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Concern about regulations on tax-free savings

Wednesday, 04 February 2015   (0 Comments)
Posted by: Author: Ingé Lamprecht
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Author: Ingé Lamprecht (Moneyweb)

There is concern that providers of tax-free savings accounts may not be ready to come to market by the beginning of March.

The final regulatory requirements that will govern the introduction of these accounts will likely only be published towards the end of February. Yet, tax legislation has already been amended to introduce tax-free savings accounts with effect March 1.

Piet Nel, project director for tax at the South African Institute of Chartered Accountants (SAICA), says although there is considerable interest in these accounts, he is somewhat concerned that product providers may not be ready to launch products by March 1.

If the regulations are only published towards the end of February, providers will be under pressure to meet the requirements so soon thereafter, he says.

Tax-free savings accounts were first mooted in the Budget Review of 2012. It is an effort by National Treasury to encourage South Africans to save.

Nel explains that these accounts will be available to natural persons (not companies or other businesses) and that individuals will be able to contribute R30 000 per annum. A lifetime capital contribution limit of R500 000 will apply. A penalty of 40% will be levied on contributions in excess of these limits.

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