Justmoney exclusively learnt today that the final draft regulations of the tax-free savings accounts will be released next week. This is after some sources in the tax industry claimed that the release of that accounts was to be postponed till next year.
"We hope to publish the Regulations soon – by next week Friday the latest," said Phumza Macanda, director of media management and communications at National Treasury.
The tax-free savings accounts will still be released on the 1 March as planned. The final draft will also announce the prescribed products list for investors, among any other changes which have been made to the tax-free accounts.
The rules so far…
You are allowed to contribute up to R30 000 per year in tax-free savings account with a lifetime contribution limit of R500 000.
You will also be allowed to open one or two accounts per year, where you may invest in either interest bearing or equity instruments or both types of investments in each account, but total contributions for the tax year may not exceed the annual limit of R30 000.
Service providers and fines
Treasury has said that service providers include licenced banks, long term insurance companies, managers of registered collective investment schemes, authorised users, linked investment service providers and the National Government.
Furthermore, all the gains earned on the account are tax free. However, going over the yearly amount of R30 000 will be fined at 40%.
In order to get to the R30 000 a year (and thus the R500 000 over 17 years) you would need to invest R2 500 a month.
For 10 facts about tax-free savings accounts, click here.
And for a comparison of tax-free savings accounts versus retirement annuities, click here.