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Draft amendments on transfer of tax-free savings released

Monday, 14 March 2016   (0 Comments)
Posted by: Author: IOL
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Author: IOL

National Treasury has released draft amendments to the regulations governing tax-free savings accounts to provide for the transfer of tax-free investments between product providers.

Returns on investments in tax-free savings accounts are exempt from income tax and dividends tax, and any capital gains are exempt from capital gains tax.

Tax-free savings accounts were introduced on March 1, 2015, and Treasury decided that transfers of investments between providers would not be permitted in the first year of the savings incentive. In the Budget Review, Treasury said the implementation of transfers would be postponed from March 1 this year to November 1, to allow providers more time to finalise the administrative procedures required to effect transfers.

Treasury says a transfer will not affect the annual (R30 000) or lifetime (R500 000) contribution limits that apply to tax-free accounts.

Among other things, the draft amendments state that:

  • A transfer must be effected within 10 business days of a provider receiving a transfer instruction;
  • A provider is not obliged to transfer an investor’s savings more than twice a year; and
  • A provider that transfers an investment must provide the investor and the provider to which the investment is transferred with a certificate that records details of the transfer.

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