Tax on Retirement Funds Act, 1996 (Act No. 38 of 1996)

5. Determination of taxable amount of retirement fund
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(1)The taxable amount in relation to any retirement fund in respect of a tax period shall be an amount determined in accordance with the formula—

 

in which formula—

(a)"T" represents the taxable amount to be determined;
(b)"A" represents the income as determined in accordance with the provisions of section 3 in respect of such tax period;
(c)"H" represents such amounts which an insurer has allocated to such retirement fund in terms of section 9 during such tax period;
(d)"K" represents the actuarial value of liabilities in respect of pensioners, including any contingent annuity payable on the death of a pensioner, but excluding the actuarial value of any annuity purchased from an insurer by such retirement fund in respect of any obligation to a pensioner of such retirement fund, calculated at the date of the relevant valuation referred to in the definition of "actuarial value"; and
(e)"L" represents the actuarial value of all assets of such retirement fund (excluding the actuarial value of any annuity purchased from an insurer by such retirement fund in respect of any obligation to a pensioner of such retirement fund) calculated at the date of the relevant valuation referred to in the definition of "actuarial value".

 

(2)Where the amount represented by the symbol "P", as contemplated in paragraph (c) of this subsection, is greater than 50 per cent of the amount represented by the symbol "N", as contemplated in paragraph (b) of this subsection, the amount represented by the symbol "T" as contemplated in subsection (1), may be limited to an amount equal to an amount determined in accordance with the formula—

 

in which formula—

(a)"M" represents the limited amount to be determined;
(b)"N" represents the market value of all assets of such retirement fund as at the end of the last financial year of such retirement fund before the commencement of the relevant tax period;
(c)"P" represents the market value of all interest and rental-bearing assets of such retirement fund, included in symbol "N"; and
(d)"T" represents the amount contemplated in subsection (1)(a).