Question:
I receive military pension and special pension whilst I'm still working. Every year SARS charges me areas in tax whilst this money is non-taxable. What percentage can I pay SARS to avoid these areas?
Answer:
Kenneth, SARS taxes you on your entire income. Normally, you would only receive a military/special pension on a needs basis, or if you suffered a serious injury or disability. These pensions would not be taxed as they fall below the minimum amount where SARS charges tax (the minimum amount is called the tax threshold). However, if you do receive other (taxed) income, this may push your pension income above the tax threshold, so you would have to start paying tax on your pension. Your SARS assessment should tell you how much you owe them. You need to refer the personal income tax tables to find out at what (marginal) rate your pension income is taxed. To do so, you would have to work out how much tax you owe on all your income (remember to subtract the primary rebate), then deduct the tax you already pay on your work income. If you divide the number that is left by your pension income, you will know at what percentage your pension income is taxed.
