How do I pay less tax?

PJ Botha • January 17, 2025

"The only things that hurts more than paying an income tax is not having to pay an income tax." Dewar, Thomas.

 

This quote is undoubtedly optimistic, but it also contains some truth. Tax payment is both a luxury and a hardship. Although you must pay taxes of some kind, there are ways to lessen your tax liability.

 

It's critical to distinguish between tax avoidance and tax evasion before we begin. It goes without saying that tax avoidance is against the law and unacceptable. Tax avoidance from an investing standpoint refers to avoiding paying needless taxes as a result of poor investment planning.

 

As February, the end of the financial year, is drawing near, now is the great time to assess your existing financial status and make the most of the tax benefits available to you.

 

 

There are the following choices:

 

Retirement Annuities

 

Retirement Annuities (RAs) are among the best options for tax planning. You can take advantage of the following noteworthy tax advantages: Your voluntary donations to a RA are tax deductible up to 27.5% of your taxable income, or R350 000. This is known as an individual's tax benefit. This implies that the money you save in a RA may be taken into account when calculating your income tax and subtracted from the amount of tax due to SARS.

 

For the duration of the investment, there are no applicable income, capital gains, or dividend taxes.

Depending on prior lump sum withdrawals, up to R550 000 of your lump sum payout may be tax-free upon retirement. The remaining amount is thereafter subject to taxation at the rates specified in the retirement lump sum tax table.

Neither a living annuity nor a RA are subject to estate duty.

Lump amounts received by beneficiaries upon the death of a RA investor are free from estate duty (with the exception of contributions that are prohibited).

 

Tax-free savings

 

Different to a RA, the contributions to a tax-free savings account are made from post-tax income and you don’t get the tax benefit on contributions.

 

However, you are free to take your money out whenever you choose. An excellent approach to supplement your retirement funds or save for a long-term objective, such as your children's university fees.

 

During the investment period, no income, capital gains, or dividend taxes are due, just like with a RA.

 

Remember that you have a lifetime contribution cap of R500 000 and an annual contribution cap of R36 000 (or R3 000 per month) for all of your tax-free savings accounts from all providers.

 

Additional tax tactics you may use include:

 

Tax loss harvesting: 

This tactic involves selling some financial assets at a loss to lower your tax obligation at the end of the year. You can use tax loss harvesting to offset capital gains that result from selling other investments or assets at a profit.

 

Utilise your exemptions: 

You are eligible for a R 40,000 annual capital gains exemption. Perhaps it's time to move across investment funds or take a profit on a well-executed investment.

You can also take advantage of an interest exemption for R 23 800 (R 34 500 for individuals over 65). Your investment plan may need to be reevaluated if your interest exceeds that amount.

 

Donations: You are exempt from donation tax if you donate R100,000 annually. To lower your estate for estate duty reasons, now is an excellent moment to give R 100,000 to a family trust or your kids.

You will also receive a deduction for your donation if it is made to a charity that has Section 18A approval.

 

The aforementioned can undoubtedly lessen the tax burden, but it won't eliminate it. Paying your fair amount of taxes is important, but you shouldn't pay more than is necessary.

PJ Botha

Stop Paying Yourself Last

By Ruvan J Grobler • February 23, 2026
For many professionals, personal savings are what’s left over — if anything is left at all. The data is clear: South Africa’s domestic savings rate remains worryingly low. Even among high-income earners, inconsistent or delayed investing is common. Income alone does not create wealth. Behaviour does. The real risk isn’t lifestyle inflation — it’s time. Missed early contributions cannot be fully recovered later, no matter how high your income becomes. Compounding rewards consistency, not intention. Paying yourself first isn’t about sacrifice; it’s about ensuring today’s success translates into future independence. If Your Business Needs a Budget, So Do You No business operates successfully without a budget. Yet many professionals try to run their personal finances without one. Paying everyone else first — the bank, SARS, suppliers, schools, lifestyle — is what happens when there is no clear structure. Fortunately, a simple framework solves this: the 50/30/20 principle. 50% – Essential Expenses Bond or rent, food, medical aid, school fees, fuel, insurance and other “must-have” costs. 30% – Investments (Your Future Self) Long-term wealth building. Retirement funding. Investments that compound over decades. This allocation happens before discretionary spending. This is how you pay yourself first. 20% – Lifestyle & Discretionary Spending Travel, entertainment, upgrades, dining out and lifestyle enhancements. This framework also brings clarity to big financial decisions. If a new home or vehicle pushes your essential expenses above 50%, it is not affordable — regardless of what the bank approves. Affordability is not what you qualify for. Affordability is what fits sustainably inside your structure. The Cost of Waiting: A Simple Illustration Let’s consider two investors with similar careers and earning potential. Investor A starts investing R15,000 per month at age 30 and contributes for 10 years — stopping at age 40 — but leaves the money invested. Investor B delays saving while focusing on practice expenses and family commitments. At age 40, they begin investing R15,000 per month and continue until age 65 — 25 years of contributions.

Tax Season: Take advantage of your RA & TFSA

By Geo Botha • January 27, 2026
28 February marks the end of the tax year. If you have some extra funds available, this might be the perfect time to consider adding to your savings in a retirement annuity (RA) or tax-free savings account (TFSA), thereby enjoying the significant tax benefits these products offer. Below are the benefits of both an RA and a TFSA, as summarised by our partners at Ninety-One. As always, please contact your personal financial adviser to assist you in calculating the amount you can still contribute, as well as whether this will be best for your portfolio and personal situation: Why invest in an RA? 1. RAs can be viewed as gifts from the taxman. For example, at a 45% marginal tax rate, a deductible RA contribution of R100 000 can generate up to R45 000 in tax relief (within the limits). Tax will be applicable when the funds eventually pay out at retirement, but due to the tax-exempt portion of the lump sum, as well as the tax rebates for individuals over 65 and 75, you may pay less tax at that time. 2. You do not lose your tax benefits, even if you contribute more than the maximum annual tax deduction (excess contributions) If you contribute more than the maximum (excess contributions), your tax benefit will roll over to the next tax year of assessment. Any excess contributions in subsequent tax years will continue to be rolled over. This means that you could receive a tax benefit at retirement, after retirement, or your beneficiaries could benefit when you have passed away, as explained below. RA contributions and tax Before retirement When contributing to an RA, your maximum tax deduction for the year is the lesser of: R350 000 27.5% of the higher of remuneration or taxable income Taxable income excluding taxable capital gains At retirement If you elect to receive a lump sum: The remaining excess contributions will be paid out free of tax R550 000 could be tax-free – if not previously utilised After retirement Excess contributions remaining after your retirement are deductible from your compulsory annuity income for tax purposes (section 10C of the Income Tax Act). After you pass away If your beneficiary elects to receive the full death benefit, or a portion thereof, as a lump sum: The remaining excess contributions will be paid out free of tax R550 000 could be tax-free – if not previously utilised The tax deduction limit applies to the combined total of RA contributions and all member and employer contributions to workplace pension and provident funds. 3. You enjoy estate-planning benefits. An RA is exempt from estate duty. Please note that excess contributions may be included for estate duty purposes, to the extent that a lump sum is received. The growth on your excess contributions is not subject to estate duty – you can therefore effectively peg the value of your estate (similar to the benefit obtained from a trust, prior to the introduction of section 7C of the Income Tax Act). Over time, the value of excess contributions could be reduced, which would decrease the potential estate duty payable on these excess contributions. 4. No tax is deducted within the investment (no income tax, capital gains tax or dividend withholding tax). This means you will benefit even more from compounded growth. 5. You remain disciplined with your retirement savings. The two-pot retirement regime was introduced on 1 September 2024. This system allows members access to a small portion of their retirement savings before they retire, while preserving the remainder until retirement (unless one of the exceptions specified in the Income Tax Act applies). To achieve this, various notional components within a member’s retirement fund benefit or contract were created. These components are referred to as: The Vested Component The Savings Component The Retirement Component Members are able to withdraw from the Savings component once in a tax year. Withdrawals from the Savings component are subject to a minimum of R2 000 per withdrawal and are taxed at your marginal tax rate. 6. You have protection from creditors. This means your savings for your retirement will be available when you need them. Key considerations when investing in an RA RAs are subject to Regulation 28 investment limits. On the death of the investor, the Board of Trustees will have full discretion when deciding on a fair allocation of the benefit to dependants and/or nominees, in terms of section 37C of the Pension Funds Act. There are liquidity restrictions prior to reaching retirement age. This means that you will only have access to the funds in the Savings component before reaching the age of 55 (unless you qualify for one of the exceptions). Why invest in a TFSA? TFSAs are exempt from tax on interest, dividends and capital gains. There are no restrictions on withdrawals; however, if you replenish the funds withdrawn, this will count towards your annual and lifetime contribution limits. For this reason, these investments are generally more suited to long-term investing. TFSAs are a great way to save for your child’s education (be aware of donations tax if the annual exemption of R100 000 per donor is exceeded). Contributions No matter how many TFSAs you have with different product providers, the total combined value of your contributions may not exceed R36 000 per tax year and R500 000 over your lifetime. If you exceed these contribution limits, a penalty of 40% will apply on the amount contributed above the limit, which will be added to your tax assessment.