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Taxing a Pension Fund Surplus

30 June 2011   (0 Comments)
Posted by: Author: Piet Nel
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Taxing a Pension Fund Surplus

Good news if you’ve received a distribution from a pension fund surplus apportionment after you retired

Question : As you may know,some of the pension fund surplus issues are finally coming to an end.I have seen no discussion on the question: what is the tax status of these payouts?

The issue you refer to is provided for in the Second Schedule and is only available when that the receipt is subsequent to the member's retirement (unless the distribution is in terms of Section 15B). You will note that it treats the receipt , in the circumstances mentioned, as something which is not gross income.That means that it can't be subject to tax, as it will then not end up in taxable income.

Paragraph 2C: Any lump sum benefit, or part thereof, received by or accrued to a person subsequent to the person's retirement or death,or withdrawal or resignation from any pension fund, pension preservation fund, provident fund,provident preservation fund or retirement annuity fund or the winding up of any such fund, and in consequence of or following upon an event that is prescribed by the Minister by notice in the Gazette and contemplated by the rules of any such fund or the approval of a scheme in terms of Section 15B of the Pensions Funds Act, 1956, or Paragraph 5.3(1)(b) of the Schedule which amends regulation 30 of the Regulations under the Long-Term Insurance Act, 1998, shall not constitute gross income of that person.

Source: By Piet Nel (Tax breaks)


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