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What is effective


Taxreform

RETIREMENT TAX REFORM

SUMMARY

Effective date 1 March 2016

The following changes will come into effect on 1 March 2016 (T-day)

Deductibility

  • All member/employee contributions to retirement funds will be tax deductible subject to new revised limits of 27.5% of remuneration or taxable income, capped at R350 000 per annum.

  • Employer contributions to retirement funds will be treated as fringe benefits but employers will be able to give employees a corresponding deduction up to the new revised deductible limits.

  • Employers will be able to claim unlimited deductions on their retirement fund contributions.

Commutation

  • The minimum Rand threshold at which you can take your retirement benefit as a full cash lump at retirement will be increased from R75 000 to R247 500.

  • Members of all retirement funds with retirement benefits below R247 500 will not be required to purchase an annuity at retirement.

Effective date 1 March 2018

Subject to an agreement still to be reached between Government and various stakeholders, the following changes will come into effect on 1 March 2018.

Fund alignment

  • Retirement benefits provident funds will be aligned with pension and retirement annuity funds.

  • Provident fund benefits up to 1 March 2018, plus growth, will be capable of being taken out as a cash lump sum at retirement. These will be regarded as "vested benefits".

  • Contributions and growth after 1 March 2018 will have to be annuitised at retirement i.e. provident fund members will only be allowed to access 1/3 of these 'non-vested' benefits as a lump sum and the remaining 2/3 to buy an annuity.

  • Members of provident funds who are 55 on 1 March 2018 will not be required to annuitise any of their retirement benefits.

Portability

  • Tax-free transfers will now be possible between different types of retirement funds which previously did not allow such transfers.

  • Tax-free transfers from retirement annuities however will only be possible to other retirement annuities.

For further information from National Treasury on these changes please click here


   
 


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Liberty Group Limited (Reg. no 1957/002788/06) is a registered Long Term Insurer and an Authorised Financial Services Provider (FAIS no 2409).

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