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What is tax rebate on a retirement annuity?
in Economics and Finance by Platinum (131,378 points) | 71 views

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I nlike your medical aid contributions, your RA contributions qualify for a tax deduction or a tax refund rather than a tax rebate.
Although you are free to contribute as much as you want to your RA, the retirement annuity tax relief for the 2017 tax year is set a maximum rate of \(27,5 \%\) of income, subject to a rand cap of R350,000. This R350,000 rand cap (and the \(27,5 \%\) limit) however includes the contributions made to a workplace pension or provident fund. If you contribute over the limit: SARS keeps a record of all unclaimed contributions, and allow these in future years (subject to the prevailing limits in those years).

To calculate your retirement annuity tax relief, you must multiply the amount of your contribution by your marginal tax rate (the highest tax rate applied to any part of your income). So if you contribute, say R12,000 per year, and your marginal tax rate is \(25 \%\), then you would get a refund of \(R 3,000\). If your marginal tax rate was \(41 \%\), your refund would be R4,920.

source: https://www.10x.co.za/
by Platinum (131,378 points)
edited by

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