The New Retirement Taxation Laws Amendment Act legislation postponed
Government has again been forced to backpedal on a tax law amendment compelling two-thirds of provident fund savings to be put in a retirement annuity.
The Cabinet will table an urgent legislative amendment to postpone the implementation date of the Taxation Laws Amendment Act, which was supposed to become effective 1 March 2016.
Treasury said the following changes will be introduced through an urgent tax amendment bill, to be tabled next week:
The bill will propose to Parliament to postpone the annuitisation requirement for provident funds for two years, until 1 March 2018.
Provident fund members will not be required to annuitise contributions to their funds that were made before 1 March 2018.
To ensure the integrity of the retirement system, the ability to transfer tax-free from pension fund to provident fund will also be delayed until 1 March 2018.
The following amendments will continue as scheduled from 1 March 2016:
The Retirement Tax South Africa based deduction for contributions to all retirement funds (including provident funds) will increase to 27.5 per cent of the greater of taxable or remuneration, up to a cap of R350 000 per year, from 1 March 2016.
The minimum threshold required for annuitisation for pension and retirement annuity funds will still be increased from R75 000 to R247 500.
Aside from the issues covered in the urgent tax amendment bill, all other provisions legislated in the 2015 Tax Laws Amendment Act (and all other tax laws) will come into force on 1 March 2016.
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