TAX FREE SAVINGS ACCOUNT 27four Shari ah Compliant Products. Saving cleverly. For individual investors and financial advisors only

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1 TAX FREE SAVINGS ACCOUNT 27four Shari ah Compliant Products Saving cleverly. For individual investors and financial advisors only

2 WHAT IS A TAX FREE SAVINGS ACCOUNT? The South African National Treasury has approved the implementation of a tax free savings account (TFSA) as an incentive to encourage individuals to save. The aim is to stimulate saving over and above retirement-based savings through a more accessible, tax free product. HOW MUCH CAN I INVEST AND WHAT IS THE TAX BREAK? From March , individual investors can invest up to R a year (lump sum or regular contributions) in tax free savings accounts. While the capital investment will be capped at R over the investor s lifetime, all proceeds earned (interest, dividends and capital growth) will be 100% tax free. Contributions larger than these limits will trigger a tax penalty. WHAT HAPPENS IF I CONTRIBUTE MORE THAN THE PRESCRIBED TAX YEAR AND LIFETIME LIMIT? If your contributions are more than the prescribed annual limit per tax year and lifetime limit, you will be liable to pay a penalty of 40% on any contribution amount that is over the prescribed limit. The penalty described above will be levied by SARS on assessment for the relevant tax year and will be payable by you. It is your own responsibility to monitor how much you have contributed per tax year and in your lifetime into your tax free savings account(s). Contributions into the tax free savings account will not be accepted if they exceed the annual tax year or lifetime limits. 1

3 Faster growth is achieved through tax free compounding. Over time this can make a huge difference to your wealth accumulation. WHAT ARE THE TAX BENEFITS? Your investment in a tax free savings account will enjoy investment growth free of any income tax on the interest, dividends tax on the dividends or capital gains tax on the capital gains. This means that your investment growth is untaxed, allowing for even greater compounding. WHAT ABOUT WITHDRAWALS? There are no restrictions in terms of when and how much you can withdraw from your tax free savings account. Withdrawals can be made at any time, and are tax free, but whatever you withdraw, you will not be able to replace. This design feature is there to discourage impulse spending. The accounts will therefore be most suitable for medium- to longterm savings. Also note that withdrawals are not allowed into a 3rd party account and must be paid into your qualifying transactional or cheque account. No tax applies at withdrawal or termination. WHAT QUALIFIES AS A "TAX FREE" INVESTMENT? Investments classified as a tax free investment must be simple to understand, offered in a transparent manner, carry charges that are reasonable and are suitable for persons who are not necessarily expert investors. Only certain Collective Investment Schemes (unit trusts), fixed deposits, REITs and retail savings bonds are eligible products. Investment products which carry performance fees are not permitted. You will easily be able to identify a tax free product as it is compulsory for the product provider to clearly advertise if a product is tax free or not. 2

4 Investment returns are enhanced because of the compounding effects of the tax free savings that accrue within the investment over time. CAN I TRANSFER EXISTING INVESTMENTS I MADE BEFORE 28 FEBRUARY 2015 TO A TAX FREE INVESTMENT ACCOUNT? No. You cannot convert an existing investment you made before 28 February 2015, into an investment within a tax free savings account, or have an existing investment reclassified. You will have to cash in the investment and invest again, even if it is being invested through the account into the same unit trust fund. Only new investments from 1 March 2015 which are classified as tax free investments will qualify for the special tax treatment. CAN I TRANSFER FROM ONE TAX FREE INVESTMENT TO ANOTHER? Not until 1 March This means that you will not be able transfer from one tax free investment to another until 1 March No transfers are allowed to be processed between 14 February and 1 March of each year. WHAT HAPPENS WHEN I DIE? On your death the value in the tax free savings account will be added to your estate for purposes of levying estate duty. While it is held in an estate, returns from the account will continue to be exempt from tax. CESSIONS You may not cede your investment in the 27four tax free savings account, nor use it as security for any debts or commitments. 3

5 27four TAX FREE SAVINGS ACCOUNT As from 1 April 2015 investors will be able to access our Shari ah compliant unit trust portfolios that are eligible as tax free investments. SHARI AH COMPLIANT PRODUCTS ELIGIBLE AS TAX FREE INVESTMENTS Unit trust category Benchmark Risk profile Fund strategy Income distributions Total Expense Ratio 27four Shari ah Active Equity Prescient Fund South African - Equity - General Unit trust category average High The Fund invests in South African listed Shari ah compliant shares. March 1.42% (A1) 27four Shari ah Balanced Prescient Fund of Funds South African - Multi Asset - High Equity Unit trust category average Moderate The Fund is a multi-managed, multi-asset class portfolio providing asset class and fund manager diversification by investing in a combination of Shari ah compliant equity funds, both locally and internationally, Islamic income and commodity products. March 1.86% (A1) 4

6 FEES: No initial fees No exit fees Only product fees apply as per TER provided in the table MINIMUM CONTRIBUTIONS Lump sum: R Recurring contributions: R500 per month (maximum R2 500 per month) debit order. Contribution limits into the tax free savings account will be capped as per the annual tax year and lifetime limits. Reinvestments of returns or dividends in your tax free savings account will not count as contributions. SWITCHES You may switch between the two investment options available with respect to the 27four tax free savings account at any time and at no cost. WITHDRAWALS Withdrawals will be processed within 5 business days. HOW DO I GET STARTED? Log on to 1. Application forms will be made available under the "How to Invest" section. The special application form will clearly state that you are investing in a tax free investment in terms of section 12T of the Income Tax Act. 2. Complete the application form. 3. Compile the following supporting documentation: ID document containing a photo, full names, date of birth and ID number or a valid passport. 5

7 To find out more about the 27four tax free savings account, or to make a new investment, speak to your financial advisor. A document less than 3 months old containing your residential address that is a utility bill, bank statement, rates account or tax invoice. Proof of banking details. 4. Send the completed application form and supporting documentation to 27four: Fax: unittrust@27four.com WHAT HAPPENS AFTER I SIGN UP? 1. You will receive a transaction confirmation statement confirming your investment. 2. You will receive monthly statements by . HOW CAN I MONITOR MY INVESTMENT? 1. Go to 2. Log in through the Secure Login tab. Here you will be able to access up to date valuation statements and information regarding your investment. HELP? Website: info@27four.com Phone: WE LIVE INVESTMENTS. INVESTMENT MANAGERS 6

8 CONTACT DETAILS 27four Investment Managers (Pty) Ltd Tel: +27 (0) Website: 54 on Bath, Ground Floor, 54 Bath Avenue, Rosebank, 2196, JHB Winners at the 2014 and 2015 Raging Bull and Morningstar Awards. DISCLAIMER This document is strictly for information purposes only and should not be considered as an offer, or solicitation, to deal in any of the investments mentioned herein. Any information and opinions contained in this communication, and any supplemental information provided, is believed to be reliable but no representation or warranty is given as to its correctness, accuracy or completeness. Investors should take cognizance of the fact that there are risks involved in buying or selling any financial product. Past performance of a financial product is not necessarily indicative of the future performance. The value of financial products can increase as well as decrease over time, depending on the value of the underlying securities and market conditions. This advertisement does not constitute a solicitation, invitation or investment recommendation. Prior to selecting a financial product or fund, it is recommended that investors seek specialised financial, legal and tax advice. This document may not be amended, reproduced, distributed or published without the prior written consent of 27four Investment Managers. 27four Investment Managers is an authorised financial services provider. DISCLOSURES Collective Investment Schemes in Securities (CIS) should be considered as medium to long-term investments. There is no guarantee in respect of capital or returns in a portfolio. CIS prices are calculated on a net asset basis, which is the total value of all the assets in the portfolio including any income accruals and less any permissible deductions from the portfolio divided by the number of participatory interests (units) in issue. The Fund's Total Expense Ratio (TER) reflects the percentage of the average Net Asset Value (NAV) of the portfolio that was incurred as charges, levies and fees related to the management of the portfolio. The investor acknowledges the inherent risk associated with the selected investments and that there are no guarantees. The Manager retains full legal responsibility for any third-party-named portfolio. Prescient is a member of the Association for Savings and Investments SA. 27four Investment Managers is an Authorised Financial Service Provider (FSP No ).