Contribution allocation towards retirement savings

New Tax Laws 2016: Harmonisation of tax treatment of contributions

This is primarily intended to allow for tax harmonisation of retirement fund contributions and benefits and it introduces a cap on contributions for tax purposes. 

The tax deduction for contributions will be limited to 27.5% (of the greater of taxable income or gross remuneration), up to an annual limit of R350 000. This is to the benefit of most members and allows members, in terms of tax deductibility, to save more towards retirement and would only negatively affect the tax of members of Funds who are very high earners. 

It is meant to create fairness in tax treatment of contributions and to limit tax reliefs for very high earners.