Tax Benefits – Use It or Lose It

Each tax year, ending on 28 February, provides you with a great opportunity to maximize your tax benefits. 

Be sure to make the most of this opportunity and open a new or top-up your existing
Retirement Annuity and/or Tax-Free Savings Account

Retirement Annuity

To maximise your annual tax benefit, you can contribute up to 27,5% of your annual remuneration or taxable income (whichever is higher) across your Retirement Funds (Pension Funds, Provident Funds and Retirement Annuities). The tax benefit is capped at R350,000 per year and contributions exceeding this amount will roll over to the next year.

Meet John
1. Earned salary of R60,000 per month2Received R100,000 as a performance bonus3Contributed R5,000 per month and R30,000 of the performance bonus to his Fairtree Retirement Annuity

Saved R35,148 in tax for the year and has boosted his retirement savings for the long-term.

Tax-Free Savings Account
To maximise your tax benefits, you can contribute up to R36,000 per tax year and up to R500,000 over your lifetime. These investments attract no tax on interest, dividends or capital gains and this will have a significant impact on the growth of your investment over the long-term.

Meet Jane

1. Invests R36,000 every year until reaching the R500,000 limit in year 14.2Makes no withdrawals.3Investment return: 10% per year

Future investment value at the end of year 20: R1,954,757

Key Takeaways

1. Be sure to make use of your annual tax benefits – you forfeit it if you don’t make use of it each year. 2. Retirement Annuities and Tax-Free Saving Accounts are products for long-term investing and every Rand you contribute has a significant impact on the future growth of your investment.  3. Now is a great time to revise what portion of your monthly income you allocate to saving and investing. Consider increasing this for the next tax year starting on 1 March 2023. 4. Apart from the tax benefits set out above, Retirement Annuities and Tax-Free Saving Accounts offer various additional advantages. Contact us to learn more about these investment products. 

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