Taxation 4
Silke chapter 12
The taxation of
RETIREMENT
BENEFITS
1
Lump sum
paid out once
of
Fixed amount,
paid out
repetitively,
ito a contract
Second
Schedule
Gross Income
def par (a)
Lump
Sums from
an
Employer
Paragraph
(c) or (cA)
Lump sum
from a
Fund
Paragraph
(d) or (f)
Paragraph
(e) and
(eA)
the
relinquishment,
termination,
loss,
repudiation,
cancellation or variation of any office or employment of any
appointment
AND
> 55 years OR
Employee sufers from ill heath, is incapable, or infirmity
of holding office OR
Termination due to
Preretirement
lump sum
Retirement
lump sum
Retirement
Resignatio
n
Death
Type of event = NB
5
Withdrawal
Rate of tax
0% of taxable income
Rate of tax
0% of taxable income
Retirement
Pension Fund
Provident Fund
RAF, Pension
Preservation Fund,
Provident
Preservation Fund
Any fund
Paragraph 5 deductions
Amount transferred for the benefit of any person which is deemed to have
accrued to the person on the date of the transfer (from any fund to any fund)
Other amounts in respect of which formula C applies which have been paid
into a fund for the taxpayers benefit by a Public Sector Pension Fund
less the amount in symbol A in formula C which has not previously been
allowed to the taxpayer as a deduction in terms of the Second Schedule in
determining the amount to be included in that taxpayers gross income
10
Paragraph 6 deductions
Amount transferred for the benefit of any person which is deemed to have
accrued to the person on the date of the transfer (from any fund to any fund)
Other amounts in respect of which formula C applies which have been paid
into a fund for the taxpayers benefit by a Public Sector Pension Fund
less the amount in symbol A in formula C which has not previously been
allowed to the taxpayer as a deduction in terms of the Second Schedule in
determining the amount to be included in that taxpayers gross income
11
R
A
F
PENSIO
N
PROVIDENT
12
13
Comprehensive
Examples
Test your Knowledge- Silke
Example 12.8 Lump sum from an
employer and a fund combined.
Example 12.10 Retirement, Preretirement and other severance
benefits
14
outside SA
= the amount included per Gross Income
15
Taxable portion
Attributable to pensionable
service after 1 March 1998
Reduced by deductions available
for private funds (paragraph 5 or
6 of the Second Schedule)
Paragraph (e) of the gross
income definition
16
Attributable
to
pensionable
service prior
to
1 March
1998
Calculation
Formula C
A= B x D
C
A = Taxable lump sum subjected to the 2nd schedule
(paragraph 5 and 6 deductions still applicable after this amount is
determined)
18
Changes in taxing RB
(s10C)
1. S10C efective from 1 March 2014 for
compulsory annuities
2. Previously, all annuity income received
as a result was taxed in full, and no
deductions were ofset against this
income received.
3. S10C now allows for the non-deductible
portions of the contributions once made
toward these funds by the taxpayer, as
a deduction against this annuity income
received.
19
Changes in taxing RB
1. S10C efective from 1 March 2014 for
compulsory annuities
2. Previously, all annuity income received
as a result was taxed in full, and no
deductions were ofset against this
income received.
3. S10C now allows for the non-deductible
portions of the contributions once made
toward these funds by the taxpayer, as
a deduction against this annuity income
received.
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RETIREMENT (FUTURE)
All
contributions deductible
27.5% (Remuneration or Taxable
Income)
Capped at R350 000
Disallowed contributions carried
forward
21
RETIREMENT (FUTURE)
Contributions to provident funds
Annuity for provident funds
55 years and over
22
END.
QUESTIONS?
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