Reference no: EM133266578

A taxpayer (65 years old) retired from employment at end of July in the current year of assessment, having reached normal retirement age. She was entitled to a lump sum from her pension fund (not a state pension fund) of R1 200 000 (this included interest of R300 000). At the end of the previous year of assessment she had a balance of retirement fund contributions amounting to R1 900 that were unclaimed. She requested that R3 000 of her lump sum be paid out to purchase new tyres for her car (R3 000) and the balance was transferred to a pension preservation fund. Calculate the taxable amount of the lump sum received.