Taxation Laws Amendment: An Update
Earlier this year we informed you that the legislation to give effect to the tax harmonisation of retirement funds had been signed into law by the President and that the changes would be implemented with effect from 1 March 2016. These changes included the compulsory annuitisation of provident fund benefits (accumulated based on contributions made after 1 March 2016) and the standardisation of the tax treatment of contributions to the different types of funds (to be subject to the cap of 27.% of the greater of taxable income or remuneration, up to a limit of R350 000 per tax year).
Following virulent opposition to the changes by the trade unions and increasingly widespread speculation regarding the implementation of the changes, the Ministry of Finance has now announced proposals for the delay of the annuitisation requirements for provident funds. Indications are that the other changes contained in the Taxation Laws Amendment Acts of 2013, 2014 and 2015 will still be implemented with effect from 1 March 2016, most notably the standardisation of the tax treatment of contributions.