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How to ensure a tax-free disability payout
Tax Bulletin | 22 January, 2009 | Hot Topics:
Dear fellow taxpayer,
Obama-mania came to a tantalising climax this week which saw the charismatic democrat inaugurated on Tuesday. As the world listened intently to his 45 minute speech, I could only but wonder whether half as many South Africans would be glued to their TV screens when our new president is inaugurated later this year.
Are as many South Africans as emotionally charged about who becomes our next president or are we just hoping for an “amicable solution”? You decide. All I know is that when voting day comes, I’ll put my “X” where it counts and hope I’ll feel as proud and warm and fuzzy inside as I did on Tuesday evening!
One of the cold, hard issues (not warm and fuzzy) that our incoming president will have to face head on, will be those presented by the labour movement. It’s pretty clear that we’re moving towards a dispensation that, justifiably so, is very concerned with upholding the rights of workers. Are you up for the challenge?
You should be and you must arm yourself with the right tools to keep you out of the CCMA and the Labour Court.
Mailbox
Answered by Matsika Vengesa of Tax Consulting SA
Is my disability payment taxable?
Dear Matsika,
I had an accident last year and received a large disability payment from my life insurer as I’m no longer able to work. Is this payment taxable, even though it isn’t for loss of income?
Answer:
As long as the disability payment is a once-off lump sum payment and not in monthly or yearly instalments to replace his salary, it won’t be taxable.
Until next week.
Regards
Nothando Hlatshwayo
Managing Editor
The Practical Tax Handbook
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Editors note
Fulvia Stoltz
Tax Bulletin Editor
The Tax Bulletin is packed full of tax tips, commentary on changes to the tax landscape and is also an interactive tax forum which aims to help you efficiently manage your taxes and avoid all the traps. It is also a handy reminder of the deadlines which taxpayers have to meet.
