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News & Press: Opinion

Proposals to The Tax Treatment of Individual–Based Insurance Policies to be Delayed By a Year

13 September 2013   (0 Comments)
Posted by: Author: Erich Bell
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Author: Erich Bell (SAIT)

'Renegotiation of income protection policies will be administratively difficult'

On Wednesday, September 11, Treasury presented the draft response document to the draft Taxation Laws Amendment Bill, 2013 to Parliament's Standing Committee of Finance. One significant proposal which drawn a lot of attention was the tax treatment of individual-based insurance policies.

Under the current state of affairs, there are two types of disability insurance plans that are offered to individuals - capital protection and income protection with both of these disability plans being treated differently for tax purposes.

With capital protection plans, the individual takes out cover against a loss of his/her income earning capacity. This will typically provide cover in the event that an individual loses a limb or becomes mentally incapacitated which affects the individual's ability to perform his daily employment duties. The premiums paid on these policies do not qualify for a deduction and similarly the pay-outs are not taxable.

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Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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