Page 5 - P6 Slide Taxation - Lecture Day 7 - Various Topics
P. 5
• Retirement benefits can be divided into 2 categories:
- Annuity payments (e.g. monthly pension or annuities from Employer)
- Lump sums (once-off payments)
• Lump sums could be paid from various funds:
- Pension Fund (PF)
- Pension Preservation Fund (PPF)
- Provident Fund (PrF)
- Provident Preservation Fund (PrPF)
- RetirementAnnuity Fund (RAF)
- Employer (either as severance benefit or non-severance benefit)
• Must a TP that receives an “annuity” or a “lump sum” be taxed?
→ Gross income = any amount received or accrued
EXCLUDING amounts of a capital nature?
Resident or non-resident?
→ Special inclusion paragraphs:
Par (a) = Annuities must be included in gross income.
Par (d), (f), (e) and (eA) = lump sums form part of gross income.
→ Source rules: s 9(2)(i)
= Pension or annuity x (RSA years of service / total years of service)