Question:
I have several RAs which I accumulated whilst I worked in South Africa during the ’80s. I have lived in the UK since then after formally emigrating from RSA back to the UK. I have just cashed in a policy of R60 000 and have been taxed on this, less an allowance of R22 500. I am 62. Shouldn’t I be taxed on the basis of a cumulative R300 000 allowance even though I am a non-resident?
Answer:
Rob
The R300 000 tax-free portion (now R315 000) relates to cash lumps on retirement from a pension, provident or retirement annuity fund. As you are no longer a South African resident, cashing in your fund is deemed as a "withdrawal" rather than "retirement". On withdrawal, only the first R22 500 is paid out tax free, the balance is taxed. In return, you are allowed to take this money out of the country, and you are not forced to buy an annuity. Given the amounts involved, you would not be required to buy an annuity in any event, so unfortunately, in your case, the rules have "conspired" against you.
