There are three tax benefits:
- Contributions are tax deductible - from 1 March 2016 the employee may deduct total contributions (made by either the employer or the employee) up to 27,5% of their gross remuneration or taxable income (whichever is the higher) to a pension, provident or retirement annuity fund. This is subject to an annual limit of R350,000. Any employer contributions is neutralised by way of a fringe benefits tax.
- Investment returns are tax free – there is no income tax or capital gains tax paid within the retirement fund.
- Benefits are taxed on a favourable basis – lump sum benefits are taxed on a sliding scale with a portion of the benefit tax free (see details under “What is the tax on your fund benefits?”)
The information and answers supplied in this section do not constitute advice as defined by the Financial Advisory and Intermediary Services Act, 37 of 2002.
