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Tax Free Investments

Foord offers tax free investment accounts in the Foord Balanced, Foord Equity and Foord Flexible Funds to existing investors only.

Tax free investment accounts are only available to South African resident individual investors. They cannot be used by trusts, companies or other legal entities. Parents can open tax free investment accounts for their minor children subject to each child's own annual and lifetime contribution limit. Redemption proceeds may only be paid into a bank account opened in the name of the child.

Tax free investment accounts may be in the form of unit trusts, bank accounts, stock broker accounts, retail savings bonds and life insurance policies. Linked investment service providers may also provide these accounts on their platforms. Tax free investment accounts must be clearly designated as tax free. Investors should carefully consider the type of investment they select to utilise the tax incentive. Taxpayers will receive the maximum tax benefit from investments that typically have higher income yields and greater chance of capital growth. Balanced and high equity unit trust investments offer the ideal income profile.

Foord’s tax free investment accounts are subject to the legislative maximum annual contribution limit of R36 000 and a minimum of R10 000. The maximum monthly debit order is therefore R3 000. The minimum monthly debit order amount for all Foord unit trust investments is R1 000.

Contributions (meaning the amount of money paid into the tax free investment account by the investor) are limited to R36 000 per tax year. The lifetime contribution limit per investor is R500 000. Existing investments may not be converted to tax free investment accounts. The limits apply across all tax free investment accounts held by individual investors. In other words, while investors may have more than one tax free investment account, care must be taken not to exceed the overall investment limit in any tax year across all such accounts. Any contribution into a tax free investment account in excess of the annual or lifetime contribution limit is subject to taxation of 40% of such excess.

Investors have unrestricted access to tax free unit trust investment accounts. Redemption proceeds will typically be paid within two working days. Tax free investment accounts are designed to encourage long-term savings. Replacements of contributions withdrawn do not reduce the contribution total. In other words, any withdrawal will reduce the amount that can be contributed into the tax free investment account in future. Withdrawals from tax free investment accounts therefore result in an opportunity loss to the investor that can never be recovered. Investors should give careful consideration to such an outcome before investing into tax free investment accounts.

Regulation prohibits the use of performance fees in tax free investment accounts. For this reason, Foord offers tax free investment accounts in the fixed fee B4 class of Foord Balanced Fund, Foord Equity Fund and Foord Flexible Fund of Funds. The fees are as follows:

FUND ANNUAL FIXED FEE
Foord Balanced Fund Class B4 1.00% + VAT plus fixed fees in underlying foreign unit trust not exceeding 1.00%
Foord Equity Fund Class B4 1.35% + VAT
Foord Flexible Fund of Funds Class B4 1.35% + VAT
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