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Cosatu planning to 'crush' new tax laws

Monday, 25 January 2016   (0 Comments)
Posted by: Authors: Dane Mcdonald and Carin Smith
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Authors: Dane Mcdonald and Carin Smith (

Cosatu on Thursday called on its members and workers in general to join in its efforts to "crush" new tax law amendments signed into law by President Jacob Zuma.

"Our opposition to this law remains unwavering and we remain determined to implement our federation's congress resolution, of fighting the National Treasury's unilateral decision to control and manage workers deferred wages," Cosatu said in a statement.

Panic and anger set in among workers after Zuma signed the new tax laws such as the 2015 Tax Laws Amendment Act and the Tax Administration Laws Amendment Act into force.

They include a limit on how much may be withdrawn when a worker resigns or is retrenched as part of efforts to force workers to save for their retirement and not withdraw savings for other reasons.

The federation said it had issued a call to all its affiliates to mobilise workers and their families "to come out and protect their savings and livelihoods".

"We are busy finalising our application for a Section 77 Notice that will allow us to go on a full blown strike," Cosatu said.

On January 14 the Presidency sought to allay workers' fears saying that it had no intention to take over the hard-earned deferred income of workers, whose funds would remain under the control of their trustees.

The government said it had merely updated the Taxation Laws Amendment Act, which was passed in 2013. The 2013 version harmonised all retirement funds for tax purposes and consolidated employer and employee contributions.

Controversial new pension laws only applied to money saved from April 1 this year, Finance Minister Pravin Gordhan said on January 14.

"Anything you saved up to March this year is not touched. The old rules still apply," Gordhan said.

Government had also improved the law to ensure better governance practices by trustees, and intended to strengthen the measures further, according to the presidency.

The 2013 law allowed for a 27.5% tax deduction up to a maximum of R350 000 per year.

The key condition for enjoying the tax deduction was that members take a lump sum up to one-third the amount, with the rest to be annuitised (an annuity investment converted into a series of periodic income payments).

"This law should have been implemented on March 1 2015, but was delayed by one year to take account of concerns raised by some stakeholders, including Cosatu.

"The only change to the law that government is considering this year, is to confirm that the new law will take effect on the scheduled date of March 1 2016 alongside an increase in the threshold above which members are required to purchase an annuity," the Presidency explained.

"It is envisaged that workers will be encouraged to save [more] through retirement funds, to curb old-age poverty and excessive dependency on relatives."

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