Correction: tax on retirement contributions
It was incorrectly reported in Personal Finance’s edition of January 26, 2013 that the new tax regime for retirement fund contributions will be implemented from March 1 this year. The correct date is March 1, 2014. Personal Finance apologises to readers for the mistake.
The retirement-savings contributions you may claim as a tax deduction for the forthcoming tax year, which starts on March 1, are:
* Occupational pension funds. The greater of 7.5 percent of your pensionable (retirement-funding) income, or R1 750.
* Retirement annuity (RA) funds. The greater of 15 percent of your taxable income less your retirement-funding income, or R3 500 less your current deductions to a pension fund, or R1 750.
The following deductions will apply in terms of the tax regime that takes effect on March 1 next year. If you are:
* Below the age of 45, you will be able to claim as a deduction total maximum contributions to all funds (for example, an occupational and an RA fund) from all sources (member and employer contributions) of up to 22.5 percent, on the higher of your employment or taxable income, with an annual limit of R250 000.
* Aged 45 and older, you will be able to claim as a deduction total maximum contributions to all funds from all sources of up to 27.5 percent, on the higher of your employment or taxable income, with an annual limit of R300 000.
In both cases, employer contributions will be added to your taxable income as a fringe benefit.