Exempt Income-Relating to Employment

Exempt from Gross Income

What does Section(1)(gC) state about foreign pensions?

• Amounts received or accrued to any resident from the social security system of another country are exempt from normal tax[a10(1)(gC)(i)]

• Any lump sum, pension, or annuity that a resident receives from a source outside Sa as compensation for past employment outside the republic is exempt from normal tax[s10(1)(gC)(ii)

What amounts do not qualify in terms of s10(1)(gC)?

• Amounts received from South African retirement funds

• Amounts received from a South African long-term insurer

How will a taxpayer qualify for the s10(1)(gC) exemption?

If amounts are transferred to a South African fund or long-term insurer from a source outside SA

What is done if the lump sum, pension or annuity relates to services rendered partly in and partly outside South Africa?

• The full amount earned is included in gross income

• The portion of the amount that is exempt is calculated

What is the formula for calculating the portion of the amount exempt in lump sums, pensions, or annuities that relate to services rendered partly in and partly outside SA?

Amount Exempt= (Period services were rendered outside SA/Total period services were rendered) * Total Amount Received

Which portion of the pension, annuity or lump sum is exempt from tax?

The portion relating to services rendered outside SA

What exemption section deals with Unemployment Insurance Benefits?

Section 10 (1) (mB)

What does s10(1)(mB) state?

Any benefit or allowance payable in terms of the Unemployment Act 63 of 2001 is exempt from normal tax

What exemption section deals with Uniforms and Uniform Allowances?

Section 10(1)(nA)

What does s10 (1) (nA) state?

• The value of any uniform given to an employee by their employer OR

• Any allowance paid to the employee by the employer in respect of any such uniform is exempt if:

1. The employee is required as a condition of employment to wear the uniform while on duty and

2. The uniform is clearly distinguishable from ordinary clothing

Where are allowances received for Uniform included?

In taxable income not in Gross Income

What exemption section deals with Relocation Benefits?

Section 10 (1) (nB)

What