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"retirement annuity fund"

means any fund (other than a pension fund, provident fund or benefit 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: Provided that the Commissioner may approve a fund subject to such limitations or conditions as he may determine, and shall not approve any 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 for the sole purpose of providing life annuities for the members of the fund or annuities for the dependants or nominees of deceased members; and

[Paragraph (a) substituted by section 2(g) of the Income Tax, 1995 (Act No. 21 of 1995)]

(b) that the rules of the fund provide—
(i) for contributions by the members, including contributions made by way of transfer of members' interests in approved pension funds, pension preservation funds, provident funds, provident preservation funds or other retirement annuity funds;
(ii) 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:
(a) 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—
(i) any amount contributed to a provident fund of which that person is a member on 1 March 2019;
(ii) with addition of any other amounts credited to the member’s individual account of the provident fund prior to 1 March 2019; and
(iii) any fund return, as defined in the Pension Funds Act, in relation to the contributions contemplated in subparagraph (i) or amounts credited contemplated in subparagraph (ii); or
(b) in any other case of a person who is a member of a provident fund—
(i) any amount contributed to a provident fund prior to 1 March 2019;
(ii) with addition of any other amounts credited to the member’s individual account of the provident fund prior to 1 March 2019; and
(iii) any fund return, as defined in the Pension Funds Act, in relation to the contributions contemplated in subparagraph (i) or amounts credited contemplated in subparagraph (ii),

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

[Paragraph(b)(ii) amended by section 1(1)(e) of Act No. 2 of 2016 - effective 1 March 2019]

(iii) [Paragraph (b)(iii) deleted by section 2(1)(y) of the Taxation Laws Amendment Act, 2008 (Act No. 3 of 2008)];
(iv) [Paragraph (b)(iv) deleted by section 2(1)(y) of the Taxation Laws Amendment Act, 2008 (Act No. 3 of 2008)];
(v) that no member shall become entitled to the payment of any annuity or lump sum benefit contemplated in paragraph 2(1)(a) of the Second Schedule prior to reaching normal retirement age;

[Paragraph (b)(v) substituted by section 7(1)(zA) of the Taxation Laws Amendment Act, 2009 (Act No. 17 of 2009)]

(vi) [Paragraph (b)(vi) deleted by section 2(1)(zA) of the Taxation Laws Amendment Act, 2008 (Act No. 3 of 2008)];
(vii) [Paragraph (b)(vii) deleted by section 2(1)(zA) of the Taxation Laws Amendment Act, 2008 (Act No. 3 of 2008)];
(viii) [Paragraph (b)(viii) deleted by section 4(a) of Act No. 103 of 1976];
(ix) [Paragraph (b)(ix) deleted by section 4(a) of Act No. 103 of 1976]
(x) that a member who discontinues his or her contributions prior to his or her retirement date shall be entitled to—
(aa) an annuity or a lump sum benefit contemplated in paragraph 2(1)(a) of the Second Schedule payable on that date;
(bb) be reinstated as a full member under conditions prescribed in the rules of the fund;
(cc) the payment of a lump sum benefit contemplated in paragraph 2(1)(b)(ii) of the Second Schedule where that member’s interest in the fund is less than an amount determined by the Minister by notice in the Gazette; or
(dd) the payment of a lump sum benefit contemplated in paragraph 2(1)(b)(ii) of the Second Schedule where that member—
(A) is a person who is or was a resident who emigrated from the Republic and that emigration is recognised by the South African Reserve Bank for purposes of exchange control; or
(B) departed from the Republic at the expiry of a visa obtained for the purposes of—
(AA) working as contemplated in paragraph (i) of the definition of 'visa' in section 1 of the Immigration Act, 2002 (Act No. 13 of 2002); or
(BB) a visit as contemplated in paragraph (b) of the definition of 'visa' in section 1 of the Immigration Act, 2002 (Act No. 13 of 2002), issued in terms of paragraph (b) of the proviso to section 11 of that Act by the Director-General, as defined in section 1 of that Act;

and is not regarded as a resident by the South African Reserve Bank for purposes of exchange control;

[Paragraph (b)(x)(dd) substituted by section 5(1)(i) of the Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016) - effective 1 March 2016]

(xi) that upon the winding up of the fund a member’s withdrawal interest therein must—
(aa) where the member received an annuity from the fund on the date upon which the fund is wound up, be used to purchase an annuity (including a living annuity) from any other fund; or
(bb) in any other case, be paid for the member’s benefit into any other retirement annuity fund;

[Paragraph (b)(xi)(bb) substituted by section 2(1)(zB) of the Taxation Laws Amendment Act, 2008 (Act No. 3 of 2008)]

(xii) that save—
(aa) as is contemplated in subparagraph (ii);
(bb) for the transfer of any member's total interest in any approved retirement annuity fund into another approved retirement annuity fund;

[Paragraph (b)(xii)(bb) substituted by section 5(1)(r) of  the Revenue Laws Amendment Act, 2007 (Act No. 35 of 2007) - effective 13 September 2007]

(cc) for the benefit contemplated in subparagraph (x)(cc); or

[Paragraph (b)(xii)(cc) substituted by section 6(1)(zE) of the Taxation Laws Amendment Act, 2010 (Act No. 7 of 2010) - effective 1 March 2009]

(dd) as is contemplated in Part V of the Policyholder Protection Rules promulgated in terms of section 62 of the Long-term Insurance Act; or

[Paragraph (b)(xii)(dd) substituted by section 4(1)(zZd) of the Taxation Laws Amendment Act, 2013 (Act No. 31 of 2013), GG 37158, dated 12 December 2013]

(ee) for any deduction contemplated in paragraph 2(1)(b) of the Second Schedule.

[Paragraph (b)(xii)(ee) substituted by section 7(1)(zC) of the Taxation Laws Amendment Act, 2009 (Act No. 17 of 2009)]

no member's rights to benefits shall be capable of surrender, commutation or assignment or of being pledged as security for any loan;

(xiii) that the Commissioner shall be notified of all amendments of the rules; and
(c) that the rules of the fund have been complied with.

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