Nasfund clarifies 35% tax claim

Business, Normal

The National, Friday June 21st, 2013

 THE Income Tax Act 2002 provides a more beneficial outcome to long-term contributors to the fund, the National Superannuation Fund (Nasfund) said.

The superfund said this in a paid advertisement to clarify   comments in the Post Courier, which said that Nasfund would be imposing a 35% tax on members’ funds.

The writer has claimed that the “members of superannuation funds or their beneficiaries would lose 35% of their contributions through tax when they receive their contributions upon reaching retirement age, become incapacitated, dies or leave active employment”.

Nasfund took exception to the writer’s comments.

It said: “We wish to clarify that the existing Income Tax and Income Tax (Superannuation Amendment) Act 2002 does not impose or allow 35% tax deduction on members’ retirement savings as stated by the writer.

“The Income Tax and Income Tax (Superannuation Amendment) Act 2002, provides a more beneficial outcome to favour long-term contributors. 

“Essentially, the longer a member retains their savings in superannuation, the less tax is paid.

There are three components that make up a member’s total contributions – employee contribution, employer contribution; and interest earned from the above contributions, Nasfund said.

The minimum employee contribution of 6% and any voluntary contributions above this level is not subject to tax as it is paid to the fund net of tax.  

The member would receive his contributions in full on withdrawal. 

“The employer contribution and the accumulated interest earned are the part of your contributions that will be taxed as these are tax deductible items from the employers’ perspective.”

Nasfund said members who are currently receiving a pension the tax is only applicable on the employee component at the marginal rate of tax over 26 fortnights.