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Income Tax Act, 1962 (Act No. 58 of 1962)

Regulations

Regulations in terms of section 12T(8) of the Income Tax Act, 1962, on the requirements for Tax Free Investment

Part VI : Fees

12. Fees in respect of withdrawal

 

 

A product provider may not on withdrawal of an amount from a tax free investment charge a fee that exceeds—

(a) in the case of a tax free investment with a guaranteed return, the higher of—
(i) R 300; or
(ii) an amount that must be determined in accordance with the formula

 

X = A x

B x

(D-E)


C


 

in which formula—

"X"   represents the amount to be determined;

"A"  represents the total amount of the value of the tax free investment at the time when the amount is withdrawn;

"B"  represents the number of days remaining until the maturity date of the financial instrument;

"C"  represents the number 365;

"D"  represents the interest rate in respect of the zero coupon nominal bond curve that is published daily by the JSE Limited with the same maturity date as the tax free investment at the time of withdrawal;

"E"  represents the interest rate in respect of the zero coupon nominal bond curve that is published daily by the JSE Limited with the same maturity date as the tax free investment on the date that the tax free investment was acquired;

(b) in the case of a tax free investment with a fixed term of five years or longer and with no guaranteed return, an amount that must be determined in accordance with the formula

 

X =

A x

C x

D


B


E

 

in which formula—

"X"   represents the amount to be determined;

"A"   represents the amount withdrawn in respect of which the fee is charged;

"B"   represents the total amount of the value of the tax free investment at the time when the amount is withdrawn;

"C"   represents the amount of R 500;

"D"   represents the higher of—

(i) the number zero; or
(ii) a number equal to the number 1825 less the number of days that the tax free investment has been held;

"E"   represents the number 1825; or

(c) in the case of a tax free investment with a fixed term of less than five years and with no guaranteed return, an amount that must be determined in accordance with the formula

 

X =

A x

C x

D


B


E

 

in which formula—

"X"   represents the amount to be determined;

"A"   represents the amount withdrawn in respect of which the fee is charged;

"B"   represents the total amount of the value of the tax free investment at the time when the amount is withdrawn;

"C"   represents the amount of R 500;

"D"   represents the number of days remaining to the date of maturity on the date of withdrawal;

"E"   represents the total number of days between the date that the tax free investment is acquired and the maturity date of the tax free investment.