Cape Town – The Association for Savings and Investment South Africa (Asisa) was relieved about the government’s decision to implement the bulk of the Taxation Laws Amendment Act, CEO Leon Campher said on Thursday.
Earlier on Thursday National Treasury said that with the exception of the annuitisation requirement for provident funds, all other tax related measures would be implemented for all retirement funds from March 1 2016.
“While this is not the outcome we had hoped for as an industry, we are satisfied that the tax harmonisation reforms, together with the other tax amendments and clarifications contained in the act, will be implemented as scheduled on March 1 2016,” Campher said.
Asisa has been strongly opposed to the postponement of the implementation of the Taxation Laws Amendment Act.
Campher confirmed that Minister of Finance Pravin Gordhan had been in direct contact with Asisa to discuss the implications of the two-year postponement to March 2018.
“Under the circumstances we concede that government had little choice but to put forward a compromise. Given that the bulk of the provisions of the Taxation Laws Amendment Act will still be implemented as planned, we will be supporting National Treasury in the consultation process that lies ahead with the aim of ultimately getting buy in from all stakeholders on the annuitisation issue,” Campher said.
It is the second year in a row where President Jacob Zuma’s government has been forced to backpedal on provisions in the Tax Amendment Act that compel South Africans to put two-thirds of their provident fund savings in a retirement annuity.
The latest followed a threat from the Congress of SA Trade Unions to pull their support of the African National Congress ahead of the local government elections this year.
The tax provision meant that retirees would be allowed to take only one-third in cash and use two-thirds to buy a pension income, while they are currently entitled to the full amount.
Gordhan said his department wanted to use the two-year period to clarify confusion and address concerns and try to come up with a better design on aspects such as annuitisation.