Question:
My uncle just passed on recently(11th month of 2014).But now the problem is with the processing of his provident fund because sars is denying claim due tax directive and people at the place of his work seems to have no clue as what to do next.You,re guidance will be highly appreciated sir,please help.
Answer:
Joseph, The provident fund claim - known as the death benefit in this instance - is paid out as directed by the fund trustees. The chosen beneficiaries can elect to receive a cash lump sum or have the money transferred into annuity that pays a regular income. Any cash lump sum paid out is taxed as though it had been received by the deceased on the day before he passed. To determine the tax to be deducted, the fund administrator must obtain a tax directive from SARS. If the deceased's tax affairs are not in order, or up to date, then SARS will refuse to issue this directive. In that case, you should contact SARS, find out what the problem is (eg outstanding tax returns), and do your best to rectify them. Then SARS can issue the directive, and the fund administrator can make the payout.
