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Thread: Maximum tax deductable pension fund contributions

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    Site Caretaker Dave A's Avatar
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    Maximum tax deductable pension fund contributions

    What is the maximum tax deductable pension fund contribution?
    Is the limit based on the total of company and individual contributions?

    Some clarity on these limits would be appreciated.
    The trouble with opportunity is it normally comes dressed up as work.

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    Silver Member Graeme's Avatar
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    Dave, an extract from BDO's 2009/2010 tax book:
    "Any person may claim a deduction of his current contributions to a pension fund. The deduction is limited to the greater of: R1750 or 7.5% of his remuneration derived from retirement funding employment. Any excess may not be carried foeward to the following year of assessment." It goes on to deal with Retirement Annuity Funds.......

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    Dave A (21-Jul-09)

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    Site Caretaker Dave A's Avatar
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    Thanks Graeme. The next question is what is the maximum tax deductable company contribution to an individual's pension funding?
    The trouble with opportunity is it normally comes dressed up as work.

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    Employer contributions to a pension fund, provident fund or benefit fund are tax
    deductible in terms of section 11(l) of the Income Tax Act, to a maximum of 10% of an employee’s approved remuneration or such higher amount as the Commissioner for the South African Revenue Services (SARS) may regard as reasonable and allow.

    Current departmental practice by SARS is to allow a deduction of up to 20% of remuneration. This 20% includes contributions to a benefit fund, which is defined to include any medical scheme registered under the provisions of the Medical Schemes Act, 1998. Put differently, the employer’s total contribution towards a pension fund, provident fund and medical scheme is limited to 20% of the employee’s approved remuneration.

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    Dave A (22-Jul-09)

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