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SARS Issues Pensions Ruling On Secondments

by Lorys Charalambous, Tax-News.com, Cyprus

06 July 2015


On July 1, in a five-year binding private ruling, the South African Revenue Service (SARS) confirmed that a South African pension fund will not be liable to withhold employees' tax from monthly pension benefits paid to residents in respect of past foreign services.

The applicant for the ruling, a pension fund established, managed, and administered in South Africa, pays monthly pension benefits to its members after their retirement. Some of the retired members would have rendered services in foreign countries, as a result of their secondment from a South African employer to one of its associated foreign companies (foreign employer).

Part of the secondment terms would have determined that the foreign employer paid the seconded employees' pension fund contributions directly to the pension fund. Those employees would have returned to South Africa on retirement and would be residents of South Africa.

SARS determined that, while the pension fund will not be liable to deduct or withhold employees' tax from the monthly pension benefits received by or accruing to residents in respect of foreign services, the ruling does not apply to lump sums, death benefits, or payments in respect of termination of service prior to the date of retirement.

TAGS: individuals | expatriates | South Africa | tax | investment | business | pensions | revenue guidance | employees | retirement | investment funds | individual income tax | services | Africa

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