Tax and SARS knowledge base
Which disability, injury and war-veteran pensions are exempt from tax?
Which disability, injury and war-veteran pensions are exempt from tax?
Last reviewed:
Direct answer
The current SARS ITR12 guide lists bounded exempt categories. They are war-veteran pensions; disability pensions under section 2 of the Social Assistance Act; mining-disease compensation; Workmen's Compensation or COIDA compensation; and the limited pre-1 March 1994 occupational death-or-disablement pension category. That is not a general exemption for every payment described as disability, injury or veteran income.
Before leaving an amount off your ITR12, confirm that the payment actually falls within the listed statutory category. Keep the legal scheme or award, the wording of the payment and the relevant certificate information.
An exemption question is different from a medical tax credit, a disability-related expense claim or an ordinary pension assessment. Keep those questions separate so that a genuine entitlement is not confused with an unsupported return entry.
What this means in practice
The payer may use broad terms such as disability pension, injury pension or veteran benefit. The SARS list is useful because it is specific, but a label alone can still describe a fund annuity, insurance payment, compensation benefit or a mix of amounts. The tax treatment follows the legal source and applicable provision, not a bank statement description.
Start with the award letter, annual statement and tax certificate. They should identify who pays, the period, and the nature of the benefit. If an amount appears on the ITR12, do not delete it because you believe it should be exempt. Ask the payer to explain the certificate and get advice on the statutory basis. Correct factual certificate errors through the issuer.
Medical evidence can be important to the benefit itself, but it is not automatically enough to prove tax treatment. Keep it private and only provide what a valid SARS verification or professional review actually needs.
Step-by-step
- Identify every payment.
Separate recurring pension payments from lump sums, insurance proceeds and reimbursements. Record the payer, payment date and amount.
- Obtain source documents.
Keep the award letter, scheme rules, annual statement and tax certificate. Ask the payer for a written benefit description if the papers are unclear.
- Match the ITR12 to the certificate.
Compare prepopulated income with the certificate before submission. An entry can be a data issue or a legal issue, and the route to fix each is different.
- Establish the claimed basis.
Match the payment to a listed category and ask a practitioner to identify the precise statutory rule where this is not clear. Do not rely on an informal assurance or a benefit nickname.
- Preserve proof for verification.
Store the documents securely with the return, assessment and any professional advice. SARS can request support for income treatment.
- Review annually.
A change in payer, benefit form or certificate can change the facts. Check each tax year rather than copying an older return treatment.
Documents and records to keep
- Award letter and statutory or scheme reference.
- Tax certificate, payment statements and bank proof.
- Relevant medical or service documentation, held securely.
- ITR12, ITA34 and written advice.
Important limits and exceptions
This is not a decision that every disability or veteran payment is exempt. The SARS-listed categories are bounded: war-veteran pensions, section 2 Social Assistance Act disability pensions, mining-disease compensation, Workmen's Compensation or COIDA compensation, and the limited pre-1 March 1994 occupational death-or-disablement pension category. It does not determine employer disability cover, foreign service pensions or additional medical expense tax credits.
Do not use this guidance to change source data without support. A tax certificate error should be corrected by its issuer. A legal exemption claim should be supported by the correct documents and advice.
When to get tailored advice
Get tailored advice before filing if the payment is material, the award is historic, the certificate conflicts with your documents, you receive multiple benefit types or you want to claim an exemption. TaxProof can help prepare the records for review.
Ask the adviser to state which payment is being reviewed, which tax year is relevant and what source documents were considered. That makes it easier to distinguish a supported position from a general statement about disability or veteran benefits.
Related TaxProof guides
- How do medical tax credits work?
- How do I report medical scheme contributions missing from my IRP5? (B06-IND-006)