As communicated to you in the previous newsletter some of the Retirement Reform initiatives were delayed by Government in October 2014. The creation of tax free savings accounts or tax free investments will however be implemented from March this year and will assist South Africans to make additional tax free savings outside of their provident funds.
What is a Tax Free Savings Account?
It’s a product that allows for flexible contributions and does not require individuals to commit to any future contributions. Amounts within the tax free savings accounts can be withdrawn at any time!
What are the benefits of a tax free savings account?
Tax Free Savings accounts offer the following features:
- You don’t pay tax on dividends!
- You don’t pay tax on income!
- You don’t pay tax on capital gains!
Maximum tax free savings limits
An individual, including your spouse and children, may each contribute up to R30 000 per year in tax free savings and investments with a lifetime contribution limit of R500 000. All returns from such products will be tax free in the hands of the individual who owns them. Investors will also be able to access their savings and investments within seven business days after they request it.
Most of the large insurers in the country will offer these products from 1 March 2015. Watch the press for details as this is a great product to grow additional savings.