Twitter The Herald La Femme Weekend Post News Feed News Break
Sunscribe to The Herald Port Elizabeth eEdition Online News
Breaking News Special Reports Jobs Lifestyle Service Directory Classifieds
Search Jobs All Jobs

Budget: Retirement tax changes delayed to Mar 2014

22 February 2012
Download the full speech

By Angus Macmillan

Pretoria, Feb 22 – As flagged by the Treasury in last year’s Budget, major changes to the taxation of retirement contributions are being implemented, but only from March 1, 2014 and not from March this year as was stated in last year’s Budget.

According to the Budget Review document, tax-free deductions for individuals will be set at 22.5% and 27.5% for those below 45 and above 45 years old respectively, based on the higher of employment or taxable income.

Annual deductions will be limited to R250,000 and R300,000 for taxpayers below 45 and above 45 respectively.

The two year delay in the implementation of these proposals will be a major blow for many people nearing retirement – particularly self employed people who are currently limited to 15% of the taxable income as a retirement contribution tax deduction.

Meanwhile, a monetary threshold of R20,000 will apply to allow low-income earners to contribute in excess of the prescribed percentages.

Non-deductable contributions (in excess of the thresholds) will be exempt from income tax if, on retirement, they are taken as either part of the lump sum or as annuity income. Measures to address some of the complexities of defined benefit pension schemes will also be considered.

In addition, a rollover dispensation similar to the current retirement annuity contributions will be adopted to allow flexibility in contributions for those with fluctuating incomes. Contributions towards risk benefits and administration costs within retirement savings will be included in the maximum percentage allowable deduction.

The Treasury also said that consultations would be held with interested parties on a uniform approach to retirement fund withdrawals, taking into account vested rights and “appropriate transitional arrangements”. Lump sum withdrawals from pension and retirement annuity funds upon retirement are currently restricted to a maximum of one third of accumulated savings.

I-Net Bridge

Media Center
Visit Our Youtube Channel
View MoreTop Stories: News
No spy door in your phone, says Blackberry, SA East Cape ‘running low’ on HIV drugs East Cape farmer stabbed to death NPA safe houses ‘rented out’ Britain ‘spied on SA’ at London meetings Alleged conman in court over dodgy property deals Men hold anti-rape protest in Plett Pupil transport providers unpaid Debate reveals language remains a barrier Varsities in success row

News Categories

News Sport LifeStyle Letters World
Comment on this article via Facebook
The Herald Port Elizabeth - Inspired by Times Media Group The Herald Port Elizabeth Digital Media & Marketing Association

All material copyright The Herald. © Times Media Group. All Rights Reserved.

Subscribe | Terms & Conditions | Privacy Policy | News | Archives | Events | Blogs | Classifieds | About Us | Jobs | Herald Rates | WeekendPost Rates

Website development and design by Online Innovations