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Tax free lump sum portion

Posted 10 June 2016 under Tax Questions



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Catherine says:
10 June 2016 at 15:35

I am 53. Recently divorced. While married we contributed to a provident fund which was handed over to Investec for management after my first husband stopped working. But he did not implement retirement He took a sum of 570 000 from his provident and paid 18 percent tax on that. Now that he has implemented retirement we both wanted to claim the 500 000 lump sum tax free that we were promised by our financial advisors. I cannot get my bit because I am under age and he cannot get his 500 000 tax free because of the previous withdrawal. Is that correct? Because he already took a taxable lump sum, he cannot have access to a tax free lump sum?

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TaxTimTaxTim says:
10 June 2016 at 17:04

That is correct, what will happen is all his withdraws will be added together and then the tax calculated on that minus any taxes paid before and then that tax will be what is owing. In effect he does get the R500 000, but the first withdrawal is taken into account and therefore this limits the effects.


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