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.

How to invest in a volatile market

By Geo Botha • July 4, 2025
How to invest in a volatile market: 3 Principles to keep in mind ‘In the short term, markets can be very volatile depending on which news story makes headlines. However, over the longer-term investors are always rewarded for staying invested and riding out the waves.’ We know this by now, we have heard it many times before and historical data proves it. Yet it’s easier said than done. When it gets to our own money we are emotionally involved and there is a part of us that believes that this time, it might indeed be different. What if the markets never recover and I suffer permanent capital loss. And with the increase power of AI and social media, it feels like my portfolio hangs on the thread of a single Tweet. In this article Stephen Bernard, an actuarial analyst form our partner Allan Gray share his views, backed by statistics and historical evidence: Read the article here: https://www.allangray.co.za/latest-insights/markets-and-economy/how-to-invest-in-a-volatile-market/

Invest Globally, Prosper Locally: Offshore Strategies for SA Investors

By Ruvan J Grobler • July 1, 2025
In an increasingly interconnected global economy, South African investors are finding compelling reasons to look beyond local borders when building long-term wealth. Offshore investing offers access to broader, more resilient markets, particularly in developed economies with stronger currencies and more stable political environments. Given South Africa’s constrained economic growth, fiscal uncertainty, and the rand’s vulnerability as an emerging market currency, allocating a portion of your portfolio offshore can serve as both a growth engine and a hedge. Investing offshore provides exposure to world-leading companies, industries, and fund managers that are often unavailable in the local market. It allows investors to participate in innovation-led growth in sectors like technology, healthcare, and clean energy, which are typically underrepresented on the JSE. Most importantly, it supports diversification—not just across asset classes, but across geographies, currencies, and economic cycles—reducing concentration risk tied to the South African economy. Key Reasons to Invest Offshore: Diversification: Reduce reliance on South African markets and benefit from a broader global opportunity set. Currency Hedge: Protect your wealth against rand depreciation by investing in hard currencies. Global Access: Gain exposure to top-tier international asset managers and world-class investments. Growth Potential: Participate in faster-growing economies and industries driving global expansion. Important Considerations for South African Tax Residents Before investing offshore, it’s essential to evaluate how your investment aligns with your broader financial planning, particularly around access, succession, taxation, and estate planning: Flexibility: Will you have access to your funds when needed? What types of investments can you hold? Succession Planning: Can your investment be transferred to your heirs? Will Capital Gains Tax (CGT) apply? Tax Compliance: Is the structure tax-efficient, and what must be declared on your tax return? Estate Structuring: Will your investment attract foreign estate duties? Is an offshore executor required? An Efficient Offshore Solution: The Offshore Wrapper A tailored offshore wrapper can simplify many of these complexities, offering a cost-effective and administratively streamlined solution. Key benefits include: No exposure to offshore estate duties No South African executor fees on death No inheritance tax in the offshore jurisdiction Ability to nominate beneficiaries directly for smooth succession Creditor protection for assets held within the structure Consolidation of various investments (e.g., share portfolios, funds) under one structure Minimum investment from $25,000 Tax Treatment The offshore wrapper also provides significant tax efficiency: Taxes are calculated and settled annually by the platform—no action required by the investor CGT is capped at 12%, and income tax at 30% Taxes are applied to USD returns, meaning rand depreciation is not taxed Reach out to me at ruvan@bovest.co.za for more information. Ruvan J Grobler RFP™ (PGDip Financial Planning)