RA Tax Rebate Calculation

V

^^vampire^^

Expert Member
Joined
Feb 17, 2009
Messages
3,912
Reaction score
648
Hi

Can someone help me out with this.

How do you calculate the rebate SARS gives you when contributing to a retirement annuity?

Thanks
 
S11 (n) -i) aa) so much of the total current contributions to any retirement annuity fund or funds made during the year of assessment by any taxpayer as a member of such fund or funds as does not in the case of the taxpayer exceed the greatest of--

A) 15 per cent of an amount equal to the amount remaining after deducting from, or setting off against, the income derived by the taxpayer during the year of assessment (excluding income derived from any retirement funding employment (being the income or part thereof referred to in the definition of "retirement funding employment" in section 1), and any retirement fund lump sum benefit and retirement fund lump sum withdrawal benefit) the deductions or assessed losses admissible against such income under this Act (excluding this paragraph, sections 17A, 18 and 18A and items (c) to (i), inclusive, of paragraph 12(1) of the First Schedule); or

B) the amount, if any, by which the amount of R3 500 exceeds the amount of any deduction to which the taxpayer is entitled under paragraph (k)(i) in respect of the said year; or

C) the amount of R1 750;
 
First question is what or where do you get your income from. If you earn a normal salary then the calculation is different to that of someone who is for example self employed or earning commission. It also depends on what or how your employer codes your IRP5. Will need more info to assist...
 
Mbuzi said:
S11 (n) -i) aa) so much of the total current contributions to any retirement annuity fund or funds made during the year of assessment by any taxpayer as a member of such fund or funds as does not in the case of the taxpayer exceed the greatest of--

A) 15 per cent of an amount equal to the amount remaining after deducting from, or setting off against, the income derived by the taxpayer during the year of assessment (excluding income derived from any retirement funding employment (being the income or part thereof referred to in the definition of "retirement funding employment" in section 1), and any retirement fund lump sum benefit and retirement fund lump sum withdrawal benefit) the deductions or assessed losses admissible against such income under this Act (excluding this paragraph, sections 17A, 18 and 18A and items (c) to (i), inclusive, of paragraph 12(1) of the First Schedule); or

B) the amount, if any, by which the amount of R3 500 exceeds the amount of any deduction to which the taxpayer is entitled under paragraph (k)(i) in respect of the said year; or

C) the amount of R1 750;
Click to expand...

100% correct

In practice.
Greater of
15% x NON RETIREMENT Funding amount
3500 - any deduction from SARS allowable
R1750

Ie your absolute minimum you will receive will be R1750 if you have an RAF but you will pick the biggest obviously this decreases overall tax payable.

Non retirement funding,will be your salary less pension fund for a very simple example.
 
I earn a normal salary.

so lets say i earn R25000 ctc and after provident fund, medical aid etc i get R21 000 before tax, is this amount the non-retirement amount?

would that then mean R21 000 * 15% = 3150 be the max that you could get a rebate on that salary amount?
 
You are close.

I have to give you how they get to the R21 000 just so you have a clue on what I am talking about.I promise it will make sense

Salary(Retirement amount used to calculate your pension fund allowance)
Pension fund contribution allowance/deduction(You and your companies contribution
1750
7.5%
3500 -deductions)
Subtotal(This total is your NON pensionable/Retirement amount)
Retirement Annuity
Greater of
15% x NON RETIREMENT Funding amount
3500 - any deduction from SARS allowable
R1750

-Medical Aid

Income
Tax at tables
Tax payable xxx

For your example it would be the R25 000 - pension(i dont know your contributions) = X

Now your RAF
Greater of
X multiplied by 15%
R3500 - deductions(None in your case)
R1750

The x multiplied by 15% will be your greatest amount
So take around R20 000-R22 000 x 15%
and thats your allowance,this is ofcourse dependent on how much you are contributing to the RAF.
Ie if you calc comes out at like R5000 and you only contribute R3000 it is limited to your actual contribution,or the greater of the above,so you would select the R3500


^^vampire^^ said:
I earn a normal salary.

so lets say i earn R25000 ctc and after provident fund, medical aid etc i get R21 000 before tax, is this amount the non-retirement amount?

would that then mean R21 000 * 15% = 3150 be the max that you could get a rebate on that salary amount?
Click to expand...
 
But ya use the link above.Will help get some more accurate figures.
Im just trying to help you out on how the calcs are done and what SARS is doing with your salary.You can imagine this why PAYROLL systems sell so well.They either put tax people like me in or out of work :P

Greg C said:
You are close.

I have to give you how they get to the R21 000 just so you have a clue on what I am talking about.I promise it will make sense

Salary(Retirement amount used to calculate your pension fund allowance)
Pension fund contribution allowance/deduction(You and your companies contribution
1750
7.5%
3500 -deductions)
Subtotal(This total is your NON pensionable/Retirement amount)
Retirement Annuity
Greater of
15% x NON RETIREMENT Funding amount
3500 - any deduction from SARS allowable
R1750

-Medical Aid

Income
Tax at tables
Tax payable xxx

For your example it would be the R25 000 - pension(i dont know your contributions) = X

Now your RAF
Greater of
X multiplied by 15%
R3500 - deductions(None in your case)
R1750

The x multiplied by 15% will be your greatest amount
So take around R20 000-R22 000 x 15%
and thats your allowance,this is ofcourse dependent on how much you are contributing to the RAF.
Ie if you calc comes out at like R5000 and you only contribute R3000 it is limited to your actual contribution,or the greater of the above,so you would select the R3500
Click to expand...
 
Greg C said:
100% correct


Non retirement funding,will be your salary less pension fund for a very simple example.
Click to expand...


no it's not................pension fund deductions come from retirement funding income and has nothing to do with non retirement funding income.

non retirement funding income is made up of allowances such as travel, other allowances etc. retirement funding income is made up of salary income and sometimes bonus.
 
Celine said:
no it's not................pension fund deductions come from retirement funding income and has nothing to do with non retirement funding income.

non retirement funding income is made up of allowances such as travel, other allowances etc. retirement funding income is made up of salary income and sometimes bonus.
Click to expand...

Apologies.You are correct.
We are human,forgive me
 
You must log in or register to reply here.
Back
Top
Sign up to the MyBroadband newsletter
X