Unit Trusts: The Next Tax Target?

Treasury has proposed legislation on taxing Collective Investment Schemes (CIS), more commonly known as unit trusts. The tax amendment aims to tax realised profits (made from selling an asset) that were generated within 12 months of the purchase of the asset/instrument. These profits will then be distributed to investors and taxed as income.

The current situation
There has been a debate about the unequal treatment of tax between CIS and other industries. The profits that individuals or other industries generate are taxed as income if the asset was held for less than 12 months (deemed profit in nature) and as capital gains tax for longer investment periods (seen as capital appreciation from long-term investment). An investor putting money in a CIS would have only been liable for capital gains tax on redemption of the investment, thereby taxing both short term and long-term profits as capital gain. This is significant since an initial amount of capital gain is exempt from tax and the excess is taxed at a lower rate, 40% of the marginal income tax rate.

Proceed to Source : ShareNet

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CIS industry assets racing to R2.5 trillion

JOHANNESBURG – Investors ploughed R26 billion in net inflows to the local Collective Investment Schemes (CIS) industry in the second quarter of the year, with the combined value of assets in the sector racing towards R2.5 trillion at the end of June.

The CIS industry statistics for the quarter ended June yesterday showed that the growth net inflows pushed total net inflows for the year ended June to R96bn.

Proceed to Source : IOL

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