GG-LOGICS · LOGIC-MODELS™

The Three Gates
of Section 11F

Retirement fund deductions · See It. Understand It. Improve It.
Income Tax Act 58 of 1962 · s 11F
2027 year of assessment
(1 Mar 2026 – 28 Feb 2027)
BEFORE 1 MAR 2016

Three separate regimes

Pension: 7.5% of retirement-funding income. RA: 15% of non-retirement-funding income. Provident: employee contributions not deductible at all. Employer contributions were not a fringe benefit.

1 MAR 2016

Harmonisation — s 11F born

One pooled deduction for pension + provident + RA combined. Employer contributions became a taxable fringe benefit with a matching deemed contribution. Limit: 27.5%, capped at R350 000.

1 MAR 2026

First cap increase in a decade

Budget 2026 lifted the rand cap from R350 000 to R430 000 — the first adjustment since harmonisation. The 27.5% percentage limb is unchanged.

Interactive Logic-Model™

Pour contributions in at the top.
The narrowest gate decides.

Every rand you contribute to any retirement fund — pension, provident or RA, including employer contributions — flows through three gates in series. The deduction that reaches your tax return is set by the narrowest gate. Nothing is lost: what the gates block is carried forward.

1 · Choose a taxpayer

2 · Or move the levers

Salary package for employees' tax purposes
Interest, rental, trade income — lifts taxable income above remuneration
After the 40% inclusion rate — watch Gates 2 and 3 disagree
Pension + provident + RA, employer and employee combined
Rand cap era
R350k
R430k
CONTRIBUTIONS IN
Gate 1 · The Rand Cap BINDING
Gate 2 · The Percentage BINDING
Gate 3 · The Income Floor BINDING
Deduction allowed
Carried forward
↺ excess re-joins next year's queue — nothing is lost
Logic Insight

Where the overflow drains

Blocked today ≠ lost forever

The R430 000 figure is a deduction limit, not a contribution limit. Disallowed contributions follow a three-stage drain — a time-shift of the tax benefit, not a forfeiture.

STAGE 1 · s 11F

Next year's queue

Excess contributions roll into the following year of assessment and are tested against that year's gates first, ahead of new contributions. SARS tracks the running balance on assessment.

STAGE 2 · PARA 5, SECOND SCHEDULE

The lump sum shield

Any balance still unused at retirement is set off against the taxable portion of your retirement lump sum — reducing, sometimes eliminating, lump sum tax.

STAGE 3 · s 10C

Tax-free annuity income

Whatever remains exempts your compulsory annuity income until fully consumed. High earners deliberately over-contribute to manufacture exactly this: tax-free retirement income.

The paradigm reset

If you learned tax before 2016, unlearn this table's left column

QuestionOld world (pre-1 Mar 2016)New world (s 11F)
How many regimes? Three. Pension (s 11(k)), RA (s 11(n)), provident — each with its own rules and income base. One pooled limit across pension + provident + RA combined.
RA deduction 15% of non-retirement-funding income — you had to split income into two buckets first. No separate RA limb. RA contributions simply join the pool against 27.5% of the higher of remuneration or taxable income.
Provident fund members Employee contributions: no deduction at all. Fully deductible inside the same pool.
Employer contributions Not taxed in the employee's hands; invisible to the employee's own limits. Taxable fringe benefit (para 2(l), Seventh Schedule) + matching deemed employee contribution — so they consume your room.
Rand cap None as such — percentage limits only. R350 000 (2016–Feb 2026) → R430 000 from 1 Mar 2026.
Excess contributions RA excess carried forward; pension excess largely wasted. All excess carried forward → lump sum set-off (para 5) → tax-free annuity income (s 10C).
Teaching simplifications. This model treats remuneration as fully taxable and ignores other deductions, so taxable income = remuneration + investment income + taxable capital gain. Strictly: Gate 2's base is 27.5% of the higher of (a) remuneration for employees' tax purposes or (b) taxable income, both excluding retirement lump sums and severance benefits, and taxable income measured before the s 11F deduction itself, s 6quat(1C) credits and s 18A donations. Gate 3 is taxable income after other deductions but before including any taxable capital gain. From 1 Mar 2024, broken years of assessment within one March–February period share a single cap. Verify current figures against the Act and SARS guidance before relying on them.