Question:
I currently have a Sanlam RA. I want to contribute R150 per month extra to reflect as arrears contribution (R1 800 pa allowed). I DO NOT want to add this to my current premium as I am almost at my limit of 15% of non-retirement fund income. I also have a pension fund at limit (7.5%) and also have the R150 arrears contribution. Does Sanlam allow you to make the arrears payment of R150 and if NO, why not?
Answer:
Mr Roman,
Our law refers to arrears contributions, which can be claimed subject a limit of R1 800 pa. This limit refers to an additional current year contribution that is related to a previous tax year in which you did not claim your maximum allowable deduction. This extra contribution of R1 800 can be claimed annually in respect of all previous years in which you did not claim your full 15% (of non-pensionable income) deduction. We cannot speak for what Sanlam will allow you to do or not, but it is not so much a question of how Sanlam treats the extra R150 per month, but how you disclose it to SARS, and whether you have scope to claim the arrears contribution. The tax saving on R1 800 (a number which has not changed for many years) has lost much of its significance anyway. Even if you do no get a tax deduction now, you will get the tax deduction when you claim your retirement annuity (any contributions not deducted for tax are added to your tax free cash lump sum). Also, based on retirement reform proposals, you may, from 2015, be able to deduct 27.5% from all your taxable income in respect of all your retirement fund contributions.
