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Tax Free Investment - Coggle Diagram
Tax Free Investment
- What are tax-free investments?
Section 12T(1) defines a tax-free investment as: Any financial instrument that is administered by any person or entity designated by the Minister of Finance by notice in the Government Gazette
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Section 12T(8) states that the Minister of Finance shall make regulations prescribing therequirements relating to tax-free investments
Section 12T(9) states that the Financial Sector Conduct Authority has to ensure compliance with these regulations stated in Section 12T(8)
- Exemptions in tax-free investments
According to Section 12T(2) in respect of a tax-free investment, any amount received by or accrued to a natural person, or to the deceased or insolvent estate of a natural person.
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- Who owns tax-free investments?
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The deceased or insolvent estate of a natural person (Both are deemed to be equivalent to the natural person in respect of contributions made by the natural person)
- Penalties for tax-free investments
Section 12T(7)(a) states that if an individual contributes more than R36 000 in a period of 12 months to a tax-free investment, Then an amount of 40% of the excess is deemed to be normal tax payable by the person in the last period of assessment in the 12-month period.
Section 12T(7)(b) states that if a person contributes in excess of R500 000 to a tax-free investment, an amount of 40% of the excess will be treated as normal tax payable.
- Limitations of tax-free investments
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- Exclusions of tax-free investments
Any Capital gain or capital loss in respect of the disposal of the tax-free investment from the capital gains tax provision in the Act, are disregarded.
References:
All work was taken from the prescribed "Notes on South Africa Income Tax" textbook by Phillip Haupt and Elke Haupt