Frequently Asked Questions

  1. Who may invest in containers?
    • Any South African resident or legal entity.
  2. Why should I invest in tank containers as opposed to other investments available to South Africans?
    • If you are seeking to augment your existing portfolio by investing in a rand-hedge investment, this is an attractive vehicle. In addition, an investment in tank containers may be made over and above the current offshore investment allowance, and should not detract from one's overall investment strategies.
  3. What are the main benefits of an investment in a tank container?
    • Locally funded investment.
    • Dollar-based asset.
    • No limitation to the number of containers which may be purchased.
    • No Reserve Bank or Revenue authorisation required.
    • Income earned in a basket of currencies, which is converted to dollars.
    • All earnings can be retained offshore and freely dealt with, provided that the investment is registered in the name of a private individual.
    • Tax-efficient.
    • A hedge against rand depreciation.
    • The investment is beneficial to the South African economy.
    • Environmentally friendly.
  4. What am I really buying?
    • An investment in world trade.
    • International currency exposure.
    • Asset base diversification.
    • A long-term income stream.
  5. Am I able to finance part or all of the investment cost?
    • Yes. A wide range of gearing options are available subject to normal credit approval.
  6. Am I permitted to make such an investment?
    • Yes. The investment has been approved by the Exchange Control Department of the South African Reserve Bank.
  7. What is the expected life span of my container?
    • Approximately 20 years.
  8. If I wish to sell my tank container at any time, will there be a demand?
    • Yes, a tank container may be sold at any time. Demand for second-hand tanks is, and has been, very strong. The benefit to the new investor is that the tank container will already be working in a pool of tanks and income will accrue to the new investor from date of purchase. In addition, the new investor will purchase at a discount to the investment cost of a new tank container.
  9. How do I know that my tank container exists?
    • Each container is allocated 3 different numbers, i.e. the Identity Number, an Operational Number, which is linked to the lease manager who will be managing your container, and an International Certification Number issued by one of the certification bureaus such as Lloyds or Bureau Veritas.
    • You will receive a certified copy of the Ownership Certificate as the original is lodged with our bankers as agents for the Exchange Control Department of the South African Reserve Bank.
  10. How much can I expect to pay for this investment?
    • The price of the investment is market-related and is reflected on the Investment Application Form.
  11. Are there any additional costs in respect of shipping, railage, transport?
    • No. The purchase price includes all costs pertaining to the positioning of your tank in the world market.
  12. Is there a danger that the market can become saturated?
    • We believe not, for the following reasons:
      • Stainless steel containers are replacing traditional means of transportation which are systematically being phased out internationally.
      • Current population of tank containers is estimated to grow by 5% per annum.
      • Growth opportunities continue to arise in the US market, South America, the Eastern European markets, Mainland China, as well as the "Pacific Rim" countries and the Far East.
  13. Who manages my container for me?
    • When you decide to make a tank container investment, Intertank will prepare all the legal documentation relating to the acquisition of the container.
    • In terms of the Agency Agreement, you will appoint Intertank as your management agent.
    • Intertank has agreements with various overseas lease managers who will ultimately manage your container on a day to day basis.
  14. Is my container maintained, and if so, who is responsible for the maintenance?
    • Containers are maintained according to strict international specifications and regulations.
    • The lease managers, operators and users maintain the tank containers on behalf of and under the direction of Intertank.
    • Strict inspections are carried out on a regular basis. The effect of this is that tank containers could have an expected life span of up to 20 years.
    • Tank containers may not be operated unless they have been certified by one of the international certification bodies from date of manufacture. Tank containers have to be recertified every 2 years in terms of International Maritime Standards.
  15. What can I expect to pay for the management of my tank container?
    • The overseas lease managers' fees currently range between 15% - 20% of gross rentals earned from the leasing of the pool of containers.
    • Our own management fee is fixed at 5% of the gross income for the duration of the Agency Agreement.
  16. What happens if my tank container is destroyed or damaged while on lease?
    • Your tank container is comprehensively insured for repair or replacement.
    • Your rental income will not be affected as you will continue to earn income from your share of the pool.
  17. Who regulates the tank container investment industry in South Africa?
    • The Exchange Control Department of the South African Reserve Bank.
    • Investors should only invest through approved members of the South African Tank Container Association.
  18. What happens to my containers at the end of its useful life?
    • At the end of their useful life (undetermined at this point) tank containers are sold as static storage vessels or for the scrap value of the stainless steel at that time.

TAXATION

  1. What deductions do I get for tax purposes?
    • In terms of current tax practice, the amount of the annual wear and tear allowance in respect of tank containers will be limited, for tax purposes, to the amount of taxable rental income received by investors.
    • The write-off commences from the date of purchase.
    • A certificate reflecting income earned and annual depreciation will be issued and mailed to you each year in April.
  2. What are the tax implications when I sell my tank container and I have already deducted its entire cost for tax purposes?
    • You could have a tax recoupment of the allowance you have deducted up to the date you sell the container. This recoupment is limited to the original purchase price. It would be taxed at your marginal rate of tax in the year in which the sale is concluded.
  3. Is the investment subject to Capital Gains Tax?
    • With the introduction of Capital Gains Tax on 1 October 2001, any gain that may be made upon sale of a tank container by an investor, over and above the original purchase price, will be taxable.
  4. Where will I be taxed if I elect to leave the rental income offshore?
    • You will still be liable to pay tax in South Africa. Tax certificates, issued locally, will reflect all income earned, whether retained offshore or not, in rands.

RENTAL INCOME PAYMENTS

  1. How often is income distributed?
    • Quarterly in arrears, as follows:
      Quarters: Paid at the beginning of:
      January February March July
      April May June October
      July August September January
      October November December April
    • Income earned in the first quarter is paid at the end of the second quarter, and so on.
    • You will receive your first income approximately 9 months after delivery of your tank/s.
    • Intertank pays its investors ten days from the end of each quarter.
  2. What exchange rate is used to convert my income into rands?
    • A rate is negotiated with our bankers on the day of receipt of the funds from abroad.
  3. Do I have to repatriate my income?
    • Since 1 July 1997, investors may elect to leave their income offshore. This concession is only applicable to individuals and not to trusts, companies, close corporations or partnerships. Upon receipt of a written instruction from you, we will arrange transfer of funds to your account, anywhere in the world. All transfer and conversion costs are for your account.
  4. Is there any limit to the amount of rental income which I may leave offshore?
    • No, there is no limit.

EMIGRATION IMPLICATIONS

    • In terms of Exchange Control Regulations, Intertank is not permitted to pay sale proceeds offshore. However, private individuals who are over the age of 18 and tax payers in good standing may apply for specific Exchange Control Approval for the funds to be paid offshore as part of their offshore investment allowance.
  1. If I emigrate and keep my tank container investment, what happens to the rental income?
    • You will be entitled to receive your rental income anywhere in the world.
    • In terms of Exchange Control Regulations, Intertank is not permitted to pay sale proceeds offshore and the funds will form part of your blocked assets. Nevertheless, in terms of the 2003 Budget, emigrants can apply to the Reserve Bank to take out more than their foreign capital allowance but will be charged a 10% levy on the funds.
  2. Can tank containers be purchased with blocked funds?
    • Blocked funds may not be used to invest in tank containers without specific Exchange Control Approval.