What’s VATable and what’s not

● Long-term insurance policies covering you against death, disability, severe illness and providing funeral cover are generally VAT exempt, says Leonard Willemse, senior tax consultant at Mazars. However, there could be elements of your cover that are not VAT exempt, he says.

George Kolbe, head of marketing at Momentum Myriad, says VAT is payable on commission paid to an adviser who sold you a policy.

Momentum and Liberty will absorb the cost for now.

Short-term insurance premiums are VATable and any premiums paid from April 1 will be subject to the higher VAT rate, the South African Insurance Association says.

Insurers are not obliged to inform you of the increase in your premiums, nor do they have to give you 30 days’ notice, the Financial Sector Conduct Authority has confirmed to the SAIA.

Medical scheme contributions are not subject to VAT but medical schemes will be paying VAT for medical services for members at the higher rate from this month.

If schemes need to put up contributions they need to apply to the Council for Medical Schemes for an interim increase. Paresh Prema, head of benefit management at the CMS, expects most schemes will pay the additional costs from their reserves and adjust contributions at the end of the year.