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Tax on retrenchment and pension

Posted 24 February 2016 under Tax Questions



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Blamey says:
24 February 2016 at 8:14

I have worked for a company for 10 years. I have never been retrenched before and my company pension fund is worth around R780K. I have been retrenched due to my division being closed. I have been offered a retrenchment package of R180K cash. How will this R180K be taxed and how will my pension be taxed if I withdraw it or if I move it?

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TaxTimTaxTim says:
24 February 2016 at 10:19

Your pension will be taxed according to the Lump sum calculator for which your retrenchment package must be added too to work out the PAYE.


Blamey says:
24 February 2016 at 10:53

My calculation comes out at a tax payment of R 98 100

And then I received the pension and the retrenchment in cash. Is this correct?


TaxTimTaxTim says:
24 February 2016 at 13:06

We get an amount of R102 600 - however this should be the amount that you will pay over to SARS roughly. The company may take some other factors into account.

If you move the pension amount to a preservation fund then there will be no tax.


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