Approved Risk Benefits & Tax - What you need to know!


Calculating tax
  • Only life and capital disability can be an approved benefit.

  • The policy is owned by the fund.

  • The Employer pays the premium to the fund administrator who in turns pays it to the insurer.

  • Approved by SARS.

EMPLOYERS

Tax on premiums paid for Approved Risk Benefits

  • All premiums paid by the employer for fund benefits can be claimed as an expense when the employer submits their annual tax returns.

Tax on benefits paid for Approved Risk Benefits

  • No tax implications.

EMPLOYEES

Tax on premiums paid for Approved Risk Benefits

  • All premiums paid by the employee for fund benefits are tax deductible up to 27.5%. (Limited to R350 000 pa).

  • Employees receive this deductibility monthly on their salary.

Tax on benefits paid for Approved Risk Benefits

  • The first R500 000 is paid out tax free, any amount above that is taxed as per the scales set out in the Income Tax Act.

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