National Treasury has put limits on the amount you can claim as a tax deduction in a Retirement annuity account. The Annual Limit is 27.5% of your gross income to a maximum of R350 000 per tax year.
Retirement fund contributions:
- Amounts contributed to a pension, provident, and retirement annuity funds during a year of assessment are deductible by members of those funds.
- Amounts contributed by employers and taxed as fringe benefits are treated as contributions by the individual employee.
- The deduction is limited to 27.5% of the greater of remuneration for PAYE purposes or taxable income (both excluding retirement fund lump sums and severance benefits).
- Furthermore, the deduction is limited to a maximum of R350 000. Any contributions exceeding the limitations are carried forward to the immediately following year of assessment and are deemed to be contributed in that following year.
- The amounts carried forward are reduced by contributions set off against retirement fund lump sums and against retirement annuities.
Unfortunately, there are no rollovers allowable on contribution limits. If you do not invest 27.5% of your Taxable Income per tax year, the limit does not rollover.