\* MERGEFORMAT. TAXATION In South Africa 2014 / 2015

Transcription

1 \* MERGEFORMAT TAXATION In South Africa 2014 / 2015 March 2014

2 INCOME TAX 2014 / 2015 Taxation of retirement provision in South Africa is based on the E E T principle which implies that contributions are tax deductible (Exempt), growth earned in the fund is tax free (Exempt) and benefits are taxed (Taxable) when these become payable. TAX DEDUCTIONS ON MEMBER CONTRIBUTIONS The Income Tax Act currently provides for the following tax deductions on contributions to a pension fund: Up to 20% of remuneration may be claimed for employer contributions, Employees can claim 7.5% of pensionable remuneration, or R1 750 per year, Employees can also claim a deduction of R1 800 per year for arrear contributions. The amount contributed by a member of the Fund that did not qualify for a tax deduction during his/her contributory term, may be claimed against a lump sum benefit, when this benefit becomes payable. THE ABOVE WILL CHANGE EFFECTIVE 1 MARCH 2015 AS FOLLOWS: Employer contributions will be treated as a fringe benefit and be added to an individuals taxable income Member contributions (including the employer s contribution and in-fund risk benefit contributions) will qualify for a tax deduction limited to 27,5% of the greater of remuneration or taxable income This tax deduction will be capped at a maximum of R per annum. Contributions that exceed the capped amount will be carried forward and can be claimed in subsequent years. Any balance will be deducted from the taxable portion of retirement benefits when these become payable, either from a lump sum or monthly pension. The deductions will apply to total contributions made to pension, provident and retirement annuity funds. New retirement savings generated after T-DAY (contributions plus growth) by provident fund members will be subject to the same annuitisation rules applied to pension funds i.e. that at least 2/3 of capital must be applied to provide for a monthly pension at retirement. Members who have fund credits below R at retirement date, will be able to fully commute the entire benefit and take a cash withdrawal. TAX ON LUMP SUM BENEFITS Tax tables for lump sum benefits are applied on an accumulative basis (you only get the tax free portion and reduced tax rate once), over a person s lifetime. The following tax tables are effective 1 March 2014: WITHDRAWAL BENEFIT LUMP SUM TAXABLE VALUE R0 to R25,000 0% R25,001 to R660,000 18% of the amount exceeding R25,000 R660,001 to R990,000 R114,300 plus 27% of the amount exceeding R660,000 R990,001 plus R203,400 plus 36% of the amount exceeding R990,000 RETIREMENT, RETRENCHMENT & DEATH LUMP SUM TAXABLE VALUE R0 to R500,000 0% R500,001 to R700,000 18% of the amount exceeding R500,000 R700,001 to R1,050,000 R36,000 plus 27% of the amount exceeding R700,000 R1,050,001 plus R130,500 plus 36% of the amount exceeding R1,050,000 2

3 TAX ON MONTHLY PENSIONS All pensions paid by Sentinel are taxable in terms of Pay-As-You-Earn (PAYE) regulations. The following applies from 1 March 2014 until 28 February 2015: Income Tax Table: TAXABLE INCOME R0 to R174,550 18% of each R1 R174,551 to R272,700 R31,419 plus 25% of the amount above R174,550 R272,701 to R377,450 R55,957 plus 30% of the amount above R272,700 R377,451 to R528,000 R87,382 plus 35% of the amount above R377,450 R528,001 to R673,100 R140,074 plus 38% of the amount above R528,000 R673,101 and above R195,212 plus 40% of the amount above R673,100 Rebates and Thresholds: AGE CATEGORY ANNUAL REBATE TAX THRESHOLD Below 65 R12,726 R70, and older R19,836 R110, and older R22,203 R123,350 Medical tax credits replaced tax deductions for individuals. The value of these monthly tax credits on medical aid contributions are: R257 for the first two dependants; and R172 for every dependant thereafter. An additional rebate can be claimed for qualifying out of pocket medical expenses as follows: Persons aged 65 and older, and those with a disability can claim 33,3% of qualifying expenses. Persons younger than 65 can claim 25% of qualifying expenses, but only the portion that exceeds 7,5% of taxable income will qualify for this rebate. Pension fund members who worked outside of the RSA during their term of membership are entitled to a tax exemption, based on the number of years worked outside the RSA in relation to the total years of fund membership. This is arranged by the Fund for members who provide substantiating documentary proof. TAX EXEMPTION ON INTEREST EARNED The following exemptions apply to interest income earned: Individuals below the age of 65: R23,800 per annum Individuals aged 65 and older: R34,500 per annum 3

4 OTHER TAXES The following table provides information about different taxes, thresholds and rates that are levied in South Africa: DESCRIPTION THRESHOLD & TAX RATE Estate Duty Exemption at death Tax Rate Inheritance between spouses R3,5 million per person 20% Exempt Donations Tax Annual Exemption Tax Rate Donations Between Spouses R100,000 per person 20% Exempt Transfer Duty on Property R0 to R600,000 R600,001 to R1,000,000 R1,000,001 to R1,500,000 R1,500,001 and above 0% 3% on the value above R600,000 R12,000 plus 5% on the value above R1,000,000 R37,000 plus 8% on the value above R1,500,000 Capital Gains Tax Annual Exclusion Primary Residence Exclusion Exclusion on Death Exclusion on disposal of a small business CGT Rate Individuals CGT Rate Trust CGT Rate Company & Close Corporation R30,000 R2 million R300,000 R1,8 million 0% 13,3% 26,6% 18,6% SARS website address: This brochure provides information with regard to tax rates applicable to South Africa. It does not give rise to any rights or obligations. In the event of errors, current legislation and regulations will prevail and the Fund can not be held liable for any damage or loss. Issued March

5 FUND CONTACT DETAILS ELECTRONIC Tel : (011) Fax : (011) [email protected] Website: POSTAL ADDRESS The Manager Sentinel Retirement Fund P O Box Marshalltown 2107 KLERKSDORP 54 Buffeldoring Street Wilkoppies Klerksdorp Tel : (018) WELKOM Shop 24 The Strip 314 Stateway Street Welkom Tel: (057) CARLETONVILLE JOHANNESBURG Sentinel House 1 Sunnyside Drive Sunnyside Office Park Parktown Johannesburg, 2193 WITBANK WCMAS Building Corner OR Tambo and Susanna Streets Emalahleni (Witbank) Tel: (013) S Buys Office Park Shop 10 Corner Kaolin & Radium Streets Carletonville Tel: (018) Issued March