Retirement Annuity Tax Benefit Calculator

Section 11F of the Income Tax Act allows you to deduct contributions to retirement funds (retirement annuities, pension funds, and provident funds) up to 27.5% of the greater of your remuneration or taxable income, subject to an annual cap of R430,000. This deduction reduces your taxable income and therefore your tax liability.

Yes. The R430,000 annual cap applies to the total of all your retirement fund contributions, including your own RA contributions and any employer pension or provident fund contributions made on your behalf. Both count towards the 27.5% limit and the R430,000 cap.

Contributions that exceed the deductible limit are not lost. They are carried forward as an "excess contribution" and can be deducted in future tax years when you have available deduction room. Alternatively, excess contributions are not taxed again when you eventually receive retirement benefits.

Yes, you can contribute to both a retirement annuity and an employer pension fund. However, the combined total of all retirement fund contributions is subject to the single 27.5% / R430,000 limit. Your employer pension contributions reduce the available room for RA deductions.

Consider increasing your RA contributions if you have remaining deduction room (i.e., your total contributions are below the 27.5% or R430,000 cap). The tax saving is most valuable for taxpayers in higher marginal tax brackets. A contribution increase just before tax year-end can reduce your current year tax liability.