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TaxQuestion says: 1 July 2016 at 15:26 If one is not of retirement age and receives a provident fund lump sum payout in the 2015/16 tax year - net amount after tax is deducted - how is this amount treated in a provisional tax return (IRP6) i.e. - Is the amount included in a provisional tax return (IRP6)? The IRP6 provisional tax return only has one block to enter taxable income in. If the provident fund payout is included in the taxable income block (with other taxable income) tax will be calculated on the full amount at the 2015/16 scaling rates (which I understand is incorrect). How does one complete a provisional tax return (IRP6) in such a situation (i.e when one has taxable income (e.g. salary, rental income etc) and a provident fund payment (from which tax was deducted). |
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TaxTim says: 1 July 2016 at 16:43 You would exclude the provident fund lump sum payout in the taxable income block. The tax on the lump sum is calculated using special tax tables which are different to the tax tables for normal taxable income. The financial institution will issue you with a tax directive and will withhold the correct amount of tax from the lump sum. Do read our blog on What is Provisional Tax? How and when? |
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TaxQuestion says: 2 July 2016 at 13:16 Thank-you |
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TaxTim says: 3 July 2016 at 7:54 Only a pleasure! |
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