Tax amendment Bill passed

The tax harmonisation reforms of retirement funds will be implemented from 1 March 2016.

What are the changes that will come into effect on 1 March 2016?

“The Taxation Laws Amendment Act, 2013 will come into effect on 1 March 2016. This law allows for a 27.5% tax deduction up to a maximum of R350 000 per annum for all retirement fund contributions. This law should have been implemented on 1 March 2015, but was delayed by one year to take account of concerns raised by some stakeholders. Further, the new law passed in Parliament has:

  • increased the amount required for annuitisation at retirement from R150 000 to R247 500,
  • closes certain coverage gaps; and
  • requires a review of the legislation after two years from the effective date, and to report this review to Parliament.”

“The law also allows one-third of the retirement saving to be cashed out as a lump sum, with the remaining two-thirds to be annuitised. This law already applies to all pension fund and retirement annuity fund members, but will now be extended to members of provident funds.”

Please click here to download a very informative Question and Answer document supplied by Treasury.

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