Once the holiday season is over there will be little over a month to take maximum advantage of a significant change to the tax laws – the new retirement funds contribution deduction.
With effect form 1 March this year, the tax deduction for contributions to all retirement funds is set at 27.5% of the higher of remuneration or taxable income. Retirement lump sum benefits, withdrawal or severance benefits are excluded from taxable income. The deduction is subject to a cap of R350 000 per annum.
This leaves renewed scope for additional tax deductible contributions towards personal retirement annuities – even for those who are members of an employer pension or provident fund.
For the self- employed the previous overall deductible cap of 15% of “taxable income” has therefore been raised substantially.
Additional contributions must be finalised well before the end of February 2017.
SARS – Important dates:
25 November 2016: Deadline for submission of Feb 2016 income tax returns via E filing or at a SARS branch (non-provisional taxpayers)
30 January 2017: Deadline for provisional taxpayers submission of 2016 income tax returns via E filing only.