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What tax is payable on my retirement benefit?

Leaving your benefit in the fund 

No tax is payable if you leave your benefit in the fund unless deductions are made from your benefit. 

Buy a pension (annuity) 

Monthly pension payments (annuities) are taxable as income. These pension payments will be subject to PAYE deductions and form part of SARS’s annual Income Tax Assessment. 

Benefit paid out in cash 

Cash lump sum benefit are taxable according to the retirement tax table of the Income Tax Act.  

Tax legislation is complex, and it is amended from time to time. It is therefore strongly recommended that you seek the assistance of a financial adviser before you decide what to do with your benefit from the fund. 

The following tax table is applicable to retirement lump sum benefit

Taxable lump sum (R)

Rate of tax

0 - 500 000

0% of amount

500 001 - 700 000 

R0 + 18% of amount exceeding R500 000

700 001 - 1 050 000

R36 000 + 27% of amount exceeding R700 000

1 050 001 and above

R130 500 + 36% of amount exceeding R1 050 000

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