To enhance competition and flexibility‚ savers must be permitted to transfer any portion of the value in their accounts to another service provider and service providers must be able to facilitate such a transfer. Individuals will then have two weeks to make the transfer and‚ according to the proposals‚ the transferred amount will not count towards the annual contribution limit.
From 1 March 2015, an individual will be able to contribute up to R30‚000 a year in tax-free savings and investments with a lifetime contribution up to a limit of R500‚000.
The draft regulations allow for products that are issued by banks‚ long-term insurance companies and managers of collective investment schemes. However‚ those products may not have restrictions when those returns are paid or on the level of returns paid to the individual.
Products qualifying as tax-free savings and investments should be "simple to understand‚ transparent in their disclosure and suitable for the majority of individuals making use of such savings and investment products".
"Service providers must be transparent in how they offer tax-free savings and investments‚" the Treasury said.
The Taxation Laws Amendment Bill 2014 includes a new section 12T that defines a tax-free investment as a savings product‚ financial instrument or policy that complies with the regulations. The new provision also states that all returns from such products will be tax free in the hands of the individual who owns them.
Written comments on the notice must be received by the Treasury by December 3.
Source: BDpro, via I-Net Bridge
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