Page 17 - P6 Slide Taxation - Lecture Day 7 - Various Topics
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Retirement lump sum: How taxed?
• Taxable portion = Lump Sum – par 5 or 6 deduction ito 2 Schedule
nd
• Scenario 4: Termination or loss of TP’s employment due to:
→ Employer ceases to carry on a trade OR
→ Employee becomes redundant due to general reduction
in personnel or personnel of a particular class.
In the scenario above the following are allowed as deductions ito par 6(1)(b):
- TP’s own contributions to a fund not allowed as a deduction against his /her
income ito s 11(k) or s 11(n) (includes PrF contributions); and
- Amount transferred for benefit of person to another fund ito s 37D election
- If lump sum is transferred to any fund to the benefit of the TP of which he/she
is or previously was a member; and
- Unclaimed benefits previously taxed and transferred to a PPF / PrPF; and
- The exempt portion (formula par 2A) transferred to a private fund from a
PSPF (in effect the tax exempt portion before 1 March 1998).
* Deductions only applied if not already utilised under s 10C exemption.
* Above deductions may not create a loss!
* Above deductions may only be deducted if not previously allowed.
