Gov’t to relax tax laws for pensioners
Mompati Tlhankane | Monday December 18, 2023 06:00
Speaking in Parliament yesterday, Serame admitted that they are aware of the outcry by Batswana due to exempting, in part, the amounts allowable for withdrawals under the Retirement Funds Act, 2022.
Serame added that it is against this background that a decision has been made to amend the Income Tax Act to align it with the Retirement Funds Act, 2022.
“The Bill will be published before the end of this year.
The government has found it worthwhile to allow for total exemption from income tax, the whole of the enhanced withdrawals that are allowed under the Retirement Funds Act, 2022. Further, given the positive impact that this amendment is expected to give to retiring members of pension funds or Batswana, publishing of the Bill in this regard, which has already been drafted, will be fast-tracked so that it can be tabled at this Honourable House at the earliest opportunity,” she said.
She said the objective of the Bill is to amend the Income Tax Act so as to increase the tax-free threshold applicable to pension fund commutable amounts from 33.33% to 50%. Serame added that the bill will increase the tax-free threshold applicable to gratuity and severance payments from 33.33% to 50% and increase the tax-free threshold applicable to retrenchment packages from 33.33% to 50%.
She indicated that it will also allow deferred pension members to access their pension funds to settle medical bills tax-free and allow 50% exemption to deferred pension amounts accessed by members to settle loans.
"We will further assess the revenue losses that would come with any proposed changes and come up with strategies for trade-offs thereon.
The Consultancy on the Botswana Pension System was undertaken through the Non-Bank Financial Institutions Regulatory Authority (NBFIRA). It assessed the effectiveness and adequacy of the Botswana Pension system and looked at ways to better inform the response to the public outcry for further withdrawals, especially from pensioners and active members. The report, which is still under consideration by the Ministry, was received in July 2023. Some of the recommendations require engagement with other Ministries, such and the Ministry of Labour and Home Affairs, and the engagements are on-going. The recommendations will be considered by government and necessary changes made,” she highlighted.
Serame was responding to a question from Tati West Member of Parliament Simon Moabi who had asked if the minister would consider amending the Income Tax Act to allow for exemption from tax for the enhanced withdrawal provisions under the Retirement Funds Act, 2022 so as to benefit Batswana.