Income Tax Act, 1962 (Act No. 58 of 1962)

Regulations

Regulations under paragraph (dd)(C) of the proviso to section 11(W) of the Income Tax Act, 1962

Notice No. R. 2408 of 1982
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Notice No. R. 2408

12 November 1982

GG 8442

 

The State President has by virtue of paragraph (dd)(C) of the proviso to section 11(w) of the Income Tax Act, 1962 (Act No. 58 of 1962), made the Regulations contained in the Schedule.

 

Schedule

 

Requirements in regard to terms and conditions with which insurance policies shall conform for the purposes of paragraph (dd)(C) of the proviso to section 11(w) of the Income Tax Act, 1962 (Act No. 58 of 1962).

 

(1)In these Regulations, unless the context otherwise indicates any word or expression to which a meaning has been assigned In the Income Tax Act, 1962 (Act No. 58 of 1962), bears the meaning assigned thereto, and—

 

"commencement date", in relation to an insurance policy, means the date on which the contract of insurance to which the policy relates is made by the parties;

 

"death benefit", in relation to an insurance policy, means an amount payable on the death at any time while the policy is in force of the person whose life is insured under the policy;

 

"death benefit period", in relation to an insurance policy, means the number of years (in the calculation of which any fraction of a year shall be reckoned as a year), not exceeding 20 years, calculated from the commencement date of the policy until the maturity date thereof;

 

"insurance policy" means a life policy as defined in section 1(1) of the Insurance Act, 1953 (Act No. 27 of 1943), taken out upon the life of an employee or director as contemplated In section 11 (w) of the Act, but does not include any policy to which the provisions of paragraph (dd)(A) or (B) of the proviso to the said section 11(w) apply;

 

"maturity date", in relation to an insurance policy, means—

(i)where such policy provides for the payment of a benefit upon a date specified in the policy or upon the earlier death of the person whose life is insured under the policy, the date so specified or, where the policy provides for the payment of benefits on more than one such date, the latest date on which such benefit will become payable, or
(ii)where such policy is not a policy referred to in paragraph (i). the date falling at the end of the period of the life expectancy of the person whose life is insured under the policy, as determined immediately before the commencement dale of the policy in accordance with a mortality table contemplated in paragraph 4(b) of the Second Schedule to the Insurance Act. 1943 (Act No. 27 of 1943);

 

"policy year", in relation to an insurance policy, means the period of 12 months commencing on the commencement date of the policy or any subsequent period of 12 months commencing on the anniversary of that date;

 

"premium factor" means an amount equal to 80 per cent of so much of the premium or sum of the premiums payable under an insurance policy in respect of any policy year as remains after deducting therefrom any portions of such premium or sum of the premiums paid—

(i)in respect of benefits on disablement or additional benefits on accidental death; or
(ii)as an additional premium the payment of which was, in conformity with standards applied to all the life assurance business of the relevant insurer, considered warranted by the insurer's valuator as a result of the state of health or occupation of the person whose life is insured under the policy or his participation in activities or as a result of any other condition affecting his insurability;

 

"the Act" means the Income Tax Act, 1962 (Act No. 58 of 1962);

 

"valuator" means a valuator as defined in section 1(1) of the Insurance Act, 1943 (Act No. 27 of 1943).

 

(2)The terms and conditions with which an insurance policy shall conform for the purposes of paragraph (dd)(C) of the proviso to section 11(w) of the Act shall be the following:—
(a)The policy shall apply to one life assured only and no other life assured may be substituted therefore;
(b)the premiums under the policy shall be payable at regular yearly, six-monthly, three-monthly, monthly or weekly intervals for a period which is not shorter than the death benefit period, or until the earlier death or disablement of the person whose life is insured under the policy, and the premiums shall not be increased otherwise than in the manner contemplated in paragraph 11(5)(b) of the Sixth Schedule to the Act;
(c)the policy shall provide for the payment during any policy year in which it is in force of a death benefit which shall not be less than an amount arrived at by multiplying the death benefit period of the policy by the lowest premium factor relevant to the said and any preceding policy year;
(d)the terms and conditions set out in paragraphs (a) to (c) of this regulation shall in effect be embodied in the policy and the policy shall not at any time while it is in force be varied in such a manner that it no longer complies with any of the said terms and conditions: Provided that the preceding provisions of this paragraph shall not be construed as preventing the insurer, if any premium due under the policy has not been paid, from terminating the policy with or without the payment of a benefit, or issuing a paid-up policy, in terms of the conditions of which the benefits are payable not later than the date on which the benefits under the relevant policy would have been payable if it had continued in force, in accordance with rules made by the insurer and approved by the Registrar of Insurance in terms section 62(2) of the Insurance Act, 1943 (Act No. 27 of 1943).