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)
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