Darren Britz Attorney , Tarith Oosthuizen
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Understand the tax consequence on severance packages.
You may do all that’s in your power to save that job but given the current crisis, it’s always a possibility, irrespective of your performance. If you do end up losing your job and the employer lets you go with a severance package.
You may think you have enough to sustain yourself for the next few months with the settlement that your company pays you, but don’t forget that even the severance pay is taxable in the hands of the employee as profit in lieu of salary, under Section 17(3) of the Income-tax Act.
You may do all that’s in your power to save that job but given the current crisis, it’s always a possibility, irrespective of your performance. If you do end up losing your job and the employer lets you go with a severance package.
You may think you have enough to sustain yourself for the next few months with the settlement that your company pays you, but don’t forget that even the severance pay is taxable in the hands of the employee as profit in lieu of salary, under Section 17(3) of the Income-tax Act.
