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.”
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