A taxpayer has an amount carried forward from his retirement annuity fund contributions amounting to R38 662 from the 2019 tax year. This has not been taken into account in his 2020 IT34 assessment. According to his calculation, the amount allowed should be R56 662. On the 2020 IT34 tax assessment, there is a brought forward amount from 2019 tax year amounting to R11 340 and then an excess contribution exemption amounting to R11340. These two amounts cancel each other out.
Important:
This answer is based on tax law year ending 28 February 2021.
Answer:
We may not have enough information to provide guidance here. The only instance where an exemption reduces the excess contributions, carried forward from a previous year of assessment, is where section 10C applies. Where it does, the excess amount must be reduced with the exemption before it is added to the current year's contributions. It would not be an error, but is in terms of section 11F(3).