Third Schedule, The Income Tax Act, 2000

COMPLYING R ETIREMENT F UNDS 1. Rules for approval of retirement funds (1) An application for approval of a fund shall be made in Writing to the Commissioner by the trustees of the fund and shall be— a) accompanied by a copy of the instrument by which the fund is established, two copies of the rules or regulations of the fund, and two copies of the accounts of the fund for its last financial year; b) supported by such further information as the Commissioner may require. (2) An application for approval of a fund shall be made for any year of assessment before the end of that year of (3) An application to alter the rules, regulations, constitution, objects or conditions of an approved fund shall be made in writing to the Commissioner by the trustees of the fund and shall be – a) accompanied by a copy of the proposed alteration and two copies of the accounts of the fund for its last financial year; b) supported by such further information as the Commissioner may require. (4) The Commissioner may approve— a) as a complying retirement fund; or b) as an alteration to the rules, regulations, constitution, objects or conditions of an approved fund, any fund or proposed alternation which complies with paragraph 2 of this Schedule and shall give to the applicant a notice either of his approval of the application, from a date specified in the notice, or of his refusal of it. (5) The Commissioner may at any time withdraw his approval of a fund which, in his opinion no longer complies with paragraph 2 this Schedule, and shall give to the applicant a notice of withdrawal of his approval from the date specified in the notice. (6) Where the Commissioner gives notice of withdrawal of his approval, or refuses an application for approval or for an alteration to the rules, regulations, constitution, objects or conditions of an approved fund, he shall advise the applicant of the reasons for his decision, and if within six months the applicant gives notice of an acceptable alteration of the rules, regulations, constitution, objects or conditions of a fund, the Commissioner may rescind his withdrawal or refusal. (7) The trustees of any fund may request the Commissioner to withdraw his approval of the fund, but subject to the Commissioner giving notice of withdrawal, his approval shall stand for all succeeding Years of assessment. (8) A fund approved under The Income Tax (Pension and Provident Fund) Rules shall be deemed to have been approved under this Schedule. 2. Conditions for a fund to be a complying retirement fund (1) Assets of the fund shall be vested in three or more trustees under an irrevocable trust. (2) The fund shall have as its sole purpose the accumulation of funds 'by provision of pensions, annuities or other sums— a) for the benefit of individuals by reason of retirement at age fifty five years or above as specified in the rules of the fund, or retirement by reason of ill health, of which not more than thirty percent may be commuted to a lump sum; or b) for the benefit of an individual's named dependants by reason of the death of the individual, of which up to one hundred percent may be commuted to a lump sum. (3) The assets of the fund may comprise contributions from employers and individuals, any investment income and capital accretions arising from such contributions, and any donations received by the trustees. (4) The assets and income of the fund shall be so invested that they are not available to a contributor or any associate of his, nor to a potential beneficiary or any associate of his, other than under subparagraph (2) or on termination of the fund. (5) Assets of the fund representing at least fifty percent of the contributions and income derived therefrom shall be invested in Sierra Leone. (6) No contributor to or potential beneficiary of the fund shall have a lien on or right of recourse to any assets of the fund nor be entitled to use the assets of the fund as security for any loan. (7) Contributions by an employer to the fund in respect of an employee shall be directly proportional to the benefits the employee is entitled to draw in respect of those contributions, and that proportion shall apply to all beneficiaries of the fund in similar circumstances. (8) The trustees shall account to the members of the fund each year for the contributions and other income received by the fund, its investments and its disbursements, and shall account to the Commissioner in such form and with such frequency as the Commissioner may prescribe to enable him to monitor the fund’s compliance with this Schedule and the provisions of this Act. (9) All disbursements from the fund shall be taxed as employment income under paragraph (f) of subsection (1) of section 23 except that— a) where a lump sum is paid under subparagraph (a) of paragraph (2), it shall be treated as a redundancy or termination payment under paragraph (h) of subsection (3) of' section 23; and b) where a lump sum is paid under subparagraph (b) of subparagraph (2) it shall be treated as exempt from tax.