What is an IT3s Tax Certificate
An IT3(s) is a Tax Certificate that you obtain from a financial institution like a bank or financial services provider. It provides a comprehensive summary of all the information related to your Tax-Free Savings account for the year (for instance, interest, dividends, etc.) that you will need when filling out your Tax Return.
It reflects the transactions during the tax year, such as the contributions you made to your tax-free investment, withdrawals you took from it or where you may have transferred to another service provider (whether in or out).
Frequently asked questions
What is a Tax-Free Investment
A TFI is an investment product that doesn’t attract any South African tax, if you don’t exceed the contribution limit (currently R36 000 per tax year). Foreign withholding tax deducted within an investment fund will influence your investment balance. TFIs can be administered by banks, long-term insurers, collective investment scheme companies and national government. Government implemented TFIs on 1 March 2015 to encourage savings.
The following South African taxes won’t apply:
• Income tax in respect of interest and profit or loss in share trading.
• Dividends tax
• Capital gains or losses
When is an IT3s Tax Certificate
Certificates are issued yearly before filing season opens. IT3(s) tax certificates are issued if the account is open or active, even if no new contributions were made during the tax year.
Why do you receive IT3s Tax Certificate
Individuals must report all contributions, withdrawals, transfers to and from this investment, as well as the net returns to SARS. This is to monitor and manage the allowed contribution limit of R36 000 per tax year (applicable to the tax year ending February) and lifetime limit of R500 000. You will pay a tax penalty of 40% on contributions that exceed the contribution limit.
For example:
• If you contribute R56 000 to a TFI account during the tax year, the yearly limit is exceeded by R20 000. This means you’ll pay a tax penalty of R8 000 ((R56 000 – R36 000) x 40%) for the extra amount.
• If you contribute more than R500 000 in total to a TFI over your lifetime, a 40% tax penalty will be payable on the amount over R500 000 (reduced by the tax already paid on contributions in excess of the yearly limit).
Do you need a Quote for our Tax and Accounting Services?
Contact our team via any of the following channels to get a proposal for your accounting and tax services:
Subscribe to our newsletters.
Disclaimer:
The views or opinions expressed on this site are solely those of the original authors and other contributors.
The material and information contained on this website is for general information purposes only.
This information is for general purposes only. Don't use this information for making business, legal and tax decisions without consulting a professional.
We do not make any express or implied representation, as to the completeness or accuracy of the information published.
Tax law changes regularly, and any tax information on this site might be outdated.
We are not responsible for any other websites that you may access through links on our website.
ZPA accepts no liability for any loss or damage arising from the use of any material on this site.
