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Retirement lump sum tax
Lump sums from pension, provident and retirement annuity funds have their own tax tables, separate from income tax. Every lump sum since October 2007 counts towards the table, so earlier ones push later ones into higher bands.
Tax on the lump sumR9,000You'd get about R591,000
- Lump sumR600,000
- TaxR9,000
- Average rate on this lump sum1.5%
How it works, with your numbers
- Add all lump sums: R600,000 + R0 earlier = R600,000. Tax on that from the table: R9,000.
- Tax on the earlier lump sums alone, at today's table: R0.
- The difference is the tax on this lump sum: R9,000.
Retirement table
- R0 to R550,000: 0%
- R550,001 to R770,000: 18% of the amount over R550,000
- R770,001 to R1,155,000: R39,600 + 27% of the amount over R770,000
- R1,155,001 and more: R143,550 + 36% of the amount over R1,155,000
Good to know
- Withdrawing before retirement uses the much harsher withdrawal table and loses the growth. Preserving the money in a preservation fund avoids the tax for now.
- A financial adviser can help you weigh up a living annuity against cash.
For illustration only. This is a guideline to help you plan, not tax advice: a registered tax practitioner must review and approve the final figures before you file.