Preservation Fund

What is a tax directive?


Hi, if I am awaiting a pay out and the company that is to pay me out sends me a SMS stating that pay out is approved and that a tax directive is required, what does this mean and how much is to be paid towards this tax directive? Thanking you in advance Nicola


Cash lump sums paid out by retirement funds are subject to either withdrawal or retirement lump sum tax (depending on whether you are simply withdrawing, or you are retiring). When a lump sum (any amount) is to be paid, the administrator must request a tax directive from SARS - previous lump sum payments have to be taken into account in applying the lump sum tax tables and SARS keeps a record of this. If you are withdrawing from a retirement fund for the first time, the first R22 500 of your cash lump sum is not taxed, further amounts (up to R600 000) are taxed at 18%.

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