[Question] Retirement Annuity deductions for Individuals Tax

[nichoalscfm]

Hi there

I have a couple of questions for the brainy:

1.) Can Retirement Annuity deductions for Individuals, be carried forward too the next year if there is NO Income earned for that period.

2.) Is SARS permitted to issued Additional Assessments after Tax has been paid/refunded?

With reference to the above questions, SARS has issued an Additional Assessment with regards to a client of mine; where previous year RA amounts brought forward for deductions have been reversed out and now the client is too pay money back; which SARS originally refund?

HELP ??

Many thanks

[CLIVE-TRIANGLE]

Generally speaking (1) is No and (2) is Yes.

I am intrigued as to why your client paid tax when he had no income, which is the only way that a refund can arise?

[Dave A]

I am intrigued as to why your client paid tax when he had no income, which is the only way that a refund can arise?

My understanding from the OP is the refund arose from the subsequent tax year's inital assessment.

[CLIVE-TRIANGLE]

Ah, if that's what is meant then the answer to (1) might be somewhat different.

Can you please elaborate Nichoalscfm?

This is an extract from the relevant section:
bb) the deductions in terms of subparagraph (i)(aa) shall not exceed an amount equal to the amount remaining after deducting from or setting off against the income derived by the taxpayer during the year of assessment the deductions and assessed losses admissible against such income under this Act (excluding subparagraph (i)(aa), sections 17A and 19(3) and paragraph 12(1)(c) to (i), inclusive, of the First Schedule);

cc) any current contributions (excluding any amount referred to in item (aa) of this proviso) to any retirement annuity fund or funds which are made by the taxpayer as a member of such fund or funds during a year of assessment and do not qualify for deduction from his or her income for that year under subparagraph (i)(aa) shall be carried forward and, except to the extent that such contributions have been accounted for under paragraph 5(1) or 6(1)(b) or (3) of the Second Schedule, be deemed for the purposes of subparagraph (i)(aa) to be current contributions made to the fund or funds in question during the next succeeding year of assessment;

dd) no deduction shall be made under subparagraph (i)(bb) in respect of an contribution relating to any year of assessment which, if such contribution had been made during that year, would not have qualified for deduction under this paragraph, as applicable in relation to the said year;

ee) any amount being a portion of a contribution made as contemplated in subparagraph (i)(bb) and which has been disallowed solely by reason of the fact that it exceeds the amount of the deduction allowable in respect of the year of assessment, shall be carried forward and be deemed for the purposes of subparagraph (i) to be a contribution so made in the next succeeding year of assessment;

[nichoalscfm]

Ah, if that's what is meant then the answer to (1) might be somewhat different.

Can you please elaborate Nichoalscfm?

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Hi thanks for the responses:

Ok where to start:

2007: RA of R 1,838.00 was paid for the year.

2007.1 No Income

2007.2 Original Assessment issued and stated "Deduction may not cause/increase a loss - carried over" R 1838.00

2007.3 Additional Assessment - No deduction was permitted)

2008: RA of R 1,929.00 was paid for the year.

2008.1 No Income

2008.2 Original Assessment issued and stated "Amount b/f from previous year" R1,838.00 and Amount c/f to next year R 267
"Deduction may not cause/increase a loss - carried over - R 3 500.00"

2008.3 Additional Assessment - No deduction was permitted

2009: RA of R 2,026.00 was paid for the year

2009.1 Income of R 1,580.00 (Non retirement Funding-NRFI) 15% = R 237.00

2009.2 Original Assessment issued and stated "Amount b/f from previous year" R 3,736.00 and Amount c/f to next year -R 2,293.00
"Deduction may not cause/increase a loss - carried over -R 1 920.00

2009.3 NO Additional Assessment Issued??

2010: RA of R 2,127.00 was paid for the year

2010.1 Income of R 14,876.00 (NRFI) 15% = R 2,231.40

2010.2 Original Assessment issued and stated "Amount b/f from previous year" R 4,213.00 and Amount c/f to next year -R 2,840.00

2010.3 Additional Assessment - Amount b/f from previous year amended to R 446.00

2011: RA of R 2,234.00 was paid for the year

2011.1 Income of R 62,825.00 (NRFI) 15% = R 9,423.75

2011.2 Original Assessment issued and stated "Amount b/f from previous year" R 2,840.00

2011.3 Additional Assessment Received 24-08-2012 - No amount b/f from the previous year, only the R 2,234.00 is permitted as a deduction.

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I hope i have elaborated and the overall picture is much clearer now...

A refund was received in 2011; No SARS have issued additional assessments as indicated above for all the years since 2007; excluding 2009.

Now an amount is owed to SARS a year later after all the additional assessments ...

Not quite sure if one should object or merely pay the difference ... ish