When contributions to a Retirement Annuity (RA) exceed the allowable deduction limit in a tax year, the excess is automatically carried forward to subsequent years by SARS. This means that if you couldn't claim the full deduction in one year, the unclaimed portion is preserved and can be utilised in future tax returns. Similarly, certain types of exempt income that aren't fully utilised may also be carried forward.
In tax preparation software like Sky Tax, these carry-forward amounts are typically not transmitted to SARS during the current year's filing. This is because SARS already maintains a record of these amounts from previous assessments. Therefore, when completing your tax return, you don't need to manually input these carry-forward figures; SARS will automatically apply them where applicable.
It's important to ensure that all your contributions and exempt income are accurately reported each year. This practice helps maintain an up-to-date record with SARS, facilitating the correct application of any carry-forward amounts in future assessments.
When there is any doubt about carry-forward amounts like Retirement Annuity (RA) or exempt income not claimed in a previous year, it’s advisable to obtain this information directly from SARS. Taxpayers can use Section 73 of the Tax Administration Act (TAA) to formally request this data from SARS prior to filing. This proactive approach helps ensure accuracy in tax returns and confirms that all carry-forward amounts are correctly applied, as SARS already maintains a record of these figures from past assessments.