Lehumo TAX-FREE INVESTMENT PLAN
Encouraging a savings culture
WHY CHOOSE LEHUMO?
Lehumo offers a wide range of trusted financial solutions, designed to help you create and preserve your wealth throughout your life. Our goal is to deliver superior solutions combined with world-class client service.
The Lehumo Tax-Free Investment Plan can help you to build an adequate tax-protected portfolio. We will help you choose investments that best suit your needs. You can also be assured that we have access to ongoing support and fund evaluation services from leading experts.
WHAT TO EXPECT FROM LEHUMO EXPERTS
Once you and your advicer at lehumo have decided the Lehumo Tax-Free Investment Plan is the best option to grow your household savings, you will work through the following areas together:
Your risk tolerance – You may be in a position to choose a high-risk product that has potential to yield high returns, or you may be more comfortable with moderate risk, even at a lower return. Your intermediary will do a risk assessment and advise what is best for you.
Your preferred contribution method – You may be able to invest a lump sum or you may prefer regular monthly payments towards creating wealth for yourself and your family.
Your financial goals – We will ensure your portfolio stays on track according to your financial needs.
LEHUMO TAX-FREE INVESTMENT PLAN
What is the Lehumo Tax-Free Investment Plan?
The Lehumo Tax-Free Investment Plan is the smart way to increase your household savings. It lets you invest up to R30 000 per tax year, tax free, with an overall lifetime contribution limit of R500 000. There are no penalty charges for withdrawals, and you can spread your contributions across a wide range of collective investment funds.
Why is this different from a standard investment account?
Tax efficiency – You pay no tax on interest, dividends or capital gains. The investment is tax free by virtue of section 12T of the Income Tax Act.
Dedicated savings plan – It is a convenient way to save for long- or short-term goals. You are able to grow your household savings as a buffer against unexpected expenses.
Easy investment – Collective investments are an efficient way to invest in the market. You can simply adjust your portfolio if your needs and risk profile change.
Who can invest?
Only natural persons may invest in the Lehumo Tax-Free Investment Plan. Legal entities (e.g. companies) and trusts will not be able to invest in this product.
How much can I contribute?
You can contribute R30 000 per tax year (1 March to end- February), either as a lump sum or in monthly instalments of R2 500. The overall lifetime contribution limit is R500 000.
What are my investment options?
You can select from a wide range of collective investment funds on Lehumo’s platform, including selected wrap funds. (Funds with performance-based fees, as well as personal share portfolios are excluded.)
Structure your portfolio according to the level of risk (market uctuation) with which you’re comfortable.
You may change your investment fund selection at any time, at no charge.
Can I access my savings?
You can take money out at any time. However, the Lehumo Tax-Free Investment Plan is designed to encourage long-term saving, so please speak to your nancial intermediary before making withdrawals. The full withdrawn amount can be put back into the Lehumo Tax-Free Investment Plan, but it will be regarded as a contribution. It is your responsibility to ensure that this does not breach your contribution limit within a tax year, as an over-contributed amount will be subject to a 40% penalty tax.
What are the rules?
You are not permitted to invest more than R30 000 in any tax year in the Lehumo Tax-Free Investment Plan.
All contributions must be in cash.
Investors will only be allowed to have one Tax-free
Investment Plan on Lehumo’s platform.
Transfers of tax-free investments are currently not allowed.
What happens if I exceed the contribution limits?
You may not exceed the prescribed limits even if you did not use your full contribution limit in a previous tax year. It is your responsibility to adhere to the annual limit.
You are allowed to have multiple tax-free investments at di erent service providers, but the annual contribution limit of R30 000 (and lifetime contribution limit of R500 000) applies to the total contribution across all tax-free investments you own.
If your total contribution exceeds annual or lifetime limits, you will be taxed at a rate of 40% on the excess amount. For example, if you contributed R40 000
in a given tax year, you would pay 40% on the over- contributed R10 000.
What about estate planning?
On death, the investment will form part of your estate and estate duty may be payable. While the investment is held within the estate, the returns on it will remain exempt from income tax, dividends tax and capital gains tax.
Note that when transferring the amounts in a Lehumo Tax- Free Investment Plan to a bene ciary’s tax-free investment, the transfer will be regarded as a contribution and is subject to the annual and lifetime contribution limits of the beneficiary.
DO INVESTMENTS CARRY RISK?
Financial markets fluctuate daily and investments in collective investment funds can fall in value as well as rise. It is important to be aware of the risks before you invest. You will help you determine the level of risk that is right for your personal circumstances.
FEES AND CHARGES
Product administration fees
The administrator will charge an annual administration fee, which you can find on the application form and investment confirmation.
Financial intermediary fees
You and Lehumo will agree on the fees for financial advice and services provided. Fees may be renegotiated at any time.
Investment management fees
Fund managers charge a fixed annual fee, which is deducted before the calculation of prices and declaration of income. The fees are included in the total expense ratio and shown on the investment statement.
Wrap fund fees
If you include a wrap fund within the plan, a wrap fund fee will apply to that proportion of the plan invested in the wrap fund. The fee will be indicated
on the relevant wrap fund’s mandate. The fee accrues daily and is deducted monthly by repurchasing units from the underlying investment funds within the wrap fund.
Should contributions be received that exceed the maximum prescribed limits, the over-contributions will either be invested in an existing Lehumo Investment Plan of the investor or paid back to the investor’s bank account on record. Only the maximum portion allowed will be invested in the Lehumo Tax-Free Investment Plan. The administrator reserves the right to charge an administration fee of up to R250.00 for the reimbursement, which will be deducted from the amount before payment to the client.
Value-added tax (VAT) payable on fees
VAT will be payable on all fees.
Asset class A group of securities that have similar financial characteristics, behave similarly in the marketplace, and are subject to the same laws and regulations. The main asset classes are equities (shares), bonds, cash and property.
Dividend A sum of money paid by a company to its shareholders.
Capital gains Profit from the sale of an investment.
Wrap fund A vehicle to consolidate and manage an investor’s portfolio under a single investment manager.
Fixed-interest investments Lower risk investments that offer potentially lower returns over the longer term. In return for lending your money to an organisation, you earn interest.