What is a Lump Sum? Meaning and SA Tax Treatment
Tax & Compliance
Explained Simply
In South African tax, lump sums from retirement funds (on retirement, death, withdrawal) and severance benefits are taxed using separate SARS tax tables rather than the ordinary income tax brackets. SARS calculates the tax on the lump sum by taking into account earlier lump sums you have received, because the tables are cumulative. The retirement fund usually applies for a tax directive from SARS before paying out. Lump sums from your employer, such as leave pay or a bonus, are different and are usually taxed as part of your remuneration. Check the current table on the SARS rates page before relying on any figure.
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Retirement Lump Sum Tax Calculator
Calculate tax on retirement, resignation, or retrenchment lump sums using cumulative SARS tax tables.
Related Terms
- Income TaxIncome tax is a direct tax levied by SARS on the taxable income of individuals, companies, and trusts in South Africa, using a progressive rate system for individuals.
- IRP5 CertificateAn IRP5 is an employee tax certificate issued by employers in South Africa each tax year, summarising gross remuneration, PAYE deducted, pension contributions, medical aid, and other payroll deductions.