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Income Tax Act, 1962 (Act No. 58 of 1962)


Regulations 2016

Regulations in terms of paragraph 12D(5)(a) of Seventh Schedule to the Income Tax Act, 1962, on Determination of Fund Member Category Factor

6. Determination of risk benefit component factor


(1) The risk benefit component factor must be determined in respect of all death benefits provided by the fund for the benefit of a member of the fund or a dependant or nominee of that member, other than any risk benefit—
(a) provided by the fund solely by means of a policy of insurance and the fund pays the premiums in respect of that policy of insurance; or
(b) that constitutes a return of the member's interest in any defined contribution components of the fund payable upon the death of that member.


(2) The risk benefit component factor must be determined in accordance with the formula—



in which formula—

'X' represents the risk benefit component factor to be determined;
'A' represents the number 0.005; and
'B' represents the average of a proportion of retirement funding income of all members of a fund member category in respect of each member of that fund member category in respect of risk benefits to which the member or his or her dependants or nominees would have become entitled if the member had died during the year of assessment in respect of which the certificate is issued (including the valuator's estimate of the average capital value of any spouse's pensions or dependant's annuities paid to that spouse or those dependants by virtue of that member's membership of that fund).


(2) If a fund member is entitled to receive more than one risk benefit component in respect of a fund member category—
(a) the fund must calculate a risk benefit component factor in respect of each risk benefit; and
(b) the risk benefit component factor for the purposes of this regulation is the sum of the factors calculated in terms of paragraph (a) less any risk benefit component factors used to calculate an underpin component factor in terms of regulation 5.