Tax Planning Tools

February is the last month of the Financial year and is a good month for tax planning as you get a last chance to save on taxes payable in the given tax year.



The following tax planning tools are available to you:


1 –  Retirement Annuity


The South African Revenue Service (SARS) wants to help you pay for your retirement.


The way in which they do this is by offering generous tax deductions when you make contributions to your retirement annuity (RA), pension or provident fund. On 1 March 2016, the tax deductions for retirement savings increased from 15% to 27.5% – which means you can now save more for retirement and get back more from SARS.


Contributions are tax deductible follows:

Amounts contributed in total to a pension fund, provident fund or retirement annuity limited to 27.5% of the greater of remuneration or taxable income. This is limited to a maximum of R350 000 per annum. Any excess contributions are carried forward.


There is no tax payable on the growth of investment.


You can only take a third of the money at retirement (earliest 55). You will then be taxed on the income produces from your retirement annuity.


The added benefit of it has favorable tax treatment of lump sum proceeds at retirement or death and it is protected against creditors.

Not everyone can afford to save 27.5% of their income towards retirement, but the more you save the better your position will be in retirement.


2 – Tax Free savings


Tax Free Savings Accounts (TFSAs) provide South African investors with a new opportunity to save towards a specific goal or supplement their retirement savings.


As TFSAs are not subject to income or capital gains tax, they provide a convenient and flexible way to accumulate savings over time.


You can only contribute R 30 000 a year and R 500 000 over lifetime, but you have access to the money at all times.

The real benefits of a tax-free savings account however only realize after a long term of consistent investing.


3 – R 100 000 Tax Free Donation


Individuals may donate up to R 100,000 per annum tax free, to their Trust or dependents.

The benefit of this donation is to reduce the personal estate value for Estate Duty purposes.


It is important to be advised by a professional when making this donation as there are changes to interest free loans on Trusts coming in March 2017

However, It can also be advantageous for individuals who do not utilise the trust structure to also use this opportunity to create investments in their children’s names. This may be an opportunity to save for future education or a mechanism to divest ones estate of the asset, thereby avoiding estate duty.


Please contact us if you have any questions or want to make use of any of this tax savings vehicles

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