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Retirement Posts in Tax Q&A


Overseas income



I have been working overseas and will be doing so for the whole of 2022 tax year making me provisional:
a. What average exchange rate will I use?
b. When is the first Provisional tax return due and, if necessary payable?
c. Can I deduct my overseas pension and medical from my gross income or is this only if I have a pension/RA and medical in South Africa?
d. I know that R1. 25 mil is exempt so how would I work out the tax on that as I know that I cannot claim all overseas tax...

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Will I get a tax refund if I accept the SARS auto-assessment?



My auto-assessment shows that I am due a tax refund. Can this be correct? Do you think I will receive the refund if I accept it, or should I rather reject it and file a tax return?

Why am I getting auto-assessed? Where is my tax return?



I received an auto-assessment from SARS but I am confused what this means. Why have I been selected by SARS and how did SARS get my data? Can I still submit a tax return if I want to?

Retrenchment tax



I have been retrenched because of the company cutting back on staff. My severance package is R107000 including R14000 leave pay. I am 57 years old female. I have been paid out R87000, is that correct?
I thought I did not have to pay tax if my lump sum was under R500 000? Please could you assist me with this as I am very much confused?

Severance pay and tax exemption



My severance pay was taxed normal tax after I got retrenched even though my employer informed me that they applied for a tax exemption. Is this correct because I am confused about this? It was the first time an exemption was requested on my behalf and it was the first-time I got retrenched too. The amount of my severance pay was R370 000 and it was taxed normally. What recourse do you perhaps have for me regarding this matter please?


Divorce payout of approximately R850,000.00. How much would SARS tax?



My husband needs to pay me R850 000 maintenance as part of our divorce settlement, seeing as he does not have the funds all at once so he will be paying it to me in as a lump sum of R600 000 and the rest will be monthly payments for 3 years. What will the tax be on it?

TaxTim says:

There should be no tax due on the R600 000 if it's maintenance paid from your husband to you, you are however required to declare this income to SARS under the n...

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What is the difference between Pensionable and non-pensionable salary?



Q: Please explain the tax calculation between pensionable and non-pensionable salary

Medical Aid and Pension contributions on IRP5



I struggle to understand how the (The total deduction - code 4497 on IRP5) is calculated. I have a medical aid fund, pension fund and retirement annuity. My employer (the church) is contributing to all three of these funds. This question is for the 2021/2022 tax year with the new T-day implications. In the income section, the following IRP5 codes are used. (This I understand)
3810 - Medical aid benefit
3817 - Pension fund fringe benefit
3828 - RA fringe benefit

In the deductions/contribution section. These are the only items Payroll shows. ...

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What happens once I've submitted my tax return form?



One of the questions most asked when it comes to tax season, is “what happens now that I’ve submitted my income tax return, when do I get my refund?”’

If you’re due a tax refund then you will probably get the money deposited into your account within a few days. SARS will also email or SMS you telling you that an IT34 (Summary of your return and refund) and ITSA (Income Tax Statement of Account) have been issued. They will detail your tax refund (tax back) if any. So look forward to that deposit into your account. ...

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Retirement lump sum calculator



The TaxTim lump sum tax calculator provides for BEFORE and AFTER retirement, retrenchment or death - with a marked difference between the BEFORE and AFTER options. I would just like to make sure that this is correct, as I am being told by my fund that withdrawing retirement funds (post retrenchment - but before retirement age) does not have the same rate. I have been forced to withdraw from my pension fund because of retrenchment due to "redundancy because of a general reduction in personnel" (a cost to company reduction)...

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How to calculate provident fund deductions for 2016/2017?



Please can you show an example of how the employer and employee's provident fund will affect the monthly tax 2021/2022. I still do salaries manually.

What does code 3801 and 3810 on irp5 stand for? If fringe benefits why wont they appear on payslip?



I am currently completing my 2 daughters, my son in law, my husband and my tax returns for the 2015 tax year and I am unsure of code 3801 and 3810 on my daughter's tax return. What could these fringe benefits be? I don't see it on her payslips? Her salary structure is that her salary as a cash amount and travel allowance on her payslip as well her medical aid, disability, provident, Income protection insurance and ancillary fee but her IRP5 does not show the above on her IRP5?
Confused! Doe...

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How do independent contractors get taxed?



I will be taking a new job that requires me to be a contractor. There are mixed opinions on how contractors get taxed. The consulting company assures me this is a flat rate of 25%, but on reading SAICA's website I found this little nugget: " If the independent contractor works more than 22 hours a week, he/she must be taxed in terms of the income tax tables".
I will definitely be working more than 22 hours a week, can you tell me things will work, please?

The question of tax relates to how you are perceived to be working for the "employer" to whom you will be contracting out to...

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Where to find proof of income tax reference number?



I need documented proof of income tax reference number - not IRP 5 or salary slip. Where do I get this? I need this for retirement papers.

Tax on Forex Trading



Q: How do I go about paying tax on forex income?

I will soon be receiving additional income of about R30000.00pm from a forex investor who is trading on my behalf, I am not trading. My current income is around R36000.00 to R41000.00 gross per month.
How do I go about paying tax on the forex income? Do I have any exemptions on this?

Also can you please give me advice in terms of paying less tax? I presume the bes...

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Tax on Lump Sum payment - Provident Fund



Hi,

A friend received a lump sum payment from her provident fund to pay for a family members medical bills. Is she able to claim back some of the tax paid over to SARS for the additional medical expenses? She had previously received a lump sum payment on retrenchment, so this is the second lump sum recieved from the fund. She has no other income.

Should source code 3699 reflect on your cost to company?



Does source code 3699 include all employment income, so it should it reflect your cost to company?

Freezing emigrants Retirement Annuities, how do I declare non-tax resident status?



Hi TaxTim, please can I ask about emigration and Retirement Annuities (RA)?

The new South African tax regulation, effective March 1, regarding emigrants' RAs being frozen for 3 years after financially emigrating:

1. I was told the start of the 3 years is not from date of financially emigrating, but rather the declaration date of non-tax resident status, is this correct?
2. If so, how does one declare oneself a non-tax resident?
3. I may have already declared mysel...

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What does SARS mean by auto-assessment?



I saw something in a news article about SARS issuing auto-assessments this year from 1 August. I tried to research but couldn't find much and this is all very new to me. Please can you explain what this is? Are there any new changes which I need to be aware moving forward? I have been filing my own tax return for the past years, but I hear that I might not need to do so this year.

SARS sent me an SMS about auto-assessment? Is this legit?



I received an SMS from SARS which mentioned something about an auto-assessment. I have not heard of this before. I don't trust anyone these days, and because of that I just want to ensure that this is legit - do you think this is a scam?

Tax deductions exceeds the tax paid



What happens if my Allowable Tax Deductions exceeds the tax paid in the same year. Logically I should only be able to claim back the actual tax paid? It will be Additional allowable Medical claims which will not be covered by the medical aid. These amounts plus smaller deductions will push the claims to over and above the tax payable amount.

Contract worker and Tax



I was retrenched at the end of 2017. My last Tax Return was done in the year 2018. Since April 2019 I have been receiving income for work done on a contract basis and the company indicated that I need to see to my own tax affairs. How do I go about filing my tax return for 2020? Your assistance is highly appreciated.

IRP5s and companies paying RA for employees



If a company is paying into a Retirement Annuity (RA) for employees when preparing an IRP5, using source code 3828 as income, would we then need to use source code 4006 for the same amount? In other words, source code 3828 for the amount paid by company on behalf of employee (this amount will be added to the income total) and code 4475 for the same amount. If an employee has not contributed anything code 4006 will be 0, but will still have to appear on the IRP5?

Provisional Tax and Annuity Income



At the start of the 2021 tax year I will be earning a monthly income from my living annuity [LA], however as I understand from the provider of the LA, that tax will be deducted by them before I receive the monthly amount. I am registered as a provisional taxpayer and will be earning additional income on top of the LA income. So, I therefore assume that I can continue being a provisional taxpayer and declare the additional income only in the IRP6, or would I have to declare both incomes and then ...

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Foreign income with online forex trading



How one would declare Income/Loss that is derived from online forex trading. The trading account is in USD so I assume foreign income.

1. Where would one declare this income/loss with TaxTim/eFiling tax return under foreign income?
2. Is it necessary to declare if only a loss was made?
3. Can withdrawal fees/currency exchange and bank fees be deducted from overall profit.
4. What documentation would SARS require? The only documentation that can be acquired from the trading platform is trading history showing profit/loss but no tax certificates. ...

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