Dear fellow taxpayer

When a bread winner dies, most families rely on a pension benefit to address the coming financial difficulties. However, the value of the benefit is usually less than expected because of tax! For instance, although pension funds give exempt annuities, lump sums are potentially taxable.

Thankfully, Government has made it clear that it doesn’t support penalising beneficiaries, so from 1 January 2009 all lump sum benefits from retirement funds are exempt from Estate Duty.

This applies to:

- pension funds;
- pension preservation funds;
- provident funds;
- provident preservation funds; and
- retirement annuity funds.

Remember, to further encourage long-term retirement saving, retirement lump sums will be specifically excluded from your estate when you die, to ensure they aren’t subject to Estate Duty!

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Answered by Matsika Vengesa of Tax Consulting SA

Dear Matsika,

What is the wear and tear rate we can claim as a tax deduction for trucks? We are in the transportation business.

Answer:

For heavy duty trucks, the write-off period is three years, therefore you write-off 33.3% per year.
 
Until next week.
 
Regards
 
Nothando Hlatshwayo

Managing Editor
The Practical Tax Handbook