The payment that you will receive from the Road Accident Fund (RAF) in South Africa is not subject to income tax. According to Section 10(1)(gB)(iv) of the Income Tax Act, any compensation paid under Section 17 of the Road Accident Fund Act, 1996, is exempt from normal tax. So you will not be paying tax on this amount.
5 Reasons Why Road Accident Money is Not Taxable
Here are the main reasons why the Road Accident Fund (RAF) money is not taxable:
- RAF payout is for recovery, not income.
- RAF payouts cover injury and loss, not profit.
- RAF is exempt under Section 10(1)(gB)(iv) of the Income Tax Act.
- RAF does not provide financial gain, just reimbursement for the loss of income.
- RAF serves social security needs, avoiding income tax rules.
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