Individual Tax Module | How do I cater for a transfer between Approved Funds on a Lumpsum RA Withdrawal?

Published: 08/08/2023

My taxpayer has transferred funds between Retirement Annuity Funds during the course of the year. An IRP5 has been issued by the old fund. How do I indicate within ITM that no tax should be deducted for the transfer, as the funds were transferred directly into another RA and not to the taxpayer?

Answer:

When receiving the IRP5 from SARS from the old fund, ITM does not receive any information from SARS to indicate that a transfer between approved funds was performed for that lumpsum withdrawal. Because of this; unless manually input into the correct place in ITM, the income will reflect as taxable.

When downloading the IRP5’s from SARS within ITM, the IRP5 from the old fund will be downloaded and will be visible within your IRP5 section.
The income from the lump sum withdrawal will be indicated within the IRP5 under the relevant income code.
Please follow these steps to mark the transfer to approved funds as non-taxable

2016 Tax Year and prior:

Step 1: Open the Retirement Contributions screen by clicking the Retirement/Pension link on the home screen.

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Step 2: Input the value that was transferred between approved funds in the Transfer to Approved Funds nput box. This should be the full amount that was transferred that is indicated on the IRP5.

2017 Tax Year:

Step 1: Open the Non-taxable amounts (incl. Dividends and Exempt) screen by clicking the link under Gross Income on the home screen.

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Step 2: Input the value that was transferred between approved funds in the Transfer to Approved Funds input box. This should be the full amount that was transferred that is indicated on the IRP5.

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