Why tax is deducted from GEPF pension payouts
The GEPF says tax deductions on pension benefits are determined by the type and value of the benefit, under South Africa’s tax laws and SARS-administered rules.
The Government Employees Pension Fund (GEPF) has elucidated the taxation of pension payouts for its members, emphasizing adherence to South African tax laws. The taxation of pension benefits falls under the purview of the Income Tax Act and the regulations overseen by the South African Revenue Service (SARS).
Members of GEPF should be aware that the tax applied to a pension payout is contingent upon the nature and value of the benefit, as well as the pertinent tax rules in effect when the benefit is received. Notably, all pension benefits accumulated post-March 1, 1998, are subject to taxation in accordance with South African tax regulations.
The South African Revenue Service (SARS) levies taxes on various income forms, including pension benefits, as stipulated in the Income Tax Act of 1962. Regardless of how a member terminates their relationship with GEPF, be it through withdrawal, retirement, or demise, pension benefits are subject to tax obligations. This consistent application of tax laws underscores the fund's commitment to ensuring that individuals receive their fair share of taxation on pension income, mirroring the taxation of income from other sources.
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