will i be too heavely taxed?

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r888

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My husband passed away earlier this year.His pension was.4.1 mil.i had an option of purchasing an annuity for 3.6mil and taking.out the R550000 tax free.Or i could pay the 1.1mil tax and take out the 2mil950thousand lumpsum cash.

I opted to pay the tax and take out the lumpsum
My sister.lives.overseas and i thot i might one day want to go settle there.And i could take the money with wereas with an annuity u cant.

In the.mean time i fixed the.lumpsum in fixed deposit .And now ive.been reading i could be heavely taxed by sars on the income.

Please can anyone tell me wat percentage i may be taxed.by sars .Im so worried
PLease help?
 
Say you earn 10% interest on that money (example may be a bit high). That gives you an annual income of R300 000. The first R22 000 of annual interest earned is not taxed. So you will be taxed on about R280 000. If this is your only source of income, the tax will be about R45 000.

If you earn 5% interest, the math changes to income of R150 000, so R128 000 taxable, and tax of about R9000.

If you earn additional income, this income is to be added to your primary income, and taxed accordingly.

Google "sars tax tables" if you want to see the tax brackets on the income. These figures also change according to your age bracket (under or over 65, 75, etc)
 
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That's barely coherent but OK.

The facts are way too fuzzy to say anything about tax, but one thing I can tell you for sure: Don't think you can survive 1st world cost of living on a 3rd world pension pay-out. Forget taxes - it simply won't work.
 
Your yearly exemption for tax on interest is R23 800.

So if you earn R700 000 interest over the 3 years fixed deposit (just using a random fixed term) and it all then gets paid out in one go, then you will be taxed on the R676 200 (R700 000 - R23 800) interest you received at you personal income tax rate and whatever tax bracket that interest puts you.

If the interest pays out monthly or once a year (so like R200 000 in the first year), you'd benefit from the R23 800 interest exemption each year.
 
supersunbird said:
Your yearly exemption for tax on interest is R23 800.

So if you earn R700 000 interest over the 3 years fixed deposit (just using a random fixed term) and it all then gets paid out in one go, then you will be taxed on the R676 200 (R700 000 - R23 800) interest you received at you personal income tax rate and whatever tax bracket that interest puts you.

If the interest pays out monthly or once a year (so like R200 000 in the first year), you'd benefit from the R23 800 interest exemption each year.
Click to expand...
With a fixed deposit, does it not matter when the interest accrues instead of paid out ?
 
supersunbird said:
Your yearly exemption for tax on interest is R23 800.

So if you earn R700 000 interest over the 3 years fixed deposit (just using a random fixed term) and it all then gets paid out in one go, then you will be taxed on the R676 200 (R700 000 - R23 800) interest you received at you personal income tax rate and whatever tax bracket that interest puts you.

If the interest pays out monthly or once a year (so like R200 000 in the first year), you'd benefit from the R23 800 interest exemption each year.
Click to expand...

Oh Wow

The definition in the tax act "Earlier of receipt or accrual" (I know accrual says unconditionally entitled to, however case law stipulates this further) it doesn't matter when it is paid out, it will be taxed as it accrues.
 
4cer said:
Oh Wow

The definition in the tax act "Earlier of receipt or accrual" (I know accrual says unconditionally entitled to, however case law stipulates this further) it doesn't matter when it is paid out, it will be taxed as it accrues.
Click to expand...

Oh, so she will receive a tax certificate each year and include that amount in her annual income? So what I said in my last sentence is valid?

So be it then. I helped as best I could 2 days ago when no one knowing better did.
 
You can move 1 million overseas each year with no penalty. If you are moving to a first world country however then that money is not going to be getting you very far.
 
r888 said:
My husband passed away earlier this year.His pension was.4.1 mil.i had an option of purchasing an annuity for 3.6mil and taking.out the R550000 tax free.Or i could pay the 1.1mil tax and take out the 2mil950thousand lumpsum cash.

I opted to pay the tax and take out the lumpsum
My sister.lives.overseas and i thot i might one day want to go settle there.And i could take the money with wereas with an annuity u cant.

In the.mean time i fixed the.lumpsum in fixed deposit .And now ive.been reading i could be heavely taxed by sars on the income.

Please can anyone tell me wat percentage i may be taxed.by sars .Im so worried
PLease help?
Click to expand...

why did you not consult a financial advisor?
 
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