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Tax on Lump Sum payment - Provident Fund



Greg says:
9 February 2022 at 12:12

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.

TaxTim TaxTim says:
10 February 2022 at 8:42

Unfortunately not - the tax withheld on a lumpsum is not recoverable. The provident fund would have applied to SARS for a tax directive at the time the lumpsum was paid. SARS would have applied the special tax rates applicable to the withdrawal and then would have issued a tax directive which would show the tax to paid to SARS. Therefore, SARS withholds exactly the correct amount at the time it is paid out and therefore nothing can be claimed back from it.

If she has no other income, she can't claim back any tax related to the additional medical expenses. You can only claim back tax if you have paid tax on income.

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