Page 322 - SAIT Compendium 2016 Volume1

Second Schedule INCOME TAX ACT 58 OF 1962 Second Schedule
(i) so much of any tax payable as is due to the provisions of this paragraph may be recovered from the person by whom the lump sum bene t in question is received;
(ii) whereanyannuityorportionofanannuity(includingalivingannuity)whichbecomespayableonorinconsequence of or following upon the death of a person other than a person who was a member of any such fund has been commuted for a lump sum, such lump sum shall for the purposes of this paragraph be deemed to be a lump sum bene t which has become recoverable in consequence of or following upon the death of such deceased person;
[Para. (ii) of the proviso substituted by s. 96 (1) (b) of Act 22 of 2012 – date of commencement deemed to have been 1 March 2012; the substitution applies in respect of amounts due and payable on or after that date.]
(iii) where any such lump sum bene t becomes payable but the dependants or nominees of that person elect an annuity (including a living annuity) that is purchased or provided by that fund, no lump sum bene t shall be deemed to have so accrued to the extent that the lump sum bene t was utilised to purchase or provide the annuity; and
(iv) where any such lump sum bene t is paid to a pension preservation fund or provident preservation fund as an unclaimed bene t as de ned in the Pension Funds Act, no lump sum bene t shall be deemed to have so accrued. [Para. (iv) of the proviso substituted by s. 84 of Taxation Laws Amendment Act, 2015 (‘, 1956 (Act 24 of 1956)’ deleted) –
date of commencement: date of promulgation of Taxation Laws Amendment Act, 2015.] [Para. 3A inserted by s. 82 (1) of Act 7 of 2010 and amended by s. 96 (1) (a) of Act 22 of 2012.]
4. (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 bene t shall be deemed to have accrued to a person who is a member of such fund on the earliest of the date—
[Words in sub-para. (1) preceding item (a) substituted by s. 91 (1) of Act 24 of 2011 and by s. 97 (1) (a) of Act 22 of 2012 – date of commencement deemed to have been 1 March 2012; the substitution applies in respect of amounts due and payable on or after that date.]
(a) on which an election is made in respect of which the bene t becomes recoverable;
(b) on which any amount is deducted from the bene t in terms of section 37D (1) (a), (b) or (c) of the Pension Funds
Act;
[Item (b) substituted by s. 85 (a) of Taxation Laws Amendment Act, 2015 (‘, 1956 (Act 24 of 1956)’ deleted) – date of commencement: date of promulgation of Taxation Laws Amendment Act, 2015.]
(c) on which the bene t is transferred to another pension fund, pension preservation fund, provident fund, provident preservation fund or retirement annuity fund; or
(d) . . .
[Item (d) deleted by s. 71 (1) of Act 43 of 2014 – date of commencement: 1 March 2015.]
(e) of his or her death,
and shall be assessed to tax in respect of the year of assessment during which such lump sum bene t is deemed to accrue.
[Sub-para. (1) substituted by s. 41 (a) of Act 3 of 2008, by s. 63 (1) (a) of Act 60 of 2008 and by s. 83 (1) of Act 7 of 2010.] (2) If upon a member’s withdrawal or resignation from or the winding up of a pension fund, pension preservation fund, provident fund, provident preservation fund or retirement annuity fund on or after the fteenth day of March, 1961, a policy of insurance is ceded or otherwise made over to or in favour of such member before the date of promulgation of the Income Tax Act, 1964, any lump sum due in respect of such policy upon its maturity or surrender before such date shall be deemed to be a lump sum bene t accruing to such member from a pension fund, pension preservation fund, provident fund, provident preservation fund or retirement annuity fund, as the case may be, on the date of such maturity or surrender, or, if such member dies before such last-mentioned date, on the date of his or her death, and shall be assessed to tax in respect of the year of assessment during which such bene t is deemed to accrue as though it were a lump sum bene t 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: Provided that if after the cession or making over of such policy any premiums are paid thereon by such member, there shall be deducted from such lump sum, in addition to any other deduction to which such member may be entitled in terms of this Schedule, an amount which bears to such lump sum the same ratio as the sum of
the premiums paid by him after such cession or making over bears to the sum of all the premiums paid on such policy.
[Sub-para. (2) amended by s. 20 of Act 72 of 1963, substituted by s. 24 (a) of Act 90 of 1964 and amended by s. 41 (b) of Act 3 of 2008.]
(2)bis If a policy of insurance is ceded or otherwise made over to or in favour of a person who is a member of a pension fund, pension preservation fund, provident fund, provident preservation fund or retirement annuity fund by that fund on or after the date of commencement of the Income Tax Act, 1964, the surrender value of such policy shall, provided such person retired or ceased to be a member of such fund on or after the fteenth day of March, 1961, be deemed for the purposes of this Schedule to be a lump sum bene t accruing to such person from such fund on the date of such cession or making over.
[Sub-para. (2)bis inserted by s. 24 (b) of Act 90 of 1964 and substituted by s. 41 (c) of Act 3 of 2008 and by s. 97 (1) (b) of Act 22 of 2012 – date of commencement deemed to have been 1 March 2012; the substitution applies in respect of amounts due and payable on or after that date.]
(3) If a person who is a member of a provident fund retires from such fund before he or she reaches the age of 55 years on grounds other than ill-health, any lump sum bene ts received by or accrued to such person in consequence of or following upon such retirement shall, unless the Commissioner on application by the person and having regard to the circumstances of the case otherwise directs, be assessed to tax not in accordance with the provisions of paragraph 5 but in accordance with the provisions of paragraph 6 as though it were a lump sum bene t derived by such person in consequence of or following upon such person’s withdrawal or resignation from such fund.
[Sub-para. (3) substituted by s. 36 (1) of Act 21 of 1995 and by s. 97 (1) (c) of Act 22 of 2012 (date of commencement deemed to have been 1 March 2012; the substituted subparagraph applies in respect of amounts due and payable on or after that date) and by s. 85 (b) of Taxation Laws Amendment Act, 2015 – date of commencement: date of promulgation of Taxation Laws Amendment Act, 2015.]
314 SAIT CompendIum oF TAx LegISLATIon VoLume 1