When you have RAF b/f SARS allocates this to Pension or Annuity income - in full. Is this correct, as the only RAF deduction we are aware of is the 27.5% and the allocation of RAF b/f amounts to lumpsums. It generally results into a larger than normal ref
Important:
This answer is based on tax law for the year ending 28 February 2020.
Answer:
The relevant law is found is section 11F(3) and we copied it below:
“Any amount contributed to a pension fund, provident fund or retirement annuity fund in any previous year of assessment which has been disallowed solely by reason of the fact that the amount that was contributed exceeds the amount of the deduction allowable in respect of that year of assessment is deemed to be an amount contributed in the current year of assessment, except to the extent that the amount contributed has been—
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allowed as a deduction against income in any year of assessment;
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accounted for under paragraph 5 (1) (a) or 6 (1) (b) (i) of the Second Schedule; or
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exempted under section 10C.”
The part relevant to your request is “except to the extent that the amount contributed has been … exempted under section 10C”. So, to the extent that the taxpayer qualifies for a section 10C exemption, the amount carried forward, or opening balance, is reduced by the amount if the exemption. SARS is therefore applying the law correctly on the assessments.