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"provident fund"

means—

(a) any fund (other than a pension fund, pension preservation fund, provident preservation fund, benefit fund or retirement annuity fund) which is approved by the Commissioner in respect of the year of assessment in question and, in the case of any such fund established on or after 1 July 1986, is registered under the provisions of the Pension Funds Act ;
(b) any provident fund established for the benefit of the employees of any municipality or of any local authority (as defined in the definition of "local authority" in this section prior to the coming into operation of section 3(1)(h) of the Revenue Laws Amendment Act, 2006 (Act No. 20 of 2006), that was established prior to the date that section so came into operation); or
(c) any fund contemplated in subparagraph (b), which includes as members employees of any municipal entity created in accordance with the provisions of the Municipal Systems Act, 2000 (Act No. 32 of 2000), over which one or more municipalities or local authorities (as defined in section 1 prior to the coming into operation of section 3(1)(h) of the Revenue Laws Amendment Act, 2006, and that was established prior to the date that section so came into operation) exercise ownership control as contemplated by that Act, where such fund was established—
(aa) on or before 14 November 2000, and such employees were employees of a local authority (as defined in section 1 prior to the coming into operation of section 3(1)(h) of the Revenue Laws Amendment Act, 2006, and that was established prior to the date that section so came into operation) immediately prior to becoming employees of such municipal entity; or
(bb) after 14 November 2000, and such fund has been approved by the Commissioner subject to such limitations, conditions and requirements as contemplated in paragraph (c) of the definition of "pension fund";

Provided that the Commissioner may approve a fund subject to such limitations or conditions as he may determine, and shall not approve a fund in respect of any year of assessment unless he is in respect of that year of assessment satisfied—

(a) that the fund is a permanent fund bona fide established solely for the purpose of providing benefits for employees on retirement date or solely for the purpose of providing benefits for the dependants or nominees of deceased employees or deceased former employees or solely for a combination of such purposes or mainly for the said purpose and also for the purpose of providing any benefit contemplated in paragraph 2C of the Second Schedule or section 15A or 15E of the Pension Funds Act; and

[Paragraph (a) substituted by section 2(1)(h) of the Taxation Laws Amendment Act, 2017 (Act No. 25 of 2017) - effective 1 March 2018]

(b)        that the rules of the fund—

(i) contain provisions similar in all respects to those required to be contained in the rules of a pension fund in terms of subparagraphs (aa), (bb), (cc), (ee) and (ff) of paragraph (ii) of the proviso to paragraph (c) in the definition of "pension fund";
(ii) may provide for an employee who elects to transfer the withdrawal interest to a pension fund established by the same employer or a pension fund in which that employer participates; and
(iii) may provide for the employee to elect to transfer the retirement interest to a pension preservation fund, provident preservation fund or retirement annuity fund; and

[Paragraph (b)(i)(ii)(iii) of the proviso substituted by section 2(1)(e) of the Taxation Laws Amendment Act, 2019 (Act No. 34 of 2019), GG 42951, dated 15 January 2020]

(iv) that not more than one-third of the total value of the retirement interest may be commuted for a single payment, and that the remainder must be paid in the form of an annuity (including a living annuity) except where two-thirds of the total value does not exceed R165 000 or where the employee is deceased: Provided that in determining the value of the retirement interest an amount calculated as follows must not be taken into account—
(aa) in the case of a person who is a member of a provident fund and who is 55 years of age or older on 1 March 2019—
(A) any amount contributed to a provident fund of which that person is a member on 1 March 2019;
(B) with addition of any other amounts credited to the member’s individual account of the provident fund prior to 1 March 2019; and
(C) any fund return, as defined in the Pension Funds Act, in relation to the contributions contemplated in subitem (A) or amounts credited contemplated in subitem (B); or
(bb) in any other case of a person who is a member of a provident fund—
(A) any amount contributed to a provident fund prior to 1 March 2019;
(B) with addition of any other amounts credited to the member’s individual account of the provident fund prior to 1 March 2019; and
(C) any fund return, as defined in the Pension Funds Act, in relation to the contributions contemplated in subitem (A) or amounts credited contemplated in subitem (B),

reduced by any amounts permitted in terms of any law to be deducted from the member's individual account of the provident fund;

(v) that a partner is regarded as an employee of the partnership;

[Paragraph (b) substituted by section 1(1)(c) of Act No. 2 of 2016 - effective 1 March 2019]

(c) that the rules of the fund have been complied with;

[Paragraph (c) substituted by section 3(1)(v) of the Taxation Laws Amendment Act, 2015 (Act No. 25 of 2015)]

Provided further that a fund contemplated in paragraph (i) of the further proviso to the definition of "provident preservation fund" which is deemed to be approved or which is approved in terms of that definition or which fails to submit its rules as required by that paragraph is deemed with effect from the earlier of the date of the deemed approval or 30 September 2010 to be a fund which is not approved in terms of this definition.

[Definition substituted by section 4(1)(zM) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013]