Get tax savvy before February 2019
We all feel that we pay too much tax. Luckily there are
clever ways to use tax breaks to your advantage, and
the best thing is that it’s legal. You can maximise your
tax benefits before 28 February 2019.
Einstein didn’t refer to compound interest as being the eighth wonder of the world for nothing.
“He who understands compound interest, earns it, he who doesn’t … pays it. It is the most powerful force in the universe.”
Top up your retirement fund
You can make a pre-tax contribution to your retirement fund every year. A pre-tax contribution means you are allowed to contribute up to 27,5% of the higher of your taxable income or salary before any deductions are made, capped at R350 000 per year.
- When you re-invest this money that you saved on tax, the total value of your investment increases, and so does the compound growth that you earn on it.
- If you have not yet maximised the 27,5% benefit with your regular contributions, add a lump sum to your retirement annuity (RA) or pension fund before 28 February 2019.
Go tax-free with a tax-free investment
You are also allowed by the government to invest R33 000 per year (up to a maximum of R500 000 during your lifetime) of after-tax money in a tax-free investment (TFI) account.
- This allows you to enjoy growth that is free of dividends tax and tax on interest, and you pay no capital gains tax on money that you withdraw.
- Your investment is not taxed, so you’ll have a larger balance that is growing tax-free, for as long as you remain invested.