Tax-Free Savings Solution

Transcription

1 Tax-Free Savings Solution Plan for retirement, go on an overseas holiday, pay for university fees by opening a Unit Trust Tax-Free Savings Account.

2 What is the Tax-Free Savings Account? Convenient investment vehicle In line with the South African government s initiative to incentivise and promote savings in South Africa, through the National Savings Scheme, is offering a tax-free savings account. This will be made available to existing and new clients. This account will be available on the Unit Trust platform. Quick facts No tax on dividends (This is a tax at 15% on shareholders when they receive dividends) Your account will earn the gross dividend, which will be automatically re-invested. You don t pay tax on income All interest and other income, including listed property Income, will be re-invested tax-free. No Capital Gains Tax (CGT) You won t be taxed on capital gains resulting from a switch between funds or a withdrawal on your investment. No performance fees All investments included in the account will have no performance fees. No initial fees will charge no initial fees. However, advisers will be able to charge an initial adviser fee agreed with the client. Service fees No additional fees will be charged except the annual service fee of the fund you have selected. This may include a trail fee to the adviser.

3 The tax benefits : No withholding tax on Interest No withholding tax on dividends No tax on Interest and income earned from property funds No Capital Gains Tax Maximum Investment Contributions: Maximum of R p.a and maximum of R in your lifetime. Minimum and maximum Investment Contributions The product allows a maximum of R annual contribution and a maximum contribution of R over the lifetime of the investor. These numbers may be adjusted for inflation. Over time the balance in these accounts may exceed the R limit due to accumulated earnings and capital gains. A minimum lump sum of R5000 will be allowed with a minimum debit order of R500 p.m and a maximum debit order of R2 500 p.m Amounts within the account(s) may be withdrawn at any time however if these amounts are returned to the account(s) they will be subject to the annual contribution limits. Transfers between different funds within the account will not be subject to the annual contribution limits. PLEASE NOTE: The limit of R applies to ALL your tax-free savings accounts in total, with and other providers. If investors exceed this limit, this will be considered a contravention of the law, which SARS will be monitoring on an annual basis. Any amounts exceeding the R p.a limit will be taxed at a maximum tax rate of 41%.

4 Regulatory Requirements All natural persons may invest in this account. is prohibited to accept contributions in excess of the contribution limits made by investors. Transfers between different tax-free savings accounts will not be allowed until 1 March Where the investor is a minor, any withdrawals may only be paid into the minor s bank account and not the guardian s bank account. No performance fee will be allowed on any of the underlying funds. For illustrative purposes, taxed versus untaxed annual returns on the Income fund over a 20 year period 5 Years 10 Years 15 Years 20 Years Untaxed Fund R R R R Taxed (Total) R R R R Taxed funds generate less returns as the taxed portion leaves the account TAXED OPTION After Tax Return UNTAXED OPTION After Tax Return Assumptions: Based on the performance of income ending to 31 December All income and CGT taxed at the marginal tax rate of 40%. Disallowed Transactions ATM withdrawals may not be made. Transfers from the account to another person. No risk cover may apply to an account. Existing accounts may not be converted into tax free saving accounts as the aim is to encourage new savings. The new investment may not be used as an account from which payments may be made with a debit or credit card.

5 Funds Available Below is a table of s Core Range of funds, Single Manager funds and Offshore funds that will be available as investment options in this product shown in terms of time horizon: I WANT TO SAVE (via unit trusts) I NEED TO BE INVESTED WHILE RETIRED (via living annuity) I NEED TO SAVE FOR RETIREMENT (via RA s and preservers - tax benefits) I WANT TO CREATE WEALTH (via unit trusts) LIQUIDITY (0-1 years) SHORT TERM (1-3 years) MEDIUM TERM (3-5 years) LONG TERM (5-7 years) VERY LONG TERM (7 years or more) Money Market Fund Income Fund Conservative Fund of Funds Flexible income Fund Moderate Fund of Funds Moderately Conservative Fund of Funds Balanced Cautious Fund Absolute Plus Fund Cautious Feeder Fund (Asset Swap) Aggressive Fund of Funds Moderately Aggressive Fund of Funds Balanced Fund Feeder Fund (Asset Swap) All Stars Equity Fund of Funds Global Equity Feeder Fund (Asset Swap) Equity Fund The table below shows the investment options in terms of category and service charge that will be available as investment options in this account. Core Range of funds Service Charge Single Manager risk profile fund of funds Service Charge Offshore Funds Service Charge Flexible Income Fund Balanced Cautious Fund Absolute Plus Fund Balanced Fund 1.00% Conservative Fund of Funds Moderately Conservative Fund of Funds Moderate Fund of Funds Global Equity Feeder Fund Cautious Feeder Fund Feeder Fund Equity Fund Income Fund Money Market Fund 0.75% Moderately Aggressive Fund of Funds Aggressive Fund of Funds

6 Disclaimer Collective investment schemes in securities are generally medium to long-term investments. The value of participatory interests may go down as well as up and past performance is not necessarily a guide to the future. An investment in the participations of a collective investment scheme in securities is not the same as a deposit with a banking institution. Participatory interest prices are calculated on a net asset value basis, which is the total value of all assets in the Fund including any income accrual and less any permissible deductions from the Fund divided by the number of participatory interests in issue. Permissible deductions include brokerage, UST, auditor s fees, bank charges, trustee/custodian fees and the service charge levied by Collective Investments (RF) Limited ( the Manager ). Where exit fees are applicable, participatory interests are redeemed at the net asset value where after the exit fee is deducted and the balance is paid to the investor. A Portfolio of a collective investment scheme in securities may borrow up to 10% of the market value of the Fund to bridge insufficient liquidity as a result of the redemption of participatory interests, and may also engage in scrip lending. Where different classes of participatory interests apply to certain Portfolios, they would be subject to different fees and charges. A schedule of fees and charges and maximum commissions is available on request from the Manager. Commission and incentives may be paid and if so, would be included in the overall costs. The exposure limit to a single security in this Portfolio can be greater than is permitted for other Portfolios in terms of the Collective Investment Schemes Control Act, 2002 ( the Act ). Details are available from the Manager. A Fund of Funds Portfolio only invests in other collective investment schemes, which levy their own charges, which could result in a higher fee structure for these portfolios. A Feeder Fund Portfolio only invests in the participatory interests of a single Portfolio of a collective investment scheme apart from assets in liquid form. The Manager reserves the right to close certain Portfolios from time to time in order to manage them more efficiently. More details are available from the Manager. Forward pricing is used. Fluctuations or movements in exchange rates may cause the value of underlying international investments to go up or down. The Manager undertakes to repurchase participatory interests at the price calculated according to the requirements of the Collective Investment Schemes Control Act, 2002, and on the terms and conditions of the relevant Deeds. Payment will be made within 14 days of receipt of a valid repurchase form. Any capital gain realized on the disposal of a participatory interest in a collective investment scheme is subject to Capital Gains Tax (CGT). The Manager is obliged to report on the weighted average cost method for CGT purposes. All portfolios are valued on a daily basis at 15h30, except for some Fund of Funds Portfolios and Feeder Fund Portfolios, which are valued at 17h00. Investments and Repurchases will receive the price of the same day if received prior to 15h30. The Fund Charges document (including the Performance Fee Frequently Asked Questions) is available on www. stanlib.com ( Investment for Individuals section). Liberty is a member of the Association of Savings and Investment of South Africa. The Manager is a member of the Liberty group of companies. Contact details of Trustees: Standard Chartered Bank, 4 Sandown Valley Crescent, Sandton, Telephone Collective Investments (RF) Limited (Reg. No. 1969/003468/06) H275X6