My father's Mineworkers Provident Fund only paid a portion of what he was supposed to receive. Why was he paid so little?

The long answer

A new tax system was introduced for lump sum withdrawal benefits accruing on or after 1 March 2009. These benefits were taxed according to a special tax table with a lifetime tax-free exemption:

• First R22,500: 0% tax (tax-free)

• R22,501 to R600,000: 18% of the amount above R22,500

Thus, if the lump sum owed was R250,000, for example, and the tax-free amount that he contributed was R30,000, the amount to be taxed would be R220,000.

R220,000 falls within the 18% tax bracket (R22,501 to R600,000) after the initial tax-free portion. 

The tax rate is 18% of the amount exceeding R22,500 of the taxable income (or 18% of the total taxable income if the R30,000 is an all-encompassing tax-free portion).

18% tax on R220,000 is R39,600, making the final withdrawal amount R210,400.

The Mineworkers Provident Fund was required to apply for a tax directive from SARS to determine the correct amount of tax to be deducted (PAYE) before paying out the benefit.

Perhaps your first step should be to take the Mineworkers Provident Fund Statement and your father’s documents like ID etc, to your nearest SARS branch and ask them to investigate urgently.

If it turns out that you need legal help in dealing with the Mineworkers Provident Fund, you could approach Legal Aid, which is a means-tested organisation that must assist people who can’t afford a lawyer. These are their contact details: 

• Legal Aid

Tel: 0800 110 110 (Monday to Friday 7am to 7pm) 

Please call me: 079 835 7179

Email: communications2@legal-aid.co.za

Wishing you the best,
Athalie