Retirement Reforms - All you need to know
The Taxation Laws Amendment Act was promulgated on 12 December 2013. This amended the way in which retirement funds are treated. Sage HR & Payroll will provide updates and advise on this webpage. This will assist you to stay up-to-date with the changes helping you to remain legally compliant and have the tools to explain the implications to your employees.
Although these Retirement Reform changes were going to be effective from March 2015, the date was postponed to March 2016. The amendments will standardise the tax treatment of contributions to retirement funds for the employer and the individual, as well as aligning provident funds to pension and retirement annuity funds. This is to prevent retirees from spending all their retirement assets too quickly.
*We are aware of the possible postponement of the retirement reforms. However, if the compulsory annuitisation is postponed, the tax harmonization might still go ahead. In other words the changes to payroll might still be effective from March 2016 even though the pay-out changes might be postponed. Once we’ve received official confirmation, we will inform all clients.
Latest Media Statement regarding Retirement Reforms
Treasury Press Release:
National Treasury would like to inform all members of the public that the tax harmonisation reforms of retirement funds will be implemented from 1 March 2016. This is in terms of the current law legislated in 2013, and amended in 2014 by shifting the effective date to 1 March 2016 (i.e. the Taxation Laws Amendment Act, No. 39 of 2013, as amended by Act No. 43 of 2014). It should be noted that the 2015 Taxation Laws Amendment Bill does not amend the scheduled implementation date, but only amends the R150 000 de minimis threshold to R247 500; closes certain coverage gaps; and requires a review of the legislation after two years from the effective date, and to report this review to Parliament.
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