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Tax on lump Sum pension Withdrawal

Posted 14 May 2013

I worked at a company and my portion of pension contribution was taxed as it was part of my basic salary(taxable income). I resigned from my company and received a lump sum payout where there entire R264k was taxed at 18%(excluding the first R22500). Will I get this tax back when I submit my tax return this year as I feel I have paid tax twice once on my contribution and again on my lump sum payout.

TaxTim Marc TaxTim Marc said:
14 May 2013 at 12:43

The amount withheld on the payout is a tax on lump sums and subject to specific SARS tables, unfortunately this does not get included as part of any refund as it is a once off payment of tax.

The pension fund contribution you made monthly would actually have caused a tax deduction as you are allowed to claim a pension fund contributions as part of the allowable deductions.

So unfortunately the answer isn't good as the tax paid will not be refunded.

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