How is the provident fund of a deceased member taxed?


Question:

My fiance, who is also the father of my kids, passed away in 2010. I've been struggling to get his provident fund paid out and now they want his tax number. All I want to know is: how is the provident fund of a deceased member taxed?

Answer:

Wendy,

Assuming that the benefit will be paid out as a cash lump sum, it will be taxed as though this money had been received by your late fiance the day before he passed. Assuming he had not previously withdrawn from another retirement fund, this means that the first R315 000 would not be taxed, the second R315 000 at 18% and the third at R315 000 at 27%. Any amounts above R945 000 would be taxed at 36%.

The information and answers supplied in this section do not constitute advice as defined by the Financial Advisory and Intermediary Services Act, 37 of 2002.


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