“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]
“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]
‘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.
(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]