1 MARCH 2016: TAX AND BENEFIT CHANGES
What Are The Changes?
CONTRIBUTIONS
RA/PENSION/
PROVIDENT
TAX BASE FOR
CONTRIBUTIONS
PROVIDENT RETIREMENT
BENEFIT
29 FEBRUARY 2016 = LAST UNCAPPED TAX DEDUCTION
NO FORCED PRESERVATION
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Tax and Benefit Changes 1 March 2016
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Before 1 March 2016
Tax and Benefit Changes 1 March 2016
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Retirement Funding Income
RETIREMENT FUNDING
INCOME
NON-RETIREMENT FUNDING
INCOME
WHAT EMPLOYER USES TO
CALCULATE CONTRIBUTIONS
TAXABLE INCOME OTHER
THAN RETIREMENT FUNDING
INCOME
APPLICABLE TO:
PENSION & PROVIDENT
FUNDS
APPLICABLE TO:
RETIREMENT ANNUITIES
Tax and Benefit Changes 1 March 2016
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Tax Credit vs Tax Deduction
DEDUCTION
REDUCES TAX BASE
Tax and Benefit Changes 1 March 2016
CREDIT
REDUCES TAX PAID
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Before 29 February 2016
PROVIDENT FUND
PENSION FUND
NONE
7.5% RFI
RETIREMENT
ANNUITY FUND
15%
TAX DEDUCTION?
NONE RFI
RETIREMENT LUMP
SUM RESTRICTIONS?
NONE
MAX 1/3
MAX 1/3
DE MINIMUS R75 000
Tax and Benefit Changes 1 March 2016
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After 1 March 2016
Tax and Benefit Changes 1 March 2016
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Not Limited to Retirement Funding Income
RFI LIMIT SCRAPPED FROM 1 MARCH 2016
FROM 1 MARCH 2016 TAX DEDUCTION BASED ON
GROSS REMUNERATION:
ALL INCOME FROM EMPLOYMENT OTHER THAN
LUMP SUMS FROM RETIREMENT FUNDS OR
SEVERANCE PACKAGE
Tax and Benefit Changes 1 March 2016
TAXABLE INCOME:
EXCLUDES LUMP SUMS FROM RETIREMENT FUNDS
OR SEVERANCE PACKAGE AND CAPITAL GAINS
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Provident Fund Vested Rights
1 MARCH 2016 VALUE OF BENEFIT PLUS GROWTH ALWAYS A PROVIDENT BENEFIT
YOUNGER THAN 55
OLDER THAN 55
1.
FROM 1 MARCH 2016 ALL CONTRIBUTIONS
SUBJECT TO MAX 1/3 CASH MINIMUM 2/3
ANNUITY AT RETIREMENT
Tax and Benefit Changes 1 March 2016
2.
SAME FUND UNTIL RETIREMENT
WHOLE BENEFIT CAN BE TAKEN IN
CASH.
CHANGE FUNDS ALL NEW
CONTRIBUTIONS SUBJECT TO MAX 1/3
CASH MINIMUM 2/3 ANNUITY AT
RETIREMENT
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After 1 March 2016
PROVIDENT/PENSION/RETIREMENT ANNUITY FUND
TAX DEDUCTION?
RETIREMENT?
• DEDUCTION OF UP TO 27,5% OF GROSS REMUNERATION OR TAXABLE
INCOME (WHICHEVER IS THE HIGHER).
• ANNUAL LIMIT OF R350,000.
• EMPLOYER CONTRIBUTIONS INCLUDED IN TAXABLE INCOME.
• FRINGE BENEFIT TAX OFFSET AGAINST THE TAX DEDUCTIBILITY OF TOTAL
CONTRIBUTION.
• MAX 1/3 CASH (EXCLUDES VESTED PROVIDENT FUND BENEFITS)
• MINIMUM 2/3 ANNUITY (EXCLUDES VESTED PROVIDENT FUND BENEFITS)
DE MINIMUS R247 500
Tax and Benefit Changes 1 March 2016
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Examples: Income Tax
MS X HAS TAXABLE INCOME OF R100 000 PER YEAR
EMPLOYER CONTRIBUTION OF 10%
(RETIREMENT FUNDING INCOME)
BEFORE 1 MARCH 2016
AFTER 1 MARCH 2016
PROVIDENT FUND CONTRIBUTION
R10 000 PAID BY EMPLOYER
PROVIDENT FUND CONTRIBUTION
R30 000 PAID BY EMPLOYER SO NEW
TAXABLE INCOME R110 000
TAX DEDUCTION FOR PROVIDENT FUND
CONTRIBUTIONS = NIL
(PAYS TAX ON R100 000)
TAX DEDUCTION UP TO R27 500 (27,5%)
(PAYS TAX ON 100 000)
TAX CREDIT ROLL OVER FOR NONE DEDUCTIBLE CONTRIBUTIONS
Examples: Retirement
RETIREMENT BENEFIT IS R3 000 000
BENEFIT VESTED FROM 1 MARCH 2016 = R2 000 000
BENEFIT ACCUMULATED FROM 1 MARCH 2016 = R1 000 000
YOUNGER THAN 55 1 MARCH 2016
MAXIMUM CASH (VESTED PLUS 1/3):
R2 000 000 PLUS R333 333,33 LESS TAX
PENSION (2/3 BENEFIT AFTER 1 MARCH 2016:
R666 666,66
Tax and Benefit Changes 1 March 2016
OLDER THAN 55 1 MARCH 2016
SAME FUND UNTIL RETIREMENT
MAXIMUM CASH:
R3 000 000 LESS TAX
CHANGE FUNDS
VESTED BENEFIT ALL CASH
NEW FUND BENEFIT 1/3 AND 2/3 RULE
Thank You!
Principal Officer
Wayne Van Rensburg
po@workersrf.com
+27 11 880 4710
+27 82 657 0983
For more information visit www.workersretirementfund.com
For investment values visit www.afonline.co.za
For 1 March 2016 changes visit www.dday4ra.com
Registered in terms of the Pension Funds Act. Registration No.: 12/8/38124
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