It is a good time to reflect on the tax reform changes effective from 1 March 2016.
The changes that have been implemented:
- The change to the tax deductibility of retirement fund contributions (including contributions to provident funds) increased to 27.5% of the greater of taxable income or remuneration, up to a cap of R350 000 per year.
- The minimum threshold required for annuitisation for pension and retirement annuity funds was increased from R75 000 to R247 500.
- Provident fund members are not required to buy an annuity with their retirement benefits at retirement.
- Transfers from pension funds to provident funds will continue to be taxed.
No changes to the rules at the point where an employee leaves their employer were made.
Pensionable Salary Now Called Contribution Salary
Contribution Salary replaces the use of the word Pensionable Salary on all correspondence and schedules. The reason for this changes is that deductions are not dependent on Pensionable Salary going forward. The same way Pensionable Salary was a percentage of cost to the company, Contribution Salary can be 100% or less of the cost to the company in the same way. For existing participations the Contribution Salary will be equal to the Pensionable Salary and does not need to be changed.
To ensure a hassle-free administration experience, please ensure all future bills reflect Contribution Salary.
The tax reform changes will ensure saving and make customers realise financial freedom for a comfortable retirement.
Contact G and S Insurance Consultants for more information and assistance on your retirement planning.