[Question] Maximum tax deductable pension fund contributions

[Dave A]

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.

[Graeme]

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.......

[Dave A]

Thanks Graeme. The next question is what is the maximum tax deductable company contribution to an individual's pension funding?

[Morticia]

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.