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Tax on severence pay and retirement lump sum

Posted 3 September 2015 under Tax Questions



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Mike says:
2 September 2015 at 15:20

How is tax calculated on severance pay and a lump sum withdrawal from a retirement fund. For instance I took voluntary early retirement and was paid severance pay of R 840000. I also withdrew a lump sum of R700000 from my retirement fund. I was informed they are handled as separate intentions for tax purposes, and do understand that only one will get R500000 tax free benefit.

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TaxTimTaxTim says:
3 September 2015 at 10:34

You will be entitled to the first R500 000 on the one withdrawal as tax free and then the the second amount will be added together with the first amount, the tax calculated and the taxes you have paid will be deducted from that and the balance will be owing to SARS.


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