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The Income Tax (Home Ownership Savings Plan) Rules

Legal Notice 210 of 1995

This is the latest version of this Legal Notice.
The Income Tax (Home Ownership Savings Plan) Rules
Citation
Legal Notice 210 of 1995
Primary work
Income Tax Act
Date
Language
English
Type
Legal Notice
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LAWS OF KENYA

INCOME TAX ACT

THE INCOME TAX (HOME OWNERSHIP SAVINGS PLAN) RULES

LEGAL NOTICE 210 OF 1995

  • Commenced on 1 January 1996
  1. [Amended by Income Tax (Registered Home Ownership Savings Plan) (Amendment) Rules, 2007 (Legal Notice 82 of 2007) on 15 June 2007]
  2. [Revised by 24th Annual Supplement (Legal Notice 221 of 2023) on 31 December 2022]

1. Citation and commencement

These Rules may be cited as the Income Tax (Home Ownership Savings Plan) Rules and shall come into operation on the 1st January, 1996.

2. Interpretation

In these Rules, unless the context otherwise requires—"institution" means an approved institution operating a home ownership savings plan registered in accordance with these Rules;"Plan" means a home ownership savings plan;"qualifying deposits" means—
(i)funds transferred from another Plan under section 22C of the Act; or,
(ii)any deposits which qualify for a deduction under section 22C of the Act.

3. Application for registration

(1)An approved institution offering a home ownership savings plan to depositors may apply to the Commissioner for registration of the Plan for the purposes of the Act.
(2)An application under this rule shall—
(a)be made in writing addressed to the Commissioner;
(b)be signed by two of the officials of the approved institution;
(c)be accompanied by two certified copies of either the trust deed, or any rules or other document consisting the plan;
[LN 82 of 2007, r. 2.]

4. Requirements for registration

The Commissioner may, on receipt of an application under rule 3, register a Plan if—
(a)it is established in Kenya;
(b)the trust deed, rules or other document constituting the Plan provide that—
(i)all sums held on account of a depositor shall be used to purchase or construct a permanent house in Kenya;
(ii)no deposit made or benefit accruing or payable to the depositor shall be pledged as security for a loan or shall be capable of assignment unless the depositor dies;
(iii)upon the death of the depositor, the balance of the funds in his account shall be transferred to his spouse, any of his children who have attained the age of eighteen years or any relative of the depositor who is a qualifying individual without closing the account;
(iv)only qualifying deposits may be made by a depositor under the Plan;
(v)deleted by L.N. 82 of 2007, r. 3(b).
(vi)no loan or other benefit shall be provided out of the account to the depositor or to any person not dealing at arm's length with the depositor;
(vii)a depositor may, subject to the approval of the Commissioner, direct that all funds held in his account be transferred to another institution operating a similar Plan without undue delay;
(viii)the depositor may at any time on or before the ninth year after the qualifying year withdraw all the sums deposited without deduction of tax to purchase or construct a permanent house for his occupation:
Provided that any excess amount of the withdrawal not used for the purchase or construction of the house shall be subject to tax;
(ix)in every year starting with the qualifying year upto the tenth year the depositor shall make in his account an annual deposit of up to thirty thousand shillings;
(x)upon the death of the depositor, any funds held in his account shall be transferred as provided in these Rules and any sums not applied towards the purchase or construction of a permanent house shall be subject to tax;
(xi)in the case of expenditure on an existing house, no distinction shall be made between the value of the existing building and the land on which it stands;
(xii)in the case of the construction of a house, qualifying expenditure shall consist of construction services and building material supported by such evidence as the Commissioner may require;
(xiii)all funds in a depositor's account shall be withdrawn a lump sum by the end of the ninth year following the qualifying year.
[LN 82 of 2007, s. 3.]

5. Notification registration

The Commissioner shall, as soon as reasonably practicable after considering the application, notify the applicant in writing whether or not the Plan is acceptable for registration, and the same notification shall specify either—
(a)the reason therefor, if it is not acceptable; or
(b)the year of income in respect of which the registration is first to take effect, if it is acceptable.

6. Supply of information to the Commissioner

An institution shall, in respect of every depositor saving under a Plan, forward to the Commissioner—
(a)the personal identification number of the depositor;
(b)a certified copy of an affidavit sworn by the depositor confirming that he does not directly or indirectly own and has not previously directly or indirectly owned any interest in a permanent house;
(c)the amount of deposits, mode of investment and any withdrawals thereof;
(d)such other information as the Commissioner may from time to time require.

7. Alteration of trust deed, rules, etc.

Where an alteration is made to the trust deed, the rules or other document constituting the Plan, the institution shall forthwith notify the Commissioner in writing and such alteration shall not be effective unless written approval thereof is received from the Commissioner.

8. Withdrawal of registration

(1)The Commissioner may, by notice in writing to the institution, withdraw the registration of a Plan if—
(a)the provisions of the trust deed, the rules or other document constituting the Plan have either been breached or so altered that the Plan no longer meets the requirements of the Act or these Rules; or
(b)the accounts of the Plan fail or cease to be maintained to the satisfaction of the Commissioner.
(2)A withdrawal of registration under this rule shall take effect from the beginning of the year of income in which the grounds for that withdrawal arose or such later date as the Commissioner may determine, and the accumulated funds thereof shall be taxed in the year in which the registration is withdrawn.
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History of this document

31 December 2022 this version
15 June 2007
Read this version
01 January 1996
Commenced