Page 70 - SAIT Compendium 2016 Volume2

General INCOME TAX ACT: REGULATIONS ANd NOTICES General
Advertising of tax free investment
3. (1) A product provider must advertise a tax free investment as being a tax free investment by virtue of section 12T of the Income Tax Act when members of the general public are invited to invest therein.
(2) When a product provider advertises a tax free investment as contemplated in subregulation (1), the designation of the instrument or policy that constitutes the tax free investment must contain the words ‘tax free’.
Accepting of amounts by product provider
4. A product provider may not accept any amount in respect of any investor in respect of a tax free investment— (a) in excess of the annual contribution limit in respect of any year; or
(b) in excess of the lifetime contribution limit.
Pre-existing nancial instrument or policy may not be converted
5. An issuer may not reclassify or convert a pre-existing nancial instrument or policy owned by an investor as a tax free investment in respect of that investor.
Disclosure by product provider
6. (1) (2)
A product provider must, prior to an investor investing in a tax free investment and for as long as that investment continues, comply with the disclosure requirements prescribed under the Financial Advice and Intermediary Services Act, 2002 (Act 37 of 2002), irrespective of whether the product provider is subject to compliance with those requirements of that Act.
Where a tax free investment has a xed term but no guaranteed return, a product provider must disclose to an investor in a manner that is readily understandable by that investor all charges, fees or similar costs payable—
(a) directly or indirectly by the investor out of any amount forming part of the assets underlying the tax free
investment; and
(b) implicit in the trading or holding of any derivative instrument or other assets underlying the tax free investment.
Returns in respect of tax free investments
10. (1) (2)
If a nancial instrument that is any contractual right or obligation, the value of which is determined directly or indirectly with reference to a debt security, equity, rate index or speci ed index the product provider may not restrict any receipts or accruals to the investor in respect of that debt security, equity, rate index or speci ed index except to the extent that the restriction is the result of charges or fees in respect of the tax free investment. Subregulation (1) does not apply to a nancial instrument in respect of any collective investment scheme.
Fees in respect of tax free investment
Part III Disclosure
(3) Where—
(a) any amount in respect of the tax free investment is exposed to an index that is comprised in whole or in part of
the prices of traded nancial instruments; and
(b) income that would otherwise accrue to the owners of those assets is not taken into account in the calculation of
the index, an issuer must disclose to the investor that—
(i) the income that would otherwise accrue to the owners of those assets does not accrue to the investor, and
(ii) the amount of that income referred to in paragraph (i).
(4) When an investor invests in a tax free investment a product provider must inform the investor of the annual
contribution limit, the lifetime contribution limit and the consequence of exceeding that limit as contemplated in section 12T(7) of the Income Tax Act in the terms and conditions of the agreement with the investor.
Part IV Withdrawal and transfer
Withdrawal and transfer
7. A product provider or an issuer may not transfer or deposit an amount that is withdrawn in respect of a tax free investment owned by an investor who is a minor into an account other than into an account—
(a) that is held in the name of that investor; or
(b) of the deceased estate of that investor, who is a minor.
Payment of amount in relation to withdrawal in respect of tax free investment
8. Any amount in respect of a tax free investment—
(a) that has a maturity date must be payable to an investor by any product provider within thirty two business days; or (b) other than a tax free investment that has a maturity date must be payable to an investor by any product provider
within seven business days, after that investor has requested the payment.
Transfers
9. An investor may not transfer any amount in respect of a tax free investment prior to 1 March 2016.
Part V
Returns and maturity date
Part VI Fees
11. (1) Any fee charged in respect of a tax free investment must be reasonable.
62 SAIT CompendIum oF TAx LegISLATIon VoLume 2