Funeral benefits and Spouse’s life insurance
The tax treatment of these benefits is as follows:
- The premiums which the Employer pays for these insured benefits are regarded as a fringe benefit in your hands, so you will be taxed on the amount of the premium each month. This means that in effect the premiums will be paid out of your after-tax income. The premiums are however a small percentage of your pensionable salary, so the fringe benefit tax will be small.
- However, should a benefit become payable, the benefit will be paid free of tax.
Disclaimer
In providing the material that follows, the Fund has tried to reflect the tax treatment of contributions and benefits accurately at the time of writing, but the Income Tax Act is very complicated and is subject to regular changes. In the event that the following material conflicts with the Income Tax Act, the Act will apply. Because the Income Tax Act is so complicated, it is very important that you seek specialist advice if you have questions about taxation of your retirement benefits and when you have to make decisions, for instance about the form of the benefit that you take after you leave office.