Question:
Good day I want to know what is the percentage tax payable on money when you resign from Government after 20 years. Is the first R500 000 tax free and thereafter the next R500 000 and then R 500 000. Please advise. Thanks
Answer:
Jannie, Apologies for the late reply. There is a formula: your benefit relating to pre 31 March 1998 is not taxed, the benefit relating to post 31 March 1998 service is taxed per the withdrawal lump sum tax table. The benefit is split on a straight-line basis (pre and post 31 March 1998 service). The withdrawal lump sum tax table is as follows: the first R25,000 is not taxed, the balance to R660,000 is taxed at 18%, the balance to R990,000 at 27% and the remainder at 36%. This table is applied to the aggregate of your retirement fund withdrawals. The R500,000 tax-free amount relates to retirement, not resignation.
