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Provident Fund Tax,

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conradl
Contributor
Hi guys, I have a question regarding provident fund contributions at my current company. 1.Do I pay tax on the contributions or only when the funds are withdrawn when I resign? A very simple question but my HR can't give me a definitive answer. Conrad
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6 REPLIES 6
Frequent Contributor
Member contributions are not tax deductable. On resignation, tax free amount is a flat R22 500 per life time plus members own contributions not previously allowed as a deduction. Plus contributions made to a Public Sector fund, if applicable, on or before 01 March 1998. Less any tax free benefits previously received from other approved schemes on or after 1 March 2009.
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Frequent Contributor
Tax on withdrawal. R22 500 to R600 000 is 18%. R600 001 to R900 000 is 27%. R900 001 and above is 36%
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Super Contributor
Correction required on the previous reply - and a number of scenarios might lead to variable replies. The basic rule on a Prov Fund is: The first R315 000 plus the provident fund memberÂ’s own contributions can be taken tax-free. The next R315 000 taken as a lump sum is taxed at 18 percent, the next R315 000 is taxed at 27 percent, and you will pay tax at 35 percent on any amount you take as a lump sum in excess of R945 001. (The same tax rates apply to members of pension funds, but they cannot add their contributions to the tax-free amount.)
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Frequent Contributor
Hi CHATTYCHAT. Your figures are correct on retirement and death. My figures are correct on withdrawal due to resignation if funds are withdrawn in cash. If withdrawal funds are placed in a Provident Preserver or another Provident Fund at your new employer – then there is no tax.
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conradl
Contributor
Thank you for clearing that up for me.
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Super Contributor
Agreed - and noted that the initial question referred to resignation. "Correction" in my little post should actually read "Addition". Regards
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