No R.A. deduction

[daveob]

Well, I usually get my assessment to within R10 of my calculation, but this last year ( 2011 tax year ) things seem to have changed - I was a few grand out.

In the past, I was allowed to deduct my RA contributions up to 15% of my taxable income. But either they always got it wrong in the past, or they just changed the rules.

Appears that I can only claim up to 15% of my "non-retirement funding income", not of my salary which is classified as "retirement funding income".

Firstly, I am too sh1t scared to go query this too much, in case they go back on previous years and adjust all the assessments.

Secondly, I think this is grossly unfair. Apparently, if I had a company retirement fund ( SARS approved ) then I would get the contributions as a deduction from the taxable amount.

So now I am looking for a way to level the playing fields ....

Could I declare a reasonable monthly salary ( eg R6k ) which would be "retirement funding income" and then at the end of the year, add to the IRP5 an "Annual Payment" (code 3605) and some "Commission" (code 3606).

Would these ( 3605 & 3606 ) be in the "non-retirement funding income" field ?

[geraldenek]

i'm not quite sure if you are working for your own company or for another person but, if your employer does not have any form of retirement fund, then your entire salary package will be regarded as non-retirement funding employment, and you will therefore be able to obtain tax relief on any RA contributions up to 15% of such income.

was the irp5 certificates not maybe done wrong and instead of using code 3698 they used 3697?

[daveob]

Hi Geraldene

Thanks for the reply.

I am the only member / employee in the cc ( meaning that I am also the one that put the code 3697 on the IRP5 instead of 3698 ).

Do you have an SARS link that would explain this ( officially ) as far as what types of income are classed as retirement funding or non-retirement funding ? I have been searching, but can't seem to find a definitive explanation. I don't want to go raising an objection unless I am sure of the facts.

Regards
Dave

[geraldenek]

Hello Dave

I had a look but can't find anything on SARS website. i have however found a document from pastel payroll explaining the difference.

You should go and ammend the tax certificate of the cc resubmit it to sars wait about 2 weeks and then do a revised it12 for the 2011 year. if they do ask any questions, just say it was issued wrong and you are now correcting it. they can't deny the change.

[daveob]

You should go and amend the tax certificate of the cc resubmit it to sars

Thanks a million for the info.

Are you talking about amending the IRP5 issued by the company to myself ?

[geraldenek]

Are you talking about amending the IRP5 issued by the company to myself ?

yes, you will have to ammend the IRP5 and resubmit it (doing the reconciliation again), that is why i said wait 2 weeks for your own return so that SARS have the new irp5.... just a safer timeline.

[Dave A]

If they give you a hard time, I am prepared to testify that I have asked SARS about what should be declared as pension funding vs non-pension funding remuneration on an IRP5. I was told it didn't really matter which I used. When I queried why the two elements existed then, I was told it was for statistical purposes.

I think I may have mentioned this on TFSA somewhere along the line too.

At least this thread has cleared up how I should deal with this in future