IRP5 Reflects full pension?

[JohnHobson]

Good Day

My mother received notice she owes SARS money after the initial automatic assessment was done. I registered her as an e-filer, and saw that the amount shown as per her pension IRP5 is for the full calendar year. My father passed away in August 2019, and she only received payments from then.

Kindly assist a) is this correct practice that her income reflected is for the full calendar year?
b) What is the maximum income so she does not pay tax?
c) I didn't realise that pensions were taxed?

Many many thanks

[Andromeda]

Hi John
She should only pay tax on income she receives, which depends on her age. See the bottom of the page https://www.sars.gov.za/Tax-Rates/In...dividuals.aspx

SARS populate the return based on IRP5 and similar information, so if the dates are incorrect then the IRP5 is incorrect.

Consider using a tax practitioner.

[Dave A]

c) I didn't realise that pensions were taxed?

As a rough rule of thumb, where contributions are tax deductible, the payout is taxable.
(This used to be one of the key differentiations between a pension fund and a provident fund. No longer so simple, unfortunately).

When it comes to pension payouts, there are exemption thresholds for lump sum payouts (where the rules can be quite fiddly) and income tax rebates for ongoing pension payouts (which should be simpler).

Ultimately Andromeda gives excellent advice. Consider using a tax practitioner - particularly in the first year of a major change in arrangements such as this.