse this with the "Voluntary Disclosure Program," which had an Oct. 15, 2009 deadline. It is too late for that prepackaged program, but it's not too late to make an individual "voluntary disclosure." A voluntary disclosure must be truthful, timely and complete. You must: cooperate with the IRS in determining your correct tax liability; and make good faith arrangements with the IRS to pay the tax, interest and penalties determined by the IRS.

While a voluntary disclosure does not guarantee immunity from prosecution, the government generally will not prosecute you if you come forward voluntarily before you're under investigation. (If the IRS is already investigating you, all bets are off.) Note, however, that in publicizing the IRS Voluntary Disclosure Program in 2009, the IRS made clear it would show no mercy to those with undisclosed offshore accounts who didn't turn themselves in by the Oct. 15, 2009 deadline. For that reason, some tax lawyers fear that the traditional advantage of a voluntary disclosure--no criminal prosecution--is less certain.

Stepping forward should be done through a tax lawyer to the IRS Criminal Investigation Division. Usually the case will be referred to the civil branch of the IRS where all the filings, amending and penalty calculations are done. You then must file amended income tax returns for past years and delinquent FBARs. There's no bright line for how far back you'll have to go, as situations vary. However, the Oct. 15, 2009 program required six years of amended tax returns and FBARs, so that's a good benchmark. The total cost of making a voluntary disclosure is also hard to assess, but it can be more than the amount in your foreign account.

7. "Quiet Disclosure" Is Also an Option

Some practitioners consider a voluntary disclosure "noisy," since it involves going to the IRS Criminal Investigation Division. A "quiet" disclosure involves a correction of past problems without drawing attention to what you are doing and without going to the IRS Criminal Investigation Division. If you amend all past tax returns to report all income, check the box on Schedule B, and file all past due FBARs, haven't you (quietly) fixed everything? Arguably, yes. You would send in all the money you owe or wait to be billed. If you have been paying foreign taxes on your foreign earnings, your foreign tax credits could even net out the U.S. tax, so you might not owe back taxes.

If you reported and paid tax on all your income but did not file FBARs, you should attach a statement explaining why they were late. Perhaps you had never heard of FBARs or were told by your accountant you were in full compliance. You can avoid penalties if you had "reasonable cause" for not filing FBARs, but the grounds for waiving penalties aren't terribly clear.

8. Inconsistency Will Hurt You

Can you amend your tax returns, reporting your worldwide income and checking the foreign account box, but not bother filing delinquent FBARs? By checking the tax return box acknowledging your foreign account, you are admitting you have an FBAR filing obligation. So not also filing the delinquent FBARs seems risky.

Even though FBAR penalties are big, there have been some indications the IRS may not be pushing them too hard. If you don't file a pile of old FBARs, perhaps it won't be obvious you didn't file in the past? A tax lawyer cannot recommend this, but some clients are probably choosing not to file old FBARs.

9. Prospective Compliance Only Is Risky

Can you start filing complete tax returns and FBARs prospectively, but not try to fix the past? Some people think the IRS is so overwhelmed with FBARs and tax returns that you might be OK, but the risks are enormous and I cannot recommend it. The IRS may ask about the lack of prior FBARs and of prior tax returns disclosing a foreign account. If they ask questions, you should respond through your attorney and you can't lie.

10. Keeping Money Offshore Is Still Legal

Should you close all your foreign accounts and bring your money home? You are entitled to have money and investments anywhere in the world as long as you disclose your foreign accounts. If you are considering not trying to clean up your past tax returns and FBARs, you may be tempted to close your foreign account. However, closing your foreign account doesn't relieve you of the obligation to file accurate tax returns and FBARs. Tying off the problem prospectively may make sense, but can make your lack of compliance even worse if your actions are viewed as efforts to conceal your previous offshore activities. For that reason, don't take any of these steps without professional advice.

There's widespread confusion and noncompliance involving foreign bank accounts and the situation is unlikely to get better. Get some professional advice and try to get your situation resolved.

April 25, 2018
by Morgan Wellman
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