It is just over three weeks until the end of the tax year and not too late to do some last minute tax saving:
Retirement Annuities
As indicated in our recent circular, investing in a Retirement Annuity or topping up an existing one is the easiest and most effective way to save up to 41% in tax on such investments – even at the last minute. By the latter we really mean up to 24 February to allow for paperwork to be processed and payment clearance to be made.
Don’t forget that up to 27.5% of taxable income or remuneration (whichever is the higher) can be invested in a Retirement Annuity. This must take into account total existing contributions including those to a Pension or Provident Fund.
In most cases the change in the law means there is scope for further contributions to be made and tax relief gained.
Remember too that Retirement Annuity investments themselves do not attract any form of tax and are excluded from an individual’s estate. In this respect they are quite unique as investments.
Tax Free Savings
Up to R30 000 per annum can be invested in these accounts. This is particularly suited to those who have already taken advantage of the annual interest exemption of R23 800 per annum (R34 500 for those over 65). The latter means that R297 500 can be invested in say a money market account yielding 8% per annum ( R431 250 for those over 65).
Maximus Wealth has a Tax Free Investment plan, managed by Morningstar, which has yielded a simulated 13.54% per annum over the last 3 years (up to 31 Dec 2016).
Donations
Don’t forget to claim any donations made to recognised charities or any other institutions which qualify. The latter must be able to provide you with a 18A certificate for such donations.