The client only earned interest from investments. No other taxable income was earned. Are the contributions to the RA fund, up to 27.5% of int rec, deductible from his interest received?
Important:
This answer is based on tax law for the year ending 28 February 2020.
Answer:
Section 11F(2)(b)(ii) allows for a deduction to be made against taxable income (other than in respect of any retirement fund lump sum benefit, retirement fund lump sum withdrawal benefit and severance benefit) as determined before allowing any deduction under this section and section 18A. It is section 11F(2)(c) that then also limits the deduction to “27,5 per cent … of the person’s taxable income of that person before—
(i) allowing any deduction under this section; and
(ii) the inclusion of any taxable capital gain.”
Remember that taxable is gross income, the interest earned (as you say), less the exemption available to a natural person (under section 10(1)(i)).