Section 11F of the Income Tax Act limits how much of an employee's retirement fund contributions can reduce their tax. The deduction is capped both as a percentage and as a fixed yearly amount.
What it means
Contributions to pension, provident and retirement annuity funds are combined and deductible up to 27.5% of the greater of remuneration or taxable income, but no more than a yearly rand cap. That cap is R350 000, rising to R430 000 from the 2027 tax year (the year starting 1 March 2026). Contributions above the limit are not deductible in that year, though they carry over.
Where it fits in
In PAYE, the deductible portion of an employee's retirement contributions reduces the balance of remuneration the tax is calculated on, but only up to the Section 11F limit. The cap combines all retirement funds, so someone contributing to several is still held to the single overall limit.
Key rules
- Caps deductible retirement contributions at 27.5% of the greater of remuneration or taxable income.
- Subject to an overall yearly cap: R350 000, rising to R430 000 from the 2027 tax year.
- Combines pension, provident and retirement annuity contributions into one limit.
- Excess is not deductible that year but carries forward.
