Taxation on Retrenchment
A lump sum benefit payable on retrenchment from your Savings Pot is taxed at your marginal tax rate.
A lump sum benefit payable on retrenchment from your Vested Pot 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 |
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 reduce the tax-free portion available.
To calculate how much of your cash benefit will be tax free, use the UCTRF Lump Sum Payment Tax Calculator at https://uctrf.co.za/uctrf/exit-tax-calculator
Please Note:
- Any transfer value from the AIPF will be tax free.
- Any contributions to your Vested Pot that were previously taxed will be tax free.
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