Taxation Death

The first R550 000 payable at death from a pension, provident or retirement annuity fund is tax free. 

The balance is taxed according to the following fixed scale:

R0 – R550 000 0%
R550 001 – R770 000 18% of the amount exceeding R550 000
R770 001- R1 155 000 R39 600 plus 27% of the amount exceeding R770 000
R1 155 001 and above R143 550 plus 36% of the amount exceeding R1 155 000

This applies to the aggregate of all retirement fund lump sums received over the member’s lifetime. This means that the member’s dependents cannot get R550 000 tax free from a Retirement Annuity and R550 000 from the UCTRF. Both benefits will be added together and the first R550 000 will then be tax free.  The balance will be taxed according to the above scale.

Any withdrawal or retrenchment benefit previously received tax-free (including any tax-free amount received from your Employer as a severance package), as well as tax-free portions for amounts paid out after 1 March 2009 in respect of divorces or maintenance orders, will be added to the lump sum prior to applying the table.

Note explaining that tax is only due on the Death Benefit, while a separate tax-free Death Benefit is paid under a separate Death and Disability Policy
Note that any transfer value from the AIPF and any previously taxed contributions to the are tax-free

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