New law used as vehicle to foster saving

[caption id="attachment_60924" align="alignright" width="300"] Finance Minister Nhlanhla Nene[/caption]

IN AN effort to lighten the burden of over-indebted consumers in South Africa, tax-free savings regulations come into affect today.

Finance Minister Nhlanhla Nene said in his budget speech last week that the new tax-free savings accounts would be available from March 1.

“The problem of excessive household indebtedness remains a serious challenge.

“Approximately 45% of credit-active consumers have impaired credit records. This results in part from poor market conduct by lenders and financial advisors.

“We are engaging with the major banks on further steps to be taken to assist over-indebted consumers,” Nene said.

The initial annual contribution limit of a tax-free savings account is R30 000, with a lifetime contribution limit of R500 000. No transfers between funds will initially be allowed, until March next year.

-Cindy Preller