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According to National Treasury, government will be proceeding with the tax reform enacted in 2013 and 2014 for equity between high and low income taxpayers, by extending the tax deduction benefit to provident fund members subject to a limit. 

An update on retirement reforms

An update on retirement reforms

30 November 2015

According to National Treasury, government will be proceeding with the tax reform enacted in 2013 and 2014 for equity between high and low income taxpayers, by extending the tax deduction benefit to provident

fund members subject to a limit. This is achieved by harmonising the tax treatment of all contributions to retirement funds, irrespective of whether they are provident, pension or retirement annuity funds.

As from 1 March 2016, employer contributions towards a retirement fund (pension, provident and retirement annuities) will be taxable as a fringe benefit. The sum of the  employee contributions and the fringe benefit will be deductible in the hands of the individual employee, limited to 27.5% of the remuneration (taxable income on assessment) or up to the monetary cap of R350 000, whichever is the lowest. Employer contributions towards a defined benefit or hybrid fund will be valued through the application of a formula.

More detail will be communicated as soon as the final Taxation Laws Amendment Bill is published. Please also see the Q&A document from National Treasury.