With effect 1 March 2016 the tax deduction for contributions made to pension funds, provident funds and retirement annuity funds is significantly amended. Please refer to previous year’s tax guides for the tax treatment before 1 March 2016. From 1 March 2016 onwards, the tax deduction calculation for the three different funds, pension, provident and retirement annuity funds will be identical.

The deduction will be limited to:

The above deduction is however limited to taxable income before this deduction and before any taxable capital gain. 

Excess contributions not allowed as deductions are carried forward to the following year of assessment. Contributions made by employers on behalf of employees would be a taxable fringe benefit in the hands of the employees but will also be regarded as a contribution made by the employee, therefore deductible in the hands of the employee subject to the above limitations.