Retrenchment and retirement lump-sum tax calculator
Lump sums from retirement funds and employers have their own tax tables, separate from the income tax tables. Choose why you are receiving the money and enter any earlier lump sums to see the tax.
Your details
Lump sum after tax
R752 300.00
6% average tax rate
- Tax payable
- R47 700.00
How we worked it out
- This lump sumR800 000.00
- Earlier lump sums and severance benefitsR0.00
- Total (aggregate)R800 000.00
- Tax on total using the retirement / severance benefit tableR47 700.00
- Less tax on earlier amounts (same table)R0.00
- Tax on this lump sumR47 700.00
- Amount after taxR752 300.00
The two lump-sum tables
| Taxable lump sum | Tax |
|---|---|
| R1 – R550 000 | 0% |
| R550 001 – R770 000 | 18% of the amount above R550 000 |
| R770 001 – R1 155 000 | R39 600 + 27% of the amount above R770 000 |
| R1 155 001 and above | R143 550 + 36% of the amount above R1 155 000 |
| Taxable lump sum | Tax |
|---|---|
| R1 – R27 500 | 0% |
| R27 501 – R726 000 | 18% of the amount above R27 500 |
| R726 001 – R1 089 000 | R125 730 + 27% of the amount above R726 000 |
| R1 089 001 and above | R223 740 + 36% of the amount above R1 089 000 |
How earlier lump sums are counted
SARS adds this lump sum to all earlier ones, works out the tax on the total, and subtracts the tax that would apply to the earlier amounts on the same table today. This is why a previous withdrawal can mean you pay tax on a retirement lump sum that would otherwise have been tax free.
Frequently asked questions
How is a retrenchment package taxed?
A severance benefit paid because of retrenchment is taxed on the retirement lump-sum table, so the first R550 000 is tax free (if you have not used that amount before). Notice pay, leave pay and normal salary in your final payslip are taxed as ordinary income, not with this table.
Is the tax-free portion available every time?
No. SARS adds all your previous retirement lump sums, withdrawal benefits and severance benefits together. The tax-free portion is effectively a once-in-a-lifetime amount.
What if I resign and cash out my pension fund?
That is a withdrawal benefit. Only the first R27 500 is tax free and the rest is taxed from 18%. Leaving the money in a preservation fund avoids the tax for now.
Are two-pot savings withdrawals included?
No. Savings-component withdrawals are taxed as ordinary income at your marginal rate. Use the two-pot calculator for those.
Who calculates the actual tax?
Your fund or employer applies to SARS for a tax directive, which states exactly how much tax to withhold. This calculator helps you plan; the directive is final.