Who doesn’t want to save tax? I hope the answer would be nobody.
Let’s look at 2 different ways to save tax:

1. Retirement Annuity.
SARS allows us to contribute 27,5% of taxable income into retirement funds to a maximum of R350 000 per annum. Any contribution towards a retirement fund reduces your annual income.
If your tax rate is 40%, you will get 40 cents back for every Rand you put into your retirement annuity.
You are also allowed to contribute more than R350 000 which offers the investor deferred tax benefits.

Excess contributions can be used to:
-Increase the value of any tax-free lump sum you take before or at retirement.
-Reduce the taxable portion of your living annuity income in retirement.
-Reduce the taxable portion of any lump sum your beneficiaries choose to take as cash on your death.
-The growth in your retirement annuity is tax-free.
-The retirement annuity doesn’t form part or your estate.
-It is protected against most creditors.
-If you earn large bonuses, it will be a huge benefit to contribute to a retirement annuity.

To contribute, you get an opportunity each year before the end of February. If you are not sure of how much you can contribute, please contact me and I will be happy to do the calculation.

There is a saying “if you snooze, you lose” and after all, wouldn’t you prefer a comfortable retirement instead of paying more tax?

2. Tax-Free Investment.
-You get R36 000 per annum allowance to a maximum of R500 000 per lifetime
-Investment growth is tax-free.
-There is no CGT payable on withdrawals.
-It can be used to supplement your retirement or your children’s education.
-On that point, you can open tax-free investments for minor children.
-It is important to note that you are penalized for contributing more than R36 000 per annum, unlike excess contribution into a retirement annuity.
-You will pay tax of 40% on the excess contribution, so a friendly warning… don’t just open tax free investments.

If you have a lot of money in the money market, we believe that you could benefit from the above strategies. We can still invest your money conservatively, but you will save a lot on tax.