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Divorce Settlement

Can I pay my spouse from my pension fund as part of a divorce settlement and if so, what are the tax implications?

The short answer is yes, however, your spouse will be taxed on the amount he/she receives should it be paid out in cash instead of being transferred to another pension/preservation fund.

Lump sum amounts paid out as part of divorce settlements (and other pre-retirement or death withdrawals) are taxed in accordance with the below table:

Taxable income (R) Rate of tax (R)

0 – 25 000 0%

25 001 – 660 000 18% of taxable income above 25 000

660 001 – 990 000 114 300 + 27% of taxable income above 660 000

990 001 and above 203 400 + 36% of taxable income above 990 000

It should be noted that the table operates cumulatively and takes all previous lump sum amounts received by a person also into account.

Should you require any assistance in preparing a deed of settlement to finalise your divorce, contact our professionals on 041 363 6044 or for sound legal advice.

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This article is not intended to constitute legal advice and is produced for information purposes only and to provide a general understanding of the legal position relating to the topic. It is recommended that advice relating to the specific circumstances of your situation be sought from our attorneys before acting upon the content of this article. This article was written at a particular point in time and accordingly may not always reflect the most recent legal developments, if any, applicable to the relevant topic. Kaplan Blumberg and its partners and/or employees, are not responsible for any consequences which may follow upon any decision taken to act upon the information provided in this article.

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