Page 44 - SAIT Compendium 2016 Volume1

s 1 INCOME TAX ACT 58 OF 1962 s 1
(bb) the employer becomes a participant in that fund;
(iii) that persons who immediately prior to the said date were employed by the employer and who on the said date fall within the said class or classes may, on application made within a period of not more than 12 months as from the said date, be permitted to become members of the fund on such conditions as may be speci ed in the rules;
(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:
(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 2016—
(i) any amount contributed to a provident fund of which that person is a member on 1 March 2016;
(ii) with addition of any other amounts credited to the member’s individual account of the provident fund prior to 1 March 2016; and
(iii) any fund return, as de ned 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 2016;
(ii) with addition of any other amounts credited to the member’s individual account of the provident fund prior to 1 March 2016; and
(iii) any fund return, as de ned 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;
(c)* that a partner is regarded as an employee of the partnership;
(d) that the rules of the fund have been complied with; [Proviso to de nition of ‘pension fund’ added by
s. 3 (1) (p) of Taxation Laws Amendment Act, 2015 – date of commencement: 1 March 2016†; the paragraph applies iro years of assessment commencing on or after that date.]
[De nition of ‘pension fund’ amended by s. 3 (i) of Act 90 of 1962, by s. 4 (1) (c) of Act 90 of 1972, by s. 3 (1) (c) of Act 101 of 1978, by s. 3 (1) (c) of Act 104 of 1979 and by s. 3 (1) (c) of Act 91 of 1982 and substituted by s. 2 (1) (e) of Act 94 of 1983.]
‘Pension Funds Act’ means the Pension Funds Act, 1956 (Act 24 of 1956);
[De nition of ‘Pension Funds Act’ inserted by s. 4 (1) (zF) of Act 31 of 2013 – date of commencement: 12 December 2013.]
‘pension preservation fund’ means a pension fund organisation which is registered under the Pension Funds Act and which is approved by the Commissioner in respect of the year of assessment in question: Provided that the Commissioner may approve a fund subject to such limitations and conditions as the Commissioner may determine, and shall not approve a fund in respect of any year of assessment unless the Commissioner is satis ed in respect of that year of assessment that the rules of the fund provide that—
[Words preceding proviso substituted by s. 4 (1) (zG) of Act 31 of 2013 – date of commencement: 12 December 2013.]
(a) membership of the fund consists of—
(i) former members of a pension fund or provident
fund whose membership of that fund has
terminated due to—
[Words in para. (a) (i) preceding item (aa) substituted by s. 7 (1) (zB) of Act 24 of 2011 – date of commencement: 1 March 2012.]
(aa)resignation, retrenchment or dismissal from employment and who elected to have any lump sum bene t that is payable as a result of the termination transferred to that fund;
(bb)the winding up or partial winding up of that fund, if the member elects or is required in terms of the rules to transfer to this fund; or
[Item (bb) substituted by s. 6 (1) (s) of Act 7 of 2010.] (cc) a transfer of business from one employer to another in terms of section 197 of the Labour Relations Act, 1995 (Act 66 of 1995), and the employment of the employee with the transferor employer is transferred to the transferee employer, if the member elects or is required in terms of the rules to
transfer to this fund;
(ii) former members of any other pension fund,
pension preservation fund, provident fund or
provident preservation fund—
[Words in sub-para. (ii) preceding item (aa) substituted by s. 7 (1) (zC) of Act 24 of 2011 (date of commencement:
1 March 2012) and by s. 3 (1) (q) of Taxation Laws Amendment Act, 2015 – date of commencement: 1 March 2016‡; the substitution applies iro years of assessment commencing on or after that date.]
(aa)if that fund was wound up or partially wound up; or
[Item (aa) substituted by s. 6 (1) (t) of Act 7 of 2010.]
* It is submitted that para. ‘(c)’ and para. ‘(d)’ of the proviso should have been sub-para. ‘(v)’ and sub-para. ‘(vi)’ of para. (b) of the proviso, and that they therefore should have been aligned with sub-paras. (i) to (iv) and not with paras. (a) and (b).
† See footnote in annotation to para. (a) (i) of de nition of ‘pension fund’. ‡ See footnote in annotation to para. (a) (i) of de nition of ‘pension fund’.
36 SAIT CompendIum oF TAx LegISLATIon VoLume 1
Prelex
Words in sub-para. (ii) preceding item (aa) in force until 1 March 2016
(ii)former members of any other pension preservation fund or a provident preservation fund—