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Taxability of lumps sums from the Road Accident Fund

Thursday, 13 November 2014   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Techncial

Q: Our client received a lump sum from the Road Accident Fund. The lump sum was paid in to the bank account of a trust of which our client is a beneficiary. My question is whether this lump sum payment from the RAF is taxable or whether it is tax free.

A: We are not sure if the fact that the lump sum was ‘paid into the bank account of the trust’ was in terms of the agreement between the Road Accident fund and the individual concerned.  It may however be irrelevant as section 10(1)(gB)(iv) of the Income Tax Act exempts from normal tax any compensation paid in terms of section 17 of the Road Accident Fund Act, 1996.  

Disclaimer: Nothing in this query and answer should be construed as constituting tax advice or a tax opinion. An expert should be consulted for advice based on the facts and circumstances of each transaction/case. Even though great care has been taken to ensure the accuracy of the answer, SAIT do not accept any responsibility for consequences of decisions taken based on this query and answer. It remains your own responsibility to consult the relevant primary resources when taking a decision.



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