My company is planning to start a Pension or Provident fund soon. Details aren't finalised, but I would just like to understand the tax involved in a Company matching retirement fund
As I understand it, after all the reforms, the company match is considered a fringe benefit, so it becomes part of my taxable income? Meanwhile the portion I pay would come from pre-tax money, similar to an RA?
As a problem example, with a simplified tax schedule where everyone just pays 30% of their income tax, and there is no inflation or return on investments:
My monthly gross salary is R100. My company will match up to 5%. This means I can put in R5 (I assume the matching 5% is typically of gross?). The company will put in R5, bringing my gross salary with benefits to R105.
* How am I taxed from this? If I don't spend or earn anything else for the tax year, what amount will end up being in my bank balance, and in my retirement fund?
* Since the Company Match is a benefit, what amount can I put into an RA afterward, before hitting the 27.5% total retirement funding cap?
Thanks for reading, I would appreciate any help clarifying this.