“retirement fund lump sum benefit” means an amount determined in terms of paragraph 2(1)(a) or (c) of the Second Schedule;
[Definition of “retirement fund lump sum benefit” inserted by section 3 of Act 8 of 2007 and substituted by section 2 of Act 3 of 2008, section 7 of Act 17 of 2009 and section 2 of Act 17 of 2017 effective on 1 March 2018 and applies in respect of years of assessment commencing on or after that date]
“remuneration proxy”, in relation to a year of assessment, means the remuneration, as defined in paragraph 1 of the Fourth Schedule, derived by an employee from an employer during the year of assessment immediately preceding that year of assessment, other than the cash equivalent of the value of a taxable benefit derived from the occupation of residential accommodation as contemplated in subparagraph (3) of paragraph 9 of the Seventh Schedule in the application of that subparagraph: Provided that-
[Words preceding the proviso substituted by section 3 of Act 25 of 2015 and section 5 of Act 15 of 2016 effective 1 March 2017 in respect of years of assessment ending on or after that date]
(a) where during a portion of such preceding year the employee was not in the employment of the employer or of any associated institution, as defined in paragraph 1 of the Seventh Schedule, in relation to the employer, the remuneration proxy as respects that employee must be deemed to be an amount which bears to the amount of the employee’s remuneration for the portion of such preceding year during which the employee was in such employment the same ratio as the period of 365 days bears to the number of days in such last-mentioned portion;
[Paragraph (a) substituted by section 1(1)(g) of Act 42 of 2024 effective on 1 March, 2025 and applicable in respect of years of assessment commencing on or after that date]
(b) where during the whole of such preceding year, the employee was not in the employment of the employer or of any associated institution, as defined in paragraph 1 of the Seventh Schedule, in relation to the employer, the remuneration proxy as respects that employee must be deemed to be an amount which bears to the employee’s remuneration during the first month during which the employee was in the employment of the employer the same ratio as 365 days bears to the number of days during which the employee was in such employment;
[Definition of “remuneration proxy” inserted by section 4(1)(zZa) of Act 31 of 2013 and amended by section 3(1)(zA) of Act 25 of 2015 and by section 5(1)(h) of Act 15 of 2016 effective on 1 March, 2017 and applicable in respect of years of assessment ending on or after that date. Paragraph (b) substituted by section 1(1)(g) of Act 42 of 2024 effective on 1 March, 2025 and applicable in respect of years of assessment commencing on or after that date]
“relative” in relation to any person, means the spouse of that person or anybody related to that person or that person’s spouse within the third degree of consanguinity, or any spouse of anybody so related, and for the purpose of determining the relationship between any child referred to in the definition of ‘child’ in this section and any other person, that child shall be deemed to be related to the adoptive parent of that child within the first degree of consanguinity;
[Definition of “relative” inserted by section 4 of Act 90 of 64 and substituted by section 1 of Act 23 of 2018 effective on 17 January 2019]
“qualifying investor” means a member of a partnership or foreign partnership or a beneficiary of a trust if the liability of the member or beneficiary to any creditor of the partnership, trust or foreign partnership is limited to the amount that the member or beneficiary has contributed or undertaken to contribute to the partnership, trust or foreign partnership, unless that member or beneficiary-
(a) participates in the effective management of the trade or business of the partnership, trust or foreign partnership;
(b) has the authority to act on behalf of-
(i) the partnership or foreign partnership;
(ii) the members of the partnership or foreign partnership; or
(iii) the trust; or
(c) renders any services to or on behalf of the partnership, trust or foreign partnership;
“provident fund” means—
(a) any provident fund established by law;
(b) any provident fund established for the benefit of the employees of any municipality or of any local authority (as defined in the definition of “local authority” in this section prior to the coming into operation of section 3(1)(h) of the Revenue Laws Amendment Act, 2006 (Act 20 of 2006), that was established prior to the date that section so came into operation); or
(c) any fund contemplated in subparagraph (b), which includes as members employees of any municipal entity created in accordance with the provisions of the Municipal Systems Act, 2000 (Act 32 of 2000), over which one or more municipalities or local authorities (as defined in section 1 prior to the coming into operation of section 3(1)(h) of the Revenue Laws Amendment Act, 2006, and that was established prior to the date that section so came into operation) exercise ownership control as contemplated by that Act, where such fund was established—
(aa) on or before 14 November 2000, and such employees were employees of a local authority (as defined in section 1 prior to the coming into operation of section 3(1)(h) of the Revenue Laws Amendment Act, 2006, and that was established prior to the date that section so came into operation) immediately prior to becoming employees of such municipal entity; or
(bb) after 14 November 2000, and such fund has been approved by the Commissioner subject to such limitations, conditions and requirements as contemplated in paragraph (c) of the definition of “provident fund”; and
(d) any fund (other than a pension fund, pension preservation fund, provident preservation fund, benefit fund or retirement annuity fund) which is approved by the Commissioner in respect of the year of assessment in question and, in the case of any such fund established on or after 1 July 1986, is registered under the provisions of the Pension Funds Act:
Provided that the Commissioner may approve a fund subject to such limitations or conditions as he may determine, and shall not approve a fund in respect of any year of assessment unless he is in respect of that year of assessment satisfied-
(i) that the fund is a permanent fund bona fide established solely for the purpose of providing annuities for members on retirement date or for the dependants or nominees of deceased members, or mainly for the said purpose and also for the purpose of providing benefits other than annuities for the persons aforesaid or for the purpose of providing any benefit contemplated in the definition of “savings withdrawal benefit”, paragraph 2C of the Second Schedule or section 15A or 15E of the Pension Funds Act; and
[Paragraph (i) (previously paragraph (a)) substituted by section 2(f) of Act 21 of 1995, by section 4(1)(s) of Act 60 of 2008, by section 4(1)(zN) of Act 31 of 2013 (section 4(1)(zO) of Act 31 of 2013 deleted by section 143(1)(a) of Act 25 of 2015), by section 2(1)(h) of Act 17 of 2017 (as substituted by section 75(1) of Act 23 of 2020), (effective date in section 1(2) of Act 2 of 2016 substituted by section 97(1)(b) of Act 17 of 2017 and by section 110(1)(b) of Act 23 of 2018), by section 1(1)(p) of Act 12 of 2024 and by section 1(1)(o) of Act 44 of 2024 deemed to have come into operation on 1 September, 2024]
(ii) that the rules of the fund provide—
(aa) that all annual contributions of a recurrent nature to the fund shall be in accordance with specified scales;
(bb) that membership of the fund throughout the period of employment shall be a condition of the employment by the employer of all persons of the class or classes specified therein who enter the employment of the employer on or after the date upon which-
(a) the fund comes into operation; or
(b) the employer becomes a participant in that fund;
(cc) that person who immediately prior to the said date were employed by the employer and who on the said date fall within the said class or classes may, on application made, be permitted to become members of the fund on such conditions as may be specified in the rules;
(dd) that on retirement not more than one-third of the member’s interest in the vested component may be commuted for a single payment, and that the remainder calculated together with the member’s interest in the retirement component must be paid in the form of an annuity (including a living annuity), a combination of annuities (including a combination of methods of paying the annuity) or a combination of types of annuities except where two-thirds of the total member’s interest in the vested component, calculated together with the total member’s interest in the retirement component, does not exceed R165 000, where the member is deceased or where the member elects to transfer the retirement interest to a pension preservation fund, provident preservation fund or retirement annuity fund: Provided that in determining the value of two-thirds of the member’s interest in the vested component an amount calculated as follows must not be taken into account-
(a) in the case of a person who is or was a member of a provident fund or provident preservation fund and who is or was 55 years of age or older on 1 March 2021-
(AA) any amount contributed to a provident fund or transferred to provident preservation fund prior to, on and after 1 March 2021 of which that person is or was a member on 1 March 2021;
(BB) with the addition of any other amount credited to the member’s individual account or minimum individual reserve of the provident fund or provident preservation fund prior to, on and after 1 March 2021; and
(CC) any fund return, as defined in the Pension Funds Act, in relation to the contributions or transfers contemplated in subparagraph (AA) or amounts credited contemplated in subparagraph (BB);
[Subparagraph (CC) substituted by section 1(1)(h) of Act 17 of 2023 effective on 1 March, 2022 and is applicable in respect of years of assessment commencing on or after that date]
(b) in any other case of a person who is or was a member of a provident fund or provident preservation fund on 1 March 2021-
(AA) any amount contributed to a provident fund or transferred to a provident preservation fund prior to 1 March 2021;
(BB) with the addition of any other amounts credited to the member’s individual account or minimum individual reserve of the provident fund or provident preservation fund as a result of the value of the member’s individual account or minimum individual reserve on 1 March 2021; and
(CC) any fund return, as defined in the Pension Funds Act, in relation to the contributions or transfers contemplated in subparagraph (AA) or amounts credited contemplated in subparagraph (BB);
[Subparagraph (CC) substituted by section 1(1)(i) of Act 17 of 2023 effective on 1 March, 2022 and is applicable in respect of years of assessment commencing on or after that date]
reduced proportionally by an amount permitted in terms of the Pension Funds Act to be deducted from the member’s individual account or minimum individual reserve of the provident fund or provident preservation fund prior to, on and after 1 March 2021: Provided further that in the case where the remaining balance is utilised to provide or purchase more than one annuity, the amount utilised to provide or purchase each annuity must exceed R165 000;
[Subparagraph (dd) substituted by section 4(1)(i) of Act 20 of 2021 and amended by section 1(1)(q) of Act 12 of 2024 and by section 1(1)(p) of Act 44 of 2024 deemed to have come into operation on 1 September, 2024]
(ee) that the employee may elect to transfer the withdrawal interest to a pension fund established by the same employer or a pension fund in which that employer participates;
(ff) that a partner of a partnership is regarded as an employee of the partnership; and
(gg) that an employee who has transferred a retirement interest in terms of paragraphs 2(1)(c) and 6A(d) of the Second Schedule to this fund shall not be entitled to payment of a withdrawal benefit as contemplated in paragraph 2(1)(b)(ii) of the Second Schedule in respect of that transferred amount; and
[Subparagraph (gg) added by section 1(1)(j) of Act 17 of 2023 with effect from 1 March, 2024 and applicable in respect of years of assessment commencing on or after that date]
[Paragraph (ii) (previously paragraph (b)) substituted by section 2(1)(f) of Act 94 of 1983 and by section 1(1)(p) of Act 23 of 2018, amended by section 1(1)(q) of Act 23 of 2018 and substituted by section 2(1)(e) of Act 34 of 2019 and by section 1(1)(c) of Act 2 of 2016, as substituted by section 97(1)(a) of Act 17 of 2017, by section 110(1)(a) of Act 23 of 2018 and by section 75(1) of Act 23 of 2020 effective on 1 March, 2021 and applicable in respect of years of assessment commencing on or after that date]
(iii) that the rules of the fund have been complied with:
[Paragraph (iii) (previously paragraph (c)) substituted by section 1(1)(c) of Act 2 of 2016 and substituted by section 97(1)(a) of Act 17 of 2017, by section 110(1)(a) of Act 23 of 2018 and by section 75(1) of Act 23 of 2020 effective on 1 March, 2021 and applicable in respect of years of assessment commencing on or after that date]
Provided further that a fund contemplated in paragraph (i) of the further proviso to the definition of “provident preservation fund” which is deemed to be approved or which is approved in terms of that definition or which fails to submit its rules as required by that paragraph is deemed effective on the earlier of the date of the deemed approval or 30 September 2010 to be a fund which is not approved in terms of this definition: Provided further that the Commissioner may recognise a fund contemplated in paragraph (a), (b) or (c) in respect of any year of assessment if the Commissioner is satisfied that the rules of the fund provide that in determining the value of retirement interest an amount calculated as follows must not be taken into account-
(i) in the case of a person who was a member of a provident fund or a provident preservation fund and who was 55 years of age or older on 1 March 2021-
(aa) any amount contributed to a provident fund or transferred to a provident preservation fund prior to, on or after 1 March 2021 of which that person was a member on 1 March 2021;
(bb) with the addition of any other amounts credited to the member’s individual account or minimum individual reserve of the provident fund or provident preservation fund prior to, on or after 1 March 2021; and
(cc) where applicable, any fund return, as defined in the Pension Funds Act, in relation to the contributions or transfers contemplated in subparagraph (aa) or amounts credited contemplated in subparagraph (bb); or
(ii) in any other case of a person who was a member of a provident fund or a provident preservation fund on 1 March 2021-
(aa) any amount contributed to a provident fund or transferred to a provident preservation fund prior to 1 March 2021;
(bb) with the addition of any other amounts credited to the member’s individual account or minimum individual reserve of the provident fund or provident preservation fund as a result of the value of the member’s individual account or minimum individual reserve on 1 March 2021; and
(cc) where applicable, any fund return, as defined in the Pension Funds Act, in relation to the contributions or transfers contemplated in subparagraph (aa) or amounts credited contemplated in subparagraph (bb),
where applicable, reduced proportionally by any amount permitted to be deducted in terms of the Pension Funds Act from the member’s individual account or minimum individual reserve of the provident fund or provident preservation fund prior to, on or after 1 March 2021: Provided further that the Commissioner may approve or recognise a fund contemplated in-
(i) paragraph (a), (b), (c) or (d) in respect of any year of assessment, if the Commissioner is satisfied that the rules of the fund provide-
(aa) for the creation of a savings component, retirement component and vested component;
(bb) that a member shall, prior to his or her retirement date, be entitled to elect to receive the payment of an amount from the retirement component, that is deemed to be a lump sum benefit contemplated in paragraph 2(1)(b)(ii) of the Second Schedule, where a member-
(AA) is a person who is not a resident for an uninterrupted period of three years or longer on or after 1 March 2021; or
(BB) departed from the Republic at the expiry of a visa obtained for the purposes of-
(AAA) working as contemplated in paragraph (i) of the definition of “visa” in section 1 of the Immigration Act, 2002 (Act 13 of 2002); or
(BBB) a visit as contemplated in paragraph (b) of the definition of “visa” in section 1 of the Immigration Act, 2002 (Act 13 of 2002), issued in terms of paragraph (b) of the proviso to section 11 of that Act by the Director-General, as defined in that Act; or
(ii) paragraph (a), (b) or (c) in respect of any year of assessment, if the Commissioner is satisfied that the rules of the fund provide that on retirement, not more than one-third of a member’s interest in the vested component may be commuted for a single payment and that the remainder, calculated together with the member’s interest in the retirement component, must be paid in the form of an annuity (including a living annuity), a combination of annuities (including a combination of methods of paying the annuity) or a combination of types of annuities except where two-thirds of the total member’s interest in the vested component, calculated together with the total member’s interest in the retirement component, does not exceed R165 000, where the member is deceased or where the member elects to transfer the retirement interest to a pension preservation fund, provident preservation fund or retirement annuity fund: Provided further that the Commissioner may recognise a fund contemplated in paragraph (a), (b) or (c) in respect of any year of assessment, if the Commissioner is satisfied that the rules of the fund provide that in determining the value of two-thirds of the member’s interest in the vested component, an amount calculated as follows must not be taken into account-
(i) in the case of a person who was a member of a provident fund or a provident preservation fund and who was 55 years of age or older on 1 March 2021-
(aa) any amount contributed to a provident fund or transferred to a provident preservation fund prior to, on and after 1 March 2021 of which that person was a member on 1 March 2021;
(bb) with the addition of any other amount credited to the member’s individual account or minimum individual reserve of the provident fund or provident preservation fund prior to, on or after 1 March 2021; and
(cc) where applicable, any fund return, as defined in the Pension Funds Act, in relation to the contributions or transfers contemplated in subparagraph (aa) or amounts credited as contemplated in subparagraph (bb); or
(ii) in any other case of a person who was a member of a provident fund or a provident preservation fund on 1 March 2021-
(aa) any amount contributed to a provident fund or transferred to a provident preservation fund prior to 1 March 2021;
(bb) with the addition of any other amounts credited to the member’s individual account or minimum individual reserve of the provident fund or provident preservation fund as a result of the value of the member’s individual account or minimum individual reserve on 1 March 2021; and
(cc) where applicable, any fund return, as defined in the Pension Funds Act, in relation to the contributions or transfers contemplated in subparagraph (aa) or amounts credited as contemplated in subparagraph (bb),
where applicable, reduced proportionally by any amount permitted to be deducted in terms of the Pension Funds Act from the member’s individual account or minimum individual reserve of the provident fund or provident preservation fund prior to, on or after 1 March 2021;
[Definition of “provident fund” amended by section 2(1)(d) of Act 65 of 1986, by section 4(1)(r) and (t) of Act 60 of 2008, by section 6(1)(z) of Act 7 of 2010, by section 4(1)(zM) of Act 31 of 2013, by section 3(1)(u) of Act 25 of 2015(as substituted by section 74(1)(d) of Act 23 of 2020), by section 1(1)(j) of Act 20 of 2022, by section 1(1)(r) of Act 12 of 2024 and by section 1(1)(q) of Act 44 of 2024 deemed to have come into operation on 1 September, 2024]
“post-1990 gold mine” means a gold mine-
(a) which, in the opinion of the Director-General: Mineral and Energy Affairs, is an independent workable proposition and in respect of which a mining authorisation for gold mining was issued for the first time after 14 March 1990 in terms of the Minerals Act, 1991 (Act No. 50 of 1991); or
(b) for which a mining permit or mining right for gold mining (other than a mining permit or mining right issued on conversion of an old order mining right as defined in paragraph 1 of Schedule II to the Mineral and Petroleum Resources Development Act) was issued for the first time on or after 1 May 2004 in terms of that Act;
[Definition of “post–1990 gold mine” inserted by section 2 of Act 101 of 1990, amended by section 2 of Act 141 of 92 and substituted by section 1 of Act 43 of 2014 effective on 1 May 2004]
“Pension Funds Act” means the Pension Funds Act, 1956 (Act No. 24 of 1956);
“listed company” means a company where its shares or depository receipts in respect of its shares are listed on –
(a) an exchange as defined in section 1 of the Financial Markets Act and licensed under section 9 of that Act; or
(b) a stock exchange in a country other than the Republic which has been recognised by the Minister as contemplated in paragraph (c) of the definition of “recognised exchange” in paragraph 1 of the Eighth Schedule;
connected person” means –
(a) in relation to a natural person –
(i) any relative; and
(ii) any trust (other than a portfolio of a collective investment scheme) of which such natural person or such relative is a beneficiary;
[Subparagraph (ii) substituted by section 7 of Act 17 of 2009, section 2 of Act 22 of 2012 and section 3 of Act 25 of 2015 effective on 8 January 2016]
(b) in relation to a trust (other than a portfolio of a collective investment scheme)-
[Words preceding subparagraph (i) substituted by section 7 of Act 17 of 2009, section 2 of Act 22 of 2012 and section 3 of Act 25 of 2015 effective on 8 January 2016]
(i) any beneficiary of such trust; and
(ii) any connected person in relation to such beneficiary;
(bA) in relation to a connected person in relation to a trust (other than a portfolio of a collective investment scheme), any other person who is a connected person in relation to such trust;
[Paragraph (bA) inserted by section 19 of Act 30 of 98 and substituted by section 6 of Act 74 of 2002, section 7 of Act 17 of 2009, section 2 of Act 22of 2012, section 3 of Act 25 of 2015 and section 5 of Act 15 fo 2016 effective on 19 January 2017]
(c) in relation to a member of any partnership or foreign partnership –
(i) any other member; and
(ii) any connected person in relation to any member of such partnership or foreign partnership, other than a member who is a qualifying investor in such partnership or foreign partnership;
[Paragraph (c) substituted by section 4(1)(g) of Act 31 of 2013. Subparagraph (ii) substituted by section 1(1)(c) of Act 42 of 2024 effective on 1 January, 2025 and applicable in respect of years of assessment commencing on or after that date]
(d) in relation to a company –
(i) any other company that would be part of the same group of companies as that company if the expression ‘at least 70 per cent of the equity shares in’ in paragraphs (a) and (b) of the definition of ‘group of companies’ in this section were replaced by the expression ‘more than 50 per cent of the equity shares or voting rights in’;
(ii) ……….
(iii) ……….
(iv) any person, other than a company as defined in section 1 of the Companies Act that alone or together with any connected person in relation to that person, holds, directly or indirectly, at least 20 per cent of-
(aa) the equity shares in the company; or
(bb) the voting rights in the company;
[Subparagraph (iv) substituted by section 2(1)(a) of Act 21 of 1994, by section 2(1)(b) of Act 28 of 1997 and by section 6(1)(e) of Act 7 of 2010 and amended by section 4(1)(i) of Act 31 of 2013 and by section 4(1)(b) of Act 20 of 2021]
(v) any other company if at least 20 per cent of the equity shares or voting rights in the company are held by that other company, and no holder of shares holds the majority voting rights in the company;
(vA) any other company if such other company is managed or controlled by –
(aa) any person who or which is a connected person in relation to such company; or
(bb) any person who or which is a connected person in relation to a person contemplated in item (aa); and
(vi) where such company is a close corporation –
(aa) any member;
(bb) any relative of such member or any trust (other than a portfolio of a collective investment scheme) which is a connected person in relation to such member; and
[Item (bb) substituted by section 7 of Act 17 of 2009, section 2 of Act 22 of 2012 and section 3 of Act 25 of 2015 effective on 8 January 2016]
(cc) any other close corporation or company which is a connected person in relation to –
(A) any member contemplated in item (aa); or
[Sub-item (A)(previously sub-item (i)) renumbered by section 1(1)(d) of Act 42 of 2024]
(B) the relative or trust contemplated in item (bb); and
[Item (cc) substituted by section 2(1)(e) of Act 28 of 1997. Sub-item (B) (previously sub-item (ii)) renumbered by section 1(1)(d) of Act 42 of 2024]
(e) in relation to any person who is a connected person in relation to any other person in terms of the foregoing provisions of this definition, such other person;
: Provided that for the purposes of this definition, a company includes a portfolio of a collective investment scheme.
[Proviso added by section 7 of Act 17 of 2009 and substituted by section 2 of Act 17 of 2017 effective on 18 December 2017]
“close corporation” means a close corporation within the meaning of the Close Corporations Act, 1984 (Act No. 69 of 1984);