Need use the retirement lump sum tax table
Solved Step By Step With Explanation –Tax payable: R0
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Solved Step By Step With Explanation –Tax payable: R0
To calculate the tax payable on the lump sums received by Sikombuzo on 30 November 2022, we need to consider the retirement lump sum tax table provided by the South African Revenue Service (SARS) for the 2022/2023 tax year.
Lump sum from the provident fund: R870,000 - R316,000 (non-deductible contributions) = R554,000
The tax-free portion of this lump sum depends on Sikombuzo's age at retirement. Since he retired at the age of 66, the tax-free portion is R500,000.
| Taxable Income | Rate of Tax |
|---|---|
| Up to R500,000 | 0% |
| R500,001 - R700,000 | 18% |
| R700,001 - R1,050,000 | 27% |
| R1,050,001 and above | 36% |
In this case, the taxable portion of R54,000 falls within the "Up to R500,000" bracket, which means it is taxed at 0%.
Therefore, the tax payable on the lump sums received by Sikombuzo on 30 November 2022 is R0.
