January 2022 – Monthly Newsletter
Taxes, Taxes, Taxes!
On 4th January 2022, Acting Chief Justice Raymond Zondo released the Judicial Commission of Inquiry into State Capture Report Part 1. The Commission was set up to inquire into allegations of state capture, corruption and fraud in the public sector and organs of state. I am three-quarters of the way through reading the report and I am absolutely astounded by the levels of state capture, corruption and fraud identified by Justice Zondo. One can only be dumbfounded by the corruption of a coterie of fraudsters brazenly helping themselves and digging deep into public sector funds. A feeling of outrage swamped me. This is hard-earned taxpayers’ money that has been purloined! I asked myself: Am I paying too much tax? Do I think that tax revenue is being spent wisely? I pose these questions to you.
In 1991 in an Australian Senate Inquiry, the media and publishing magnate, Kerry Packer, bristled at the questioning: “I am not evading tax in any way shape or form. Now, of course, I am minimising my tax. And if anybody in this country doesn’t minimise their tax, they want their head read. Because, as a Government, I can tell you, you’re not spending it that well that we should be donating extra.”
What do you think? Paying too much tax? Watch Kerry packer’s interview on https://www.youtube.com/watch?v=DBg7DnQjjcY
Minimise your taxable income, maximise your tax savings!
With the end of the tax year (29th February 2022) fast approaching, you are reminded of the opportunity to minimise your tax liability by investing into a retirement annuity and maximise your tax savings by contributing to a retirement annuity or a tax-free investment.
The financial year-end is just around the corner. You may wish to consider increasing your retirement annuity debit orders or making lump-sum contributions to your existing retirement annuities.
Retirement Annuities – Save for retirement in a tax-efficient way.
Retirement annuities are a great way to save for retirement and for reducing your annual tax payments. Here are some of the benefits:
- Contributions are tax-deductible up to 27.5% of the higher of your remuneration or taxable income, to a maximum of R350, 000.
- There is no dividend withholding tax, income or capital gains tax applicable on retirement annuities
- Unclaimed or disallowed contributions may be deducted on retirement.
- At retirement, the remaining value (minimum two-thirds) may be transferred to an annuity to provide a regular monthly income in retirement.
Tax-Free investments
Tax-Free Savings Accounts provide South African investors with a new opportunity to save towards a specific goal or supplement their retirement savings. As tax-free investments are not subject to income or capital gains tax, they provide a convenient and flexible way to accumulate savings over time.
Investors may currently contribute a maximum of R36 000 per tax year into a tax-free investment, which equates to a maximum debit order of R3000 per month. There is also a lifetime contribution limit of R500 000. A word of caution! Any amounts contributed in excess of these limits will be subject to 40% tax payable by the investor.
Please contact us early if you would like to add to your existing retirement annuities or invest into a tax-free investment as there is always a logjam towards the end of February.
“A cat’s New Year dream is mostly a bird! Don’t be like a cat; in your New Year dream something that you have never dreamed. Target for new things.” -Mehmet Murat Ildan
