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Cape Town - People going on pension will in future be able to take R500 000 of their pension money as lump without paying any tax on it. The amount was previously R315 000.
The new published tables show that the amount from R500 001 to R700 000 will be taxed at 18%, the amount from R700 001 to R1 050 000 at R36 000 plus 27% of the taxable amount, and above R1 050 001 at R130 000 plus 36% of the amount above R1 050 000.
The pre-retirement lump sum that can be taken tax-free was raised from R22 500 to R25 000.
The Budget Review states that there is a larger increase in the bottom bracket for the retirement lump-sum table to avoid that lower income workers may be required to pay tax on their lump sum, even though they did not benefit from a deduction due to their taxable income falling below the tax-free threshold.
Monthly medical scheme contribution tax credits will be increased from R242 to R257 per month for the first two beneficiaries and from R162 to R172 per month for each additional beneficiary, with effect from 1 March 2014.
Tax-preferred savings accounts, first mooted in 2012 as a
measure to encourage household savings, will proceed.
These accounts will have
an initial annual contribution limit of R30 000 to be increased regularly
in line with inflation, and a lifetime contribution limit of
R500 000.
The account will allow
investments in bank deposits, collective investment schemes, exchange-traded
funds and retail savings bonds.
Service providers include banks, asset managers, life insurers and brokerages.
