While there are not a lot of things that we can do about the first and third ones, there is a very easy way to pay less tax each year.
Contribute to your Retirement Annuity (RA).
Contributions to retirement funds (Pension, Provident and Retirement Annuities) are tax deductible up to a certain limit. The maximum tax deduction you may make in a tax year to retirement funds (cumulative) is limited to 27.5% of the greater of remuneration or taxable income. The overall annual deductible limit is capped at R 350 000.
So, if you haven’t been contributing monthly to your Retirement Annuity, you’re leaving a potential massive tax break on the table. If you plan smartly by making regular contributions to your retirement annuity then the Receiver of Revenue is effectively helping you grow your wealth.
For entrepreneurs who run their own businesses and earn variable income, February is always a great month to take stock and assess the tax implications and make some tax-savvy decisions.
If you suddenly find yourself in a situation where you are going to be paying more tax than you expect, consider making a lump sum contribution into your RA and immediately reduce the tax you are going to be paying.
“But isn’t it time consuming to fill in forms and make an ad-hoc payment into an RA?” - Not if you’re with OUTvest, everything is done online, seamless and paper-free.
You can setup a new RA on your mobile phone, laptop or desktop PC – complete the contract online without any paperwork and make a contribution inside of 24 hours.
The tax burden in South Africa is well documented and the majority of South Africans are not taking full advantage by contributing monthly to their Retirement Annuity – so don’t miss out on this easy tax break by investing before the end of February 2020.
Let’s reduce that tax burden right now.
See how much you need to invest to set up your ideal retirement. Use our retirement calculator.