Retirement annuities and Tax-free investments

With the end of the financial tax year, fast approaching investors are reminded of the opportunity to minimise their tax liability by contributing into a retirement annuity. The South African Revenue Service (SARS) has put in place tax incentives to help encourage South Africans to save more for their retirement.

Investors are able to claim a deduction against their taxable income of up to 27.5% of the greater of their taxable income or remuneration capped at R350, 000 per tax year. Retirement annuities do have certain restrictions, and funds cannot be accessed before the investor turns 55. However, retirement annuities also offer protection against creditors and fall outside of investors estates. Any over contributions to a retirement annuity are automatically rolled over to the following tax year.

Tax-free investments are another way for investors to maximise their tax benefits. All tax-free investments are completely free of tax. That means individuals pay no capital gains tax, no income tax and no dividends withholding tax. Current legislation limits annual contributions to R33, 000 per annum with a lifetime allowance of R500, 000. Any over contributions into a tax-free investment are taxed at 40%.

With both, retirement annuities and tax-free investments, investors can invest in unit trusts that best align their investment needs with their future financial goals. Investors can choose between being invested into equities, property, fixed income, money market instruments or a combination of the above.

For more information or to find out how to invest into a retirement annuity or tax-free investment please click on the link. Start saving today

What is a Retirement Annuity? A Secure Way to Save for Your Future

Monthly Newsletter – April 2023

January 2022 – Monthly Newsletter