TAX YEAR END

TOP-UP or OPEN a tax efficient investment before tax year end!

You can take advantage of the benefits of a tax efficient investment vehicle before tax year end (28 February). There is still enough time to top-up or even open a new Retirement annuity OR Tax free investment.

We offer flexible retirement annuity and tax-free investment solutions from as little as R500 p.m. through some of the country’s leading providers including Allan Gray, Investec, Momentum, Liberty and Sanlam.

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1. Retirement annuity (RA)

RA’s are ideal investment vehicles if you are self-employed, your employer doesn’t provide a retirement fund or if you want to contribute in addition to your existing retirement fund.

      1.1 RA’s offer a number of attractive tax benefits:

  • Contributions up to 27.5% of gross remuneration are tax deductible (limited to R350k p.a.)
  • At retirement, proceeds taken in cash are tax free up to a certain amount, and there is no tax on the amount that is transferred to the post-retirement income product.
  • The investment growth in an RA is tax free, there is no capital gains tax, or tax on dividends and interest.
  • When you die, there are estate benefits, as the proceeds from an RA are paid directly to your dependants or beneficiaries.

      1.2 Reasons a retirement annuity may not be suitable for you:

  • Prescribed legal investment limits restrict how much you can invest in the types of investments that are considered higher risk, for example equities and offshore investments.
  • You can only access your money after the age of 55, except in certain circumstances.
  • When you retire you can only withdraw up to one-third of your investment as cash. The rest must be transferred to a product that can provide you with retirement income.

      1.3 Depending on your level of income, below is an indication of the expected tax refund:

            * Assuming a contribution rate of 15% of your annual income

RA top up refund

 

2. Tax free savings investment

If you feel that a retirement annuity is not for you, but would still like to benefit from the advantages of tax-free investment growth, you can invest in unit trusts via a tax-free investment account.

      2.1 Advantages of the tax-free investment:

  • You will not pay any tax on investment returns as the interest, capital gains and dividends you earn are completely tax free.
  • There are no limits on when you can access your investment, and there are no exit fees.
  • You can start and stop contributions at any time.

      2.2 Reasons a tax-free investment may not be suitable for you:

  • You are limited to investing R33,000 per year and R500,000 over your entire lifetime.
  • You will pay a tax penalty of 40% of any amount you invest above the maximum of R33,000 per tax year and R500,000 over your lifetime.
  • You do not receive any tax deductions for your contributions to a tax-free investment.

 

3. Need tax advice or assistance with your tax submissions

Our trusted partner with regards to tax matters is TAXWISEOnline365. TWO365 is a personal services online tax services provider, specialising in individual income tax returns, compliance, query resolution and tax clearance certificates. It was founded in 1993 by Corné Struwig and specialises in online tax return services. Contact them for quick, cost effective tax advice.

 

At Vista Wealth Management we are committed to making a difference in our customers’ lives. Helping them understand and invest in tax efficient investment vehicles is our priority. Contact us for more information or if you have any questions regarding how you can benefit from an RA or a Tax-free investment.