Retirement-fund tax is one of the easiest places to make an expensive assumption. The tax depends on the type of benefit and SARS applies cumulative rules to certain retirement lump sums.
2027 ordinary withdrawal table
| Cumulative taxable withdrawal benefit | Tax rate |
|---|---|
| R1 – R27,500 | 0% |
| R27,501 – R726,000 | 18% of amount above R27,500 |
| R726,001 – R1,089,000 | R125,730 + 27% above R726,000 |
| R1,089,001 and above | R223,740 + 36% above R1,089,000 |
2027 retirement/severance table
| Cumulative taxable benefit | Tax rate |
|---|---|
| R1 – R550,000 | 0% |
| R550,001 – R770,000 | 18% above R550,000 |
| R770,001 – R1,155,000 | R39,600 + 27% above R770,000 |
| R1,155,001 and above | R143,550 + 36% above R1,155,000 |
What “cumulative” means
SARS does not simply look at each lump sum in isolation. Certain prior retirement-fund lump sums and severance benefits are aggregated when the tax on a new lump sum is determined.
Two-Pot savings withdrawals are different
SARS says savings-component withdrawals are included in taxable income and taxed at the member’s marginal income-tax rate. They are not calculated using the ordinary withdrawal table above.
SARS — Retirement Lump Sum Benefits
SARS — Two-Pot tax implications
South African Government — Two-Pot retirement system
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