TAXATION OF BENEFITS
BENEFITS PAID TO A FORMER SPOUSE IN TERMS OF A DIVORCE ORDER
This is a complex subject and we are not able to cover all the details here. However, our current understanding of the tax legislation is that, if you get divorced and the divorce order (made after March 2009) stipulates that a portion of your “pension interest” in the Fund must be paid to your ex-spouse, any tax that the Fund is required to pay when executing this order will be deducted from the portion paid to your ex-spouse – i.e. the tax will be for your ex-spouse’s account and not for your account. The tax rates applicable will be the same as the tax rates in respect of a cash resignation benefit, as set out above. In negotiating the divorce settlement, however, you and your spouse are strongly encouraged to take specialist advice (including tax advice) on the implications of “pension splitting”, as there have been several changes in the law relating to this and we cannot be certain that the law will not be changed again.
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.