I have a Provident fund with my Employer. They contribute 5% (which is tax deductible) and I contribute 5% (which is not tax deductible).My question is: when I resign and withdraw the funds, is the employee portion paid out tax free (as I already paid tax on it every month)? Or does it add to the withdrawal benefit scale (i.e. first R22,500 free, then 18%, etc.)
Contributions to provident funds are not tax deductible, but there are going to be changes to allow all amounts which do not give rise to a tax deduction to be allowed as set off against a fund payout before calculating tax.
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