In anticipation of his first ever annual budget announcement on Wednesday, the Minister of Finance has approved the final regulations dealing with the implementation of tax free savings instruments.
Effective 01 March 2015, eligible service providers like banks and long term insurers, will be able to provide additional savings or investment accounts which will attract tax free interest, dividends and capital growth.
Individuals will be allowed to contribute a maximum of R30 000 per year and R500 000 in a lifetime to benefit from this new initiative. The products offered as TFSA’s may not include transactional savings accounts and the funds kept in these accounts may only be accessed after 32 days of requesting payment.
Will I be able to transfer my current savings into a TFSA?
At the moment, this will not be allowed and individuals may only make use of these products by acquiring a new investment or savings product from 01 March 2015. After a year, National Treasury will consider implementing some regulations to allow the transfer of funds from an existing savings account to another. The regulations also prevent an existing savings product to be transformed into a TFSA. Low income earners who pay income tax at a rate below 30% may benefit when National Treasury release additional information regarding the transformation of existing investment instruments later this year.