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 info@kaplans.co.za for sound legal advice.
