SARS Interpretation Note 113: Apportionment of surplus and minimum benefit requirements: Pension Funds Second Amendment Act (source: https://www.sars.gov.za/lapd-intr-in-2020-01-in-113-apportionment-of-surplus-and-minimum-benefit-requirements-pension-funds-second-amendment-act/)
INTERPRETATION NOTE 113
DATE: 3 March 2020
ACT : INCOME TAX ACT 58 OF 1962
SECTION : SECTION 1(1) – DEFINITIONS OF “PENSION” AND “PROVIDENT
FUNDS” AND PARAGRAPH 2C OF THE SECOND SCHEDULE
SUBJECT : APPORTIONMENT OF SURPLUS AND MINIMUM BENEFIT
REQUIREMENTS – PENSION FUNDS SECOND AMENDMENT ACT
Preamble
In this Note unless the context indicates otherwise –
• “active member” means a member whose membership in that fund has not
terminated;
• “actuarial surplus” means the amount determined under the definition of
“actuarial surplus” in the Pension Funds Act;
• “FSCA” means the “Financial Sector Conduct Authority” as defined in
section 1 of the Financial Sector Regulation Act 9 of 2017;
• “fund” means a “pension fund” and “provident fund” as defined in section 1(1)
of the Income Tax Act;
• “Income Tax Act” means the Income Tax Act 58 of 1962;
• “paragraph” means a paragraph of the Second Schedule to the Income Tax
Act;
• “Pension Funds Act” means the Pension Funds Act 24 of 1956;
• “Second Schedule” means the Second Schedule to the Income Tax Act;
• “section” means a section of the Income Tax Act;
• “surplus apportionment scheme” means the surplus apportionment scheme
approved in terms of section 15B of the Pension Funds Act by the Registrar of
Pension Funds; 1
• “taxable income” refers to taxable income from lump sum benefits; and
• any other word or expression bears the meaning ascribed to it in the Income
Tax Act.
All forms and tables referred to in this Note are available on the SARS website at
should be consulted.
1 The FSCA was established with effect from 1 April 2018. All duties and functions previously
performed by the Registrar of Pension Funds are, with effect from 1 April 2018, performed by the
Commissioner of the FSCA.
1. Purpose
This Note provides clarity on the tax treatment of the actuarial surplus allocations or
distributions made to members, former members, existing pensioners and employers
by funds under the provisions of sections 15B, 15C, 15D or 15E of the Pension Funds
Act.
General Note 29 and Addendum A thereto are hereby withdrawn.
2. Background
The definition of “actuarial surplus” and sections 15A to 15K were inserted into
section 1 of the Pension Funds Act with effect from 7 December 2001. 2 These changes
enabled a fund to apportion any actuarial surplus between the employers, members,
former members and existing pensioners of that fund.
The first surpluses were determined at the effective date of the first statutory actuarial
valuation of the fund following 7 December 2001. The first surplus determined is
normally referred to as the past surplus.
Section 15B of the Pension Funds Act governs the distribution of the past surplus
determined at the surplus apportionment date. 3 The board of trustees of the fund had
to determine how the past surplus should be distributed and allocated among the
employer, former members, current members and pensioners of a fund. The surplus
apportionment scheme had to be approved by the Registrar of Pension Funds before
any distribution or allocation could be implemented. There is a difference in the tax
treatment of the past surplus distributed and allocated in terms of surplus
apportionment schemes approved before 1 January 2006, and schemes approved on
or after 1 January 2006.
Paragraph 2C was inserted with effect from 1 January 2006 4 and provides that surplus
distributions that accrue to a taxpayer on or after 1 January 2006, as a result of a
surplus apportionment scheme approved on or after that date by the Registrar of
Pension Funds, must not be included in the taxpayer’s “gross income” 5.
Any subsequent actuarial surplus arising in a fund following the approval of the surplus
apportionment scheme by the Registrar of Pension Funds is referred to as ‘future
surplus’ and is apportioned under section 15C of the Pension Funds Act.
This Note explains the tax treatment of distributions in terms of past surplus for the two
different periods, before 1 January 2006 and on or after 1 January 2006, as well as the
tax treatment of the future surplus distributions.
3. The law
The relevant sections of the Pension Funds Act and the Income Tax Act are quoted in
the Annexure, and are discussed in more detail below.
2 Pension Funds Second Amendment Act 39 of 2001.
3 As defined in section 1 of the Pension Funds Act.
4 Taxation Laws Amendment Act 8 of 2007.
5 As defined in section 1(1).
4. Application of the law
4.1 Tax treatment of actuarial surplus apportionment schemes approved before
1 January 2006 (section 15B surplus – past surplus)
4.1.1 Allocations to active members
Allocations to active members of the fund could only be used to enhance their fund
credits. These amounts form part of the member’s lump sum benefit or annuity payable
on exit from the fund as a result of retirement, withdrawal or death.
4.1.2 Distributions to former members who terminated their membership before
retirement and before the approval of the surplus apportionment scheme
A distribution in the form of a lump sum payment to a former member of the fund is a
lump sum benefit to be included in the member’s gross income. The average rate of
tax as determined under section 5(10) relative to the year of assessment in which the
scheme was approved, is applicable. 6 The accrual date is the date that the Registrar
of Pension Funds approved the surplus apportionment scheme.
4.1.3 Distributions to pensioners who retired from the fund before the approval of
the surplus apportionment scheme
Pension fund
Any distribution of surpluses to retired members in the form of an increase to the
pension is subject to normal tax as a pension. 7 If the long-term insurer or fund does
not pay the amount as part of the existing pension but as a once-off bonus, the full
amount is subject to tax.
Provident fund
A distribution in the form of a lump sum payment to a retired member of a provident
fund is a lump sum benefit to be included in the gross income of the retired member.
The average tax rate as determined under section 5(10) relative to the year of
assessment in which the scheme was approved, is applicable.
4.2 Tax treatment of actuarial surplus apportionment schemes approved on or
after 1 January 2006 (section 15B surplus – past surplus)
Surplus amounts allocated to active members of the fund are used to enhance the
active members’ fund credits and are taxable as and when that member becomes
entitled to any lump sum benefit or annuity on exit from the fund as a result of
retirement, withdrawal or death.
Any lump sum benefit payable to former members or retired members of a fund as a
result of the approval of a surplus apportionment scheme under section 15B of the
Pension Funds Act on or after 1 January 2006 is not included in the member’s gross
income and is as a result not subject to tax.
6 The special tax rate table applicable to retirement fund lump sum benefits was introduced in 2007
and is only applicable to retirement fund lump sum benefits that accrued on or after 1 October 2007.
The special tax rate table applicable to retirement fund lump sum withdrawal benefits was only
introduced in 2009 and is only applicable to retirement fund withdrawal benefits that accrued on or
after 1 March 2009.
7 Paragraph (a) of the definition of “gross income” in section 1(1).
4.3 The tax treatment of future surplus payments (section 15C of the Pension
Funds Act)
Section 15C of the Pension Funds Act regulates the determination of any surplus
amounts to members, former members of a fund or the employer after the “surplus
apportionment date” as defined in the Pension Funds Act. 8 These amounts, known as
‘future surplus amounts’, are allocated and distributed to members, former members,
pensioners or the employer in accordance with the provisions of section 15D 9 or 15E 10
of the Pension Funds Act, depending on the rules of the fund or the decision by the
fund’s board of trustees if the rules of the fund are silent in that regard.
4.3.1 Allocation to active members
Any future surplus amounts allocated to active members of a fund under
section 15D(1)(a) or 15E(1)(d) of the Pension Funds Act, may only be used to enhance
such a member’s share in that fund. These amounts form part of the member’s lump
sum benefit or annuity payable on exit from the fund because of retirement, withdrawal
or death.
4.3.2 Distributions to former members of the fund who terminated their membership
before the surplus apportionment or pensioners that retired before the surplus
apportionment
Any future surplus amounts distributed to former members or pensioners as a lump
sum under section 15D(1)(b) or 15E(1)(d) of the Pension Funds Act are amounts that
accrue to or are received by the former member or pensioner in consequence of past
membership. 11
Future surplus payments that were payable to or accrued to the former member or
pensioner before 1 March 2009 are subject to tax at the average tax rate determined
under section 5(10).
As from 1 March 2009 these lump sum benefits payable to former members or
pensioners are regarded as retirement fund lump sum withdrawal benefits under the
new accrual provisions and are subject to the tax table applicable to retirement fund
lump sum withdrawal benefits. 12
4.3.3 Distributions to the beneficiaries of members who have died before the surplus
apportionment
Any future surplus amounts distributed to the beneficiaries of a member who has died
before the distribution of the surplus is a lump sum benefit.
Future surplus payments that were payable to or accrued to beneficiaries as a result
of the death of a member before 1 March 2009 are subject to tax at the average tax
rate determined under section 5(10).
8 “Surplus apportionment date” is defined in section 1 of the Pension Funds Act.
9 Section 15D of the Pension Funds Act governs the utilisation of surplus in the member surplus
account.
10 Section 15E of the Pension Funds Act governs the utilisation of surplus in the employer surplus
account.
11 Paragraph 2(1)(b)(ii).
12 As contemplated in paragraph 2(1)(b).
As from 1 March 2009 these lump sum benefits payable to the beneficiaries of
deceased members are regarded as retirement fund lump sum withdrawal benefits
under the new accrual provisions and are subject to the tax table applicable to
retirement fund lump sum withdrawal benefits.
Example 1 – Distribution of future surplus (section 15C) to a former member who
terminated the membership before the distribution of the surplus
Facts:
P received a withdrawal benefit of R150 000 from the KL Pension Fund on 31 July
2017.
The registered rules of the KL Pension Fund provide that a future surplus can be
distributed to the former members of the fund. A future surplus distribution was
determined and approved. P qualified for a future surplus amount of R75 000, which
accrued on 30 April 2018.
Result:
The following steps must be followed in order to calculate the tax payable on the
withdrawal benefit payable to P:
Step 1: Determine the total taxable income in respect of all lump sums received
or accrued (including the current lump sum benefit)
R
Current withdrawal benefit 75 000
All withdrawal benefits (on or after 1 March 2009) 150 000
All retirement benefits (on or after 1 October 2007) 0
All severance benefits (on or after 1 March 2011) 0
Total taxable income 225 000
Step 2: Apply the rate of tax applicable to withdrawal benefits to the total lump
sum amount calculated in Step 1
The total taxable income of R225 000, as determined in Step 1, exceeds
R25 000 but does not exceed R660 000.
R
Taxable income (R225 000 – R25 000) 200 000
Multiply: Applicable tax rate in the withdrawal benefit tax table 18%
Tax on taxable income 36 000
Step 3: Determine the total taxable income of all previous lump sums received
or accrued (excluding the current lump sum benefit)
R
All withdrawal benefits (on or after 1 March 2009) 150 000
All retirement benefits (on or after 1 October 2007) 0
All severance benefits (on or after 1 March 2011) 0
Total of previous lump sums 150 000
Step 4: Apply the rate of tax applicable to withdrawal benefits to the total lump
sum amount calculated in Step 3
The total taxable income of R150 000, as determined in Step 3, exceeds
R25 000 but does not exceed R660 000.
R
Total taxable income of previous lump sum benefits
(R150 000 – R25 000) 125 000
Multiply: Applicable tax rate in the withdrawal benefit tax table 18%
Tax on previous lump sum benefits 22 500
Step 5: Deduct the tax calculated in Step 4 from the tax calculated in Step 2 to
determine the tax payable on the current withdrawal benefit
R
Tax on all lump sums (Step 2) 36 000
Less: Tax on previous lump sums (Step 4) (22 500)
Tax on current withdrawal benefit 13 500
Tax of R13 500 is payable on the lump sum benefit (withdrawal benefit) of R75 000
received as a result of the section 15C future surplus distribution.
Example 2 – Distribution of future surplus (section 15C) to a pensioner who
retired before the distribution of the surplus
Facts:
On 31 August 2017 (date of accrual), Q’s retirement interest in the MLK Pension Fund
was R2 250 000. Q took one-third (R750 000) of the retirement interest in cash. Tax of
R135 000 was deducted from the retirement benefit.
The registered rules of the MLK Pension Fund provide that surplus can be distributed
on an annual basis to the former members of the fund as at the fund’s anniversary
date, which is the end of August each year. Q qualified for a future surplus amount of
R135 000 which accrued on 31 August 2018.
Result:
The following steps must be followed in order to calculate the tax payable on the
withdrawal benefit payable to Q:
Step 1: Determine the total taxable income in respect of all lump sums received
or accrued (including the current lump sum benefit)
R
Current withdrawal benefit 135 000
All withdrawal benefits (on or after 1 March 2009) 0
All retirement benefits (on or after 1 October 2007) 750 000
All severance benefits (on or after 1 March 2011) 0
Total taxable income 885 000
Step 2: Apply the rate of tax applicable to withdrawal benefits to the total lump
sum amount calculated in Step 1
The total taxable income of R885 000, as determined in Step 1, exceeds
R660 000 but does not exceed R990 000.
Taxable income (R885 000 – R660 000) R225 000
R
Multiply the applicable tax rate in the withdrawal benefit
tax table by taxable income (27% × R225 000) 60 750
Tax on R990 000 114 300
Tax on taxable income 175 050
Step 3: Determine the total taxable income of all previous lump sums received
or accrued (excluding the current lump sum benefit)
R
All withdrawal benefits (on or after 1 March 2009) 0
All retirement benefits (on or after 1 October 2007) 750 000
All severance benefits (on or after 1 March 2011) 0
Total of previous lump sums 750 000
Step 4: Apply the rate of tax applicable to withdrawal benefits to the total lump
sum amount calculated in Step 3
The total taxable income of R750 000, as determined in Step 3, exceeds
R660 000 but does not exceed R990 000.
Total taxable income of previous lump sum benefits
(R750 000 – R660 000) R90 000
R
Multiply the applicable tax rate in the withdrawal benefit
tax table by taxable income (27% × R90 000) 24 300
Tax on R990 000 114 300
Tax on taxable income 138 600
Step 5: Deduct the tax calculated in Step 4 from the tax calculated in Step 2 to
determine the tax payable on the current withdrawal benefit
R
Tax on all lump sums (Step 2) 175 050
Less: Tax on previous lump sums (Step 4) (138 600)
Tax on current withdrawal benefit 36 450
Tax of R36 450 is payable on the lump sum benefit (withdrawal benefit) of R135 000
received as a result of the section 15C future surplus distribution.
4.4 Transfer of future surplus payments
Any future surplus amounts that are paid to former members or pensioners of a fund
as a lump sum are amounts that accrue to or are received by the former members or
pensioners in consequence of past membership. These amounts will be subject to the
tax rates applicable to retirement fund lump sum withdrawal benefits.
Any after tax amount transferred to a pension fund, provident fund or a retirement
annuity fund qualifies as a member contribution to the transferee fund. Preservation
funds cannot accept contribution from members. These amounts can therefore not be
transferred to preservation funds.
4.5 Difference between the recalculation of a benefit and a surplus apportionment
payment
A fund may discover that former members or existing pensioners were underpaid (for
example, an error was made in the initial calculation of the lump sum or investment
returns were understated) and, as a result, additional amounts have to be paid to
members who were active members of the fund at a certain date. These are amounts
that the former members or existing pensioners were entitled to as part of their benefit
when their membership in that fund terminated. The member’s benefit in the fund is
merely recalculated with the original date of accrual remaining the same.
The additional amount payable is not as a result of a surplus apportionment calculation
in the fund. The recalculation of a benefit is not a payment of a surplus.
4.5.1 Recalculation of a benefit in respect of a member who has already terminated
his or her membership in the fund (that is, withdrawal benefit)
The additional amount must follow the member’s initial exit event and the deductions
under paragraph 6 will be available against the lump sum benefit, if applicable.
4.5.2 Recalculation of a benefit in respect of a retired member
The treatment of the payment will depend on the type of fund that makes the payment.
Pension fund
If, at retirement, a member of a pension fund already received one-third of his or her
retirement benefit in cash, the member will only be able to receive one-third of the
additional benefit in cash. Any amount that is not commuted and exceeds one-third of
the total amount may be transferred to the long-term insurer or the fund paying the
monthly annuity. If the long-term insurer or the fund is not in a position to accept the
lump sum benefit, the additional amount is then payable as a once-off bonus, is taxed
in full and does not qualify for the reduced rate at which taxable income from lump sum
benefits are taxed.
If, at retirement, a member of a pension fund elected to receive an annuity with the full
retirement interest, the additional benefit can be paid as a lump sum benefit provided
the additional benefit does not exceed one-third of the total benefit.
Provident fund
A member of a provident fund will be able to receive the additional amount as a lump
sum benefit.
5. Conclusion
The tax treatment of actuarial surplus allocations or distributions to a member, former
member or pensioner depends on whether or not the actuarial surplus is allocated or
distributed under a surplus apportionment scheme.
SOUTH AFRICAN REVENUE SERVICE
Annexure – The law
The Pensions Funds Act, 1956
Section 15B(5)(e)
15B(5)(e) The board shall apportion the actuarial surplus between the various classes of
stakeholders whom the board has determined shall participate in the apportionment in terms of
subsection (4), following which such portion as is due to the employer shall be credited to the employer
surplus account: Provided that—
(e) the board shall determine how, in the case of existing members and former members,
the allocated portion of actuarial surplus shall be applied for their benefit, including the
crediting of any portion to the member’s surplus accounts or to the member’s individual
accounts, as the case may be: Provided further that the board may allocate a portion of
the actuarial surplus to be used for former members to a contingency reserve account
which will be used to satisfy the claims of former members—
(i) who have been identified in subsection 4(a)but who cannot be traced; or
(ii) who did not substantiate their claim during the nine-month period following the
advertisement in subsection 4(a)(iii) but who do so after the end of this period; and
Section 15C of the Pension Funds Act governs the apportionment of future surplus and
provides that:
(1) The rules may determine any apportionment of actuarial surplus arising in the fund after the
surplus apportionment date between the member surplus account, the employer surplus account or
directly for the benefit of members and former members subject to the uses specified in section 15D(1).
(2) If the rules are silent on the apportionment of actuarial surplus arising after the surplus
apportionment date, any apportionment between the member surplus account, the employer surplus
account or directly for the benefit of members and former members, subject to the uses specified in
section 15D(1), shall be determined by the board taking into account the interests of all the stakeholders
in the fund: Provided that, notwithstanding anything to the contrary in the rules, neither the employer
nor the members may veto such apportionment
Income Tax 58 of 1962 – before 1 March 2009
Definition of “lump sum benefit” in paragraph 1 of the Second Schedule applicable after
1 March 1998
“lump sum benefit” includes any amount determined by the commutation of an annuity or portion
of an annuity and any fixed or ascertainable amount (other than an annuity) payable by or provided in
consequence of membership or past membership of any fund referred to in paragraph (e) of the
definition of "gross income" in section one of this Act whether in one amount or in instalments;
Paragraph 4(1) of the Second Schedule
(1) If in terms of the rules of a pension fund, pension preservation fund, provident fund, provident
preservation fund or retirement annuity fund any lump sum benefit arising out of a member’s withdrawal
or resignation is payable at a fixed or ascertainable future date, such benefit shall be deemed to have
accrued to such member on that date or on the date of his or her death, whichever is earlier, and shall
be assessed to tax in respect of the year of assessment during which such benefit is deemed to accrue
as though it were a lump sum benefit derived by him or her upon his or her withdrawal or resignation
from the fund or upon his or her retirement or immediately prior to his or her death, as the case may be,
Paragraph 2C of the Second Schedule inserted with effect from 1 January 2006 13
Paragraph 2C applies to surplus apportionment schemes approved on or after 1 January
2006. It provides that:
2C. Any lump sum benefit, or part thereof, received by or accrued to a person subsequent to the
person’s retirement or death, or withdrawal or resignation from any pension fund, pension preservation
fund, provident fund, provident preservation fund or retirement annuity fund or the winding up of any
such fund, and in consequence of or following upon an event that is prescribed by the Minister by notice
in the Gazette and contemplated by the rules of any such fund or the approval of a scheme in terms
of section 15B of the Pensions Funds Act or paragraph 5.3(1)(b) of the Schedule which amends
regulation 30 of the Regulations under the Long-term Insurance Act shall not constitute gross income
of that person
(Emphasis added.)
Paragraph (c)(i) of the definition of “pension fund” with effect from 1 January 2006 14
(i) that the fund is a permanent fund bona fide established for the purpose of providing
annuities for employees on retirement date or for the dependants or nominees of
deceased employees, or mainly for the said purpose and also for the purpose of
providing benefits other than annuities for the persons aforesaid or 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;
(Emphasis added.)
Paragraph (a) of the definition of “provident fund” with effect from 1 January 2006 15
(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;
(Emphasis added.)
Income Tax Act 58 of 1962 – after 1 March 2009
Definition of “lump sum benefit” in paragraph 1 of Second Schedule
“lump sum benefit” includes—
(a) any amount determined in respect of the commutation of an annuity or portion of an
annuity—
(i) payable by; or
(ii) provided in consequence of membership or past membership of,
a pension fund, pension preservation fund, provident fund, provident preservation fund
or retirement annuity fund; and
13 Taxation Laws Amendment Act 8 of 2007 (promulgated 8 August 2007).
14 Revenue Laws Amendment Act 60 of 2008 (promulgated 8 January 2009).
15 Revenue Laws Amendment Act 60 of 2008 (promulgated 8 January 2009).
(b) any fixed or ascertainable amount (other than an annuity)—
(i) payable by; or
(ii) provided in consequence of membership or past membership of,
a pension fund, pension preservation fund, provident fund, provident preservation fund
or retirement annuity fund,
whether in one amount or in instalments, but does not include any amount deemed to be income
accrued to a person in terms of section 7(11);
Paragraph 4(1) of the Second Schedule with effect from 1 March 2009 16
(1) Notwithstanding the rules of a pension fund, pension preservation fund, provident fund,
provident preservation fund or retirement annuity fund, any lump sum benefit arising out of a member’s
withdrawal or resignation shall, subject to paragraph 3, be deemed to have accrued to such member
on the date he or she elects to have the benefit paid to him or her or the date on which the benefit is
transferred to another pension fund, pension preservation fund, provident fund, provident preservation
fund or retirement annuity fund or on the date of his or her death, whichever is earlier, and shall be
assessed to tax in respect of the year of assessment during which such benefit is deemed to accrue as
though it were a lump sum benefit derived by him or her upon his or her withdrawal or resignation from
the fund or upon his or her retirement or immediately prior to his or her death, as the case may be.
Paragraph 4(1) of the Second Schedule with effect from 1 March 2010 17
(1) Notwithstanding the rules of a pension fund, pension preservation fund, provident fund,
provident preservation fund or retirement annuity fund, any lump sum benefit shall be deemed to have
accrued to such member on the earliest of the date—
(a) on which an election is made in respect of which the benefit becomes recoverable;
(b) on which any amount is deducted from the benefit in terms of section 37D(1)(a), (b) or
(c) of the Pension Funds Act, 1956 (Act No. 24 of 1956);
(c) on which the benefit is transferred to another pension fund, pension preservation fund,
provident fund, provident preservation fund or retirement annuity fund;
(d) of his or her retirement; or
(e) of his or her death,
and shall be assessed to tax in respect of the year of assessment during which such lump sum benefit
is deemed to accrue.
Paragraph 4(1) of the Second Schedule with effect from 10 January 2012 18
(1) Notwithstanding the rules of a pension fund, pension preservation fund, provident fund,
provident preservation fund or retirement annuity fund, and subject to paragraphs 3 and 3A, any lump
sum benefit shall be deemed to have accrued to a member of such fund on the earliest of the date—
(a) on which an election is made in respect of which the benefit becomes recoverable;
(b) on which any amount is deducted from the benefit in terms of section 37D(1)(a), (b) or
(c) of the Pension Funds Act, 1956 (Act No. 24 of 1956);
16 Revenue Laws Amendment Act 60 of 2008 (promulgated 8 January 2009).
17 Taxation Laws Amendment Act 7 of 2010 (promulgated 2 November 2010).
18 Taxation Laws Amendment Act 24 of 2011 (promulgated 10 January 2012).
(c) on which the benefit is transferred to another pension fund, pension preservation fund,
provident fund, provident preservation fund or retirement annuity fund;
(d) of his or her retirement; or
(e) of his or her death,
and shall be assessed to tax in respect of the year of assessment during which such lump sum benefit
is deemed to accrue.
Paragraph 4(1) of the Second Schedule with effect from 1 March 2012 19
(1) Notwithstanding the rules of a pension fund, pension preservation fund, provident fund,
provident preservation fund or retirement annuity fund, and subject to paragraphs 3 and 3A, any lump
sum benefit shall be deemed to have accrued to a person who is a member of such fund on the earliest
of the date—
(a) on which an election is made in respect of which the benefit becomes recoverable;
(b) on which any amount is deducted from the benefit in terms of section 37D (1)(a), (b) or
(c) of the Pension Funds Act, 1956 (Act No. 24 of 1956);
(c) on which the benefit is transferred to another pension fund, pension preservation fund,
provident fund, provident preservation fund or retirement annuity fund;
(d) of his or her retirement; or
(e) of his or her death,
and shall be assessed to tax in respect of the year of assessment during which such lump sum benefit
is deemed to accrue;
19 Taxation Laws Amendment Act 22 of 2012 (promulgated 1 February 2013).
Diamond Export Levy Act, 2007
