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Paying double tax on pension

Posted 16 February 2017 under Tax Q&A

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Mabel says:
15 February 2017 at 18:54

I get paid a monthly pension from my late husband's employee benefits, on which PAYE is deducted. On the annual tax statement and the details that get sent directly to SARS, it will show the full gross pension for the year, less the PAYE paid. Why then, does the net pension amount (after PAYE) still get included in taxable income for the year? Surely I am then paying PAYE as well as another layer of income tax on the remainder, i. e. On the net income? My tax assessment shows the taxable pension under code 3603, and then subtracts the PAYE under code 4102, which means that the net pension is then taxed again. Is this correct?

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TaxTim TaxTim says:
16 February 2017 at 7:46

If you look at your ITA34 which is your assessment you will see that the total should be included in taxable income (the full amount) and then the PAYE deducted afterwards. you will see on the IRP5 that the 3603 amount is equal to the pre-tax and then is applied to taxable income. Thereafter the PAYE gets taken off again once all the income is added up.


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