11F.     Deduction in respect of contributions to retirement funds

(1)     Notwithstanding section 23(g), for the purposes of determining the taxable income of a natural person in respect of any year of assessment there must be allowed as a deduction from the income of that person any amount contributed during a year of assessment to any pension fund, provident fund or retirement annuity fund in terms of the rules of that fund by a person that is a member of that fund.

(2)     The total deduction allowed in terms of subsection (1) must not in a year of assessment exceed the lesser of-

(a)     R350 000: Provided that where any person’s year of assessment is less than a period of 12 months, the aggregate of amounts that shall be allowed as deductions under this paragraph for years of assessment during the period of 12 months commencing on 1 March and ending at the end of February of the immediately following calendar year, must not exceed R350 000;

[Paragraph (a) amended section 26(1)(a) of Act 23 of 2018 and by section 13(1)(a) of Act 17 of 2023 with effect from 1 March, 2024 and applicable in respect of years of assessment commencing on or after that date]

(b)     27,5 per cent of the higher of the person’s-

(i)      remuneration (other than in respect of any retirement fund lump sum benefit, retirement fund lump sum withdrawal benefit and severance benefit) as defined in paragraph 1 of the Fourth Schedule; or

(ii)     taxable income (other than in respect of any retirement fund lump sum benefit, retirement fund lump sum withdrawal benefit and severance benefit) as determined before allowing any deduction under this section and sections 6quat(1C) and 18A; or

[Subparagraph (ii) substituted by section 26 of Act 23 of 2018 effective on 1 March 2019]

(c)     the taxable income (other than in respect of any retirement fund lump sum benefit, retirement fund lump sum withdrawal benefit and severance benefit) of that person before-

[Words preceding subparagraph (i) substituted by section 26 of Act 23 of 2018 effective on 1 March 2019]

(i)      allowing any deduction under this section and sections 6quat(1C) and 18A; and

[Subparagraph (i) substituted by section 26 of Act 23 of 2018 effective on 1 March 2019]

(ii)     the inclusion of any taxable capital gain.

(3)     Any amount contributed to a pension fund, provident fund or retirement annuity fund in any previous year of assessment which has been disallowed solely by reason of the fact that the amount that was contributed exceeds the amount of the deduction allowable in respect of that year of assessment is deemed to be an amount contributed in the current year of assessment, except to the extent that the amount contributed has been-

(a)     allowed as a deduction against income in any year of assessment;

(b)     accounted for under paragraph 5(1)(a) or 6(1)(b)(i) of the Second Schedule; or

(c)     taken into account in determining the amounts exempt under section 10C.

[Paragraph (c) substituted by section 26 of Act 23 of 2018 effective on 17 January 2019]

(4)     Any amount paid or contributed by an employer of the person on behalf of or for the benefit of that person must be deemed-

(a)

(i)      to be equal to the amount of the cash equivalent of the value of the taxable benefit contemplated in paragraph 2(l) of the Seventh Schedule determined in accordance with paragraph 12D of that Schedule; or

(ii)     if that amount is paid by an employer to a retirement annuity fund, to be equal to the amount of the cash equivalent of the value of the taxable benefit contemplated in paragraph 2(h) of the Seventh Schedule determined in accordance with paragraph 13 of that Schedule; and

(b)     to the extent that the amount has been included in the income of that person, to have been contributed by that person.

[Subsection (4) substituted by section 26(1)(e) of Act 23 of 2018 and by section 13(1)(b) of Act 17 of 2023 with effect from 1 March, 2024 and applicable in respect of years of assessment commencing on or after that date]

(5)       For the purposes of this section-

(a)     a partner in a partnership must be deemed to be an employee of the partnership; and

(b)     a partnership must be deemed to be the employer of the partners in that partnership.

[Section 11F inserted by section 21 of Act 17 of 2017 effective on 1 March 2016]