Page 49 - SAIT Compendium 2016 Volume2

Para 2C of 2nd Schedule INCOME TAX ACT: REGULATIONS ANd NOTICES Living annuity NOTICE IN TERMS OF PARAGRAPH 2C OF THE SECOND
SCHEDULE TO THE ACT
Promulgated under
GN 289 in GG 32005 of 11 March 2009
I, Trevor Andrew Manuel, Minister of Finance, prescribe that the event referred to in paragraph 2C of the Second
Schedule of the Income Tax Act, 1962, is as follows—
(a) any amount received by or accrued to a person from a pension fund, pension preservation fund, provident fund,
provident preservation fund or retirement annuity fund in consequence of a payment to such fund by the administrator of such fund as a result of income received by the administrator prior to 1 January 2008 that was not disclosed to such funds;
(b) any amount received by or accrued to a person from a pension fund or provident fund contemplated in paragraph (a) or (b) of the de nition of ‘pension fund’ in section 1 of the Income Tax Act, 1962 to the extent that that amount is similar to a payment in terms of a surplus apportionment scheme contemplated in section 15B of the Pension Funds Act, 1956 (Act 24 of 1956);
(c) any amount received by or accrued to a person from a pension preservation fund or provident preservation fund to the extent that it was paid or transferred to such a fund—
(i) as an unclaimed bene t contemplated in paragraph (c) of the de nition of ‘unclaimed bene t’ in section 1 of the Pension Fund Act, 1956 (Act 24 of 1956); or
(ii) as a result of or in consequence of an event contemplated in paragraph (a) of this notice.
NOTICE IN TERMS OF PARAGRAPH (b) OF THE DEFINITION OF ‘LIVING
ANNUITY’ IN SECTION 1 OF THE ACT
Promulgated under
GN 290 in GG 32005 of 11 March 2009
I, Trevor Andrew Manuel, Minister of Finance, hereby withdraw all previous notices issued in terms of paragraph (b)
of the de nition of ‘living annuity’ in section 1 of the Income Tax Act, 1962 (Act 58 of 1962) and replace these prior notices with this notice.
1 I hereby prescribe that the amount referred to in paragraph (b) of the de nition of ‘living annuity’ in section 1 of the Income Tax Act, 1962, must be determined to be—
(a) not less than 2,5 per cent and not greater than 17,5 per cent of the value of assets referred to in paragraph (a) of that
de nition if the living annuity contract was concluded on or after 21 February 2007; and
(b) not less than 5 per cent and not greater than 20 per cent of the value of assets referred to in paragraph (a) of that de nition if the living annuity contract was concluded before 21 February 2007, provided that these percentages may be adjusted to the percentages described in paragraph (a) above if the annuitant agrees to be bound by these
income levels and by any subsequent adjustments of the rates.
2 At inception of the living annuity the percentages indicated in paragraph 1 above are applied to the investment
amount net of costs. The annuitant may then elect a draw-down percentage within these limits at inception On the anniversary date of inception, the revised fund value will be required to be determined in order to calculate the minimum and maximum annuity bene ts payable. The annuitant may elect a different draw-down percentage at the anniversary date provided that this drawdown is within the set limits. The annuitant may not elect a different draw down percentage at any other time.
3 Where living annuity contracts are transferred from one insurer to another in terms of Directive 135 and 135A issued by the Registrar of Long-Term Insurance, or from a retirement fund to an insurer in terms of section 14 of the Pension Funds Act, the conditions in paragraph 2 will continue to apply and—
(a) The frequency of payment may not be changed;
(b) The annuity may not be split so that more than one annuity is payable subsequent to the transfer.
4 In circumstances where the administrative systems of an insurer are incapable of accepting the original anniversary date of the annuity as the anniversary date in terms of the new living annuity contract, the anniversary date may be changed to the date of transfer of the annuity. In this regard—
(a) Where the anniversary date remains the same as under the transferor contract, the annuity can next be reviewed on
the anniversary date as normal;
(b) Where the anniversary date is changed to the date on which the transfer is made the annuity cannot be reviewed on
the date of transfer and can only next be reviewed 12 months after the date of transfer.
5 Any future adjustment to the percentages in terms of paragraph 1(a) above shall be effected on the rst anniversary date of each living annuity contract following the date of publication of the Notice in which the adjustment is announced. 6 All living annuity contracts concluded on or after 21 February 2007 must contain a clause that will enforce any
future adjustments of the rates.
SAIT CompendIum oF TAx LegISLATIon VoLume 2 41