“risk benefit policy” means a policy under which the risk benefit provided by the fund directly or indirectly for the benefit of a member of the fund is provided by means other than a policy of insurance;
[Definition of “risk benefit policy” inserted by section 43(1)(b) of Act 20 of 2021 effective on 1 March, 2022 and applicable in respect of years of assessment commencing on or after that date]
12E. Contribution to bargaining council
(1) The cash equivalent of the value of the taxable benefit contemplated in paragraph 2(m) is the amount of any contribution or payment made by the employer in respect of a year of assessment, directly or indirectly, to any bargaining council that is established in terms of section 27 of the Labour Relations Act, 1995 (Act No. 66 of 1995), in respect of a scheme or fund as contemplated in section 28(1)(g) of that Act.
(2) Where an appropriate portion of any expenditure contemplated in subparagraph (1) cannot be attributed to the employee for whose benefit the amount is paid, the amount of that expenditure in relation to that employee is deemed, for the purposes of subparagraph (1), to be an amount equal to the total expenditure incurred by the employer during that year of assessment for the benefit of all employees divided by the number of employees in respect of whom the expenditure is incurred.
[Paragraph 12E inserted by section 72 of Act 23 of 2018 effective on 1 March 2019, applies in respect of years of assessment commencing on or after that date.]
(2) The cash equivalent of the value of the taxable benefit contemplated in paragraph 2(l), where the benefits payable to members in respect of a fund member category of a pension, provident or retirement annuity fund consists solely of defined contribution components, is the value of the amount contributed by the employer for the benefit of an employee who is a member of that fund.
[Subparagraph (2) substituted by section 69 of Act 17 of 2017 effective on 1 March 2016]
(3) Where the taxable benefits payable to members in respect of a fund member category of a pension, provident or retirement annuity fund consists of components other than only defined contribution components, the cash equivalent of the value of the taxable benefit contemplated in paragraph 2(l) is an amount that must be determined in accordance with the formula:
[Words preceding the formula substituted by section 69 of Act 17 of 2017 effective on 1 March 2016]
X = (A x B) – C
in which formula-
(a) ‘X’ represents the amount to be determined;
(b) ‘A’ represents the fund member category factor in respect of the fund member category of which the employee is a member;
(c) ‘B’ represents the amount of the retirement funding income of the employee;
[Paragraph (c) substituted by section 101 of Act 25 of 2015 effective on 1 March 2016]
(d) ‘C’ represents the sum of the amounts contributed by the employee to the fund in terms of the rules of the fund, excluding any additional voluntary contributions contributed to the fund by the employee, and buyback, in respect of that year of assessment.
(4) The board of a fund must provide to the employer of the employees who are members of a fund a contribution certificate in respect of the benefit contemplated in subparagraph (3)-
(a) no later than one month before the commencement of the year of assessment in respect of which the contribution certificate is issued: Provided that the board of the fund must not provide a contribution certificate in respect of any year of assessment in respect of which those benefits remain unaltered subsequent to the issue of that contribution certificate;
[Item (a) amended by section 71 of Act 23 of 2018 effective on 1 March 2018, applies in respect of years of assessment commencing on or after that date]
(b) where the rules of the fund are amended and those amendments or for any reason affect the value of or entitlement to any benefit payable to a member of that fund or a dependant or nominee of that member, the contribution certificate must be supplied to the employer no later than one month after the day on which those amendments become effective;
(c) where an error occurred in calculating the fund member category factor contemplated in subparagraph (5)(a), a corrected contribution certificate must be supplied to the employer and that corrected certificate will have effect from the first day of the month following the month during which that corrected certificate was received; or
[Item (c) added by section 71 of Act 23 of 2018 effective on 1 March 2018, applies in respect of years of assessment commencing on or after that date]
(d) where the fund member category factor changed during the year of assessment, the contribution certificate must be supplied to the employer no later than one month after the day on which those changes become effective.
[Item (d) added by section 71 of Act 23 of 2018 effective on 1 March 2018, applies in respect of years of assessment commencing on or after that date]
(5) The Minister must make regulations prescribing-
(a) the manner in which a fund must determine all fund member category factors; and
(b) the information that the contribution certificate contemplated in subparagraph (4) must contain.
(6) No value must be placed in terms of this paragraph on the taxable benefit derived from any contribution made by an employer to a fund-
(a) for the benefit of a member of that fund who has retired from that fund; or
(b) in respect of the dependants or nominees of a deceased member of that fund.
[Paragraph 12D inserted by section 125 of Act 31 of 2013 effective on 1 March 2016 – comes into operation in terms of section 125 of Act 31 of 2013 as substituted by section 131 of Act 43 of 2014, substituted by section 77 of Act 43 of 2014 effective on 1 March 2016]
‘underpin component’ means a benefit receivable from a pension fund, provident fund or retirement annuity fund the value of which benefit, in terms of the rules of the fund, is the greater of the amount of a defined contribution component or a defined benefit component other than a risk benefit.
“risk benefit” means a benefit payable by the fund in respect of the death or permanent disablement of a member to that member or to a dependant or nominee of that member;
[Definition of “risk benefit” amended by section 43(1)(b) of Act 20 of 2021 effective on 1 March, 2022 and applicable in respect of years of assessment commencing on or after that date]
‘retirement-funding income’ means-
(a) in relation to any employee or the holder of an office (including a member of a body of persons whether or not established by or in terms of any law) who in respect of his or her employment derives any income constituting remuneration as defined in paragraph 1 of the Fourth Schedule and who is a member of or, as an employee, contributes to a pension fund or provident fund established for the benefit of employees of the employer, from whom such income is derived, the income that is taken into account in the determination of the contributions made by the employer or the pension fund or provident fund for the benefit of the employee to such pension fund or provident fund in terms of the rules of the fund; or
[Paragraph (a) substituted by section 69(a) of Act 15 of 2016 effective on 1 March 2016, applies in respect contributions made on or after that date, and section 69(b) of Act 15 of 2016 effective on 1 March 2017, applies in respect contributions made on or after that date]
(b) in relation to a partner in a partnership (other than a partner contemplated in paragraph (a)) that part of the partner’s income from the partnership in the form of the partner’s share of profits as is taken into account in the determination of the contributions made by the partnership for the benefit of the partner to a pension fund or provident fund in terms of the rules of the fund: Provided that for the purposes of this definition a partner in a partnership must be deemed to be an employee of the partnership and a partnership must be deemed to be the employer of the partners in that partnership;
‘member’ means in relation to a pension, provident or retirement annuity fund, any member or former member of that fund but does not include any member or former member or person who has received all the benefits which may be due to them from the fund and whose membership has thereafter been terminated in accordance with rules of the fund;
‘fund return’, in relation to-
(a) the assets of a fund, means any income (received or accrued) and capital gains and losses (realised or unrealised) earned on the assets of the fund, net of expenses and tax charges, associated with the acquisition, holding or disposal of assets; or
(b) any portion of the assets of a fund if the assets are separately identifiable, means any income (received or accrued) and capital gains and losses (realised or unrealised) earned on those assets, net of expenses and tax charges associated with the acquisition, holding or disposal of assets; or
(c) the assets of a fund, to the extent that those assets consist of long-term policies which are “fund member policies” as defined in Part 5 of the Regulations under the Long-term Insurance Act means the “growth rate” (as defined in those Regulations) applicable to those policies, as determined in accordance with those Regulations;
‘fund member category factor’ means the fund member category factor contemplated in subparagraph (5)(a);
[Definition of “fund member category factor” substituted by section 69 of Act 17 of 2017 effective on 1 March 2016]
‘fund member category’ in relation to members of a pension fund, provident fund or retirement annuity fund, means any group of members in respect of whom, in terms of the rules of the fund-
(a) the employers of those members and those members must respectively make a contribution to that fund in an amount in respect of retirement funding income at the same fixed rate; and
(b) the determination of the value of the benefits of the members referred to in paragraph (a) and the determination of the entitlement of those members to those benefits are made according to the same method;