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Topping up your retirement annuity and enjoy tax refunds!
Around this time of the year, we would like to remind you to consider topping up your retirement annuity fund. According to the current legislation, you may contribute up to 27.5% of your taxable income (strictly speaking, non-retirement funding income) to a retirement annuity fund and enjoy tax deductions. As 28 February is the end of the tax year, you must calculate and pay the additional amount to your retirement annuity prior to this date, in order to qualify for tax deductions and tax refunds.
Below is an example of topping up your retirement annuity:
Mr Jackson has a monthly salary of R50,000. In December he received a bonus of R100,000. Every month he contributes R3,000 to a personal retirement annuity fund.
His annual income is then
R50,000*12 + R100,000 = R700,000.
The maximum tax-deductible contribution to retirement annuity is R700,000 * 27.5% = R192,500.
Over the year he has contributed the following to a retirement annuity fund:
R3,000 * 12 = R36,000
The additional amount he may top up in his retirement annuity (RA) is
He can expect a tax refund of R156,500*39% = R61,035 from his additional retirement annuity contributions.
Should you require assistance to calculate the retirement annuity top-up amount, please contact Su-Lan or Su-Chin (011)658-1333, email firstname.lastname@example.org
Source: Kevin Yeh
What Should Go Into Your Tax Free Savings Account
To assist you to prepare you for the next tax year end, we look at Tax Free Savings Account (TFSA) and remind you that you can top up your TFSA before the end of the Tax year on 28 February 2018.
What is a TFSA?
In February 2015, the then Finance Minister, Nhlanhla Nene, introduced TFSAs as a means to encourage South Africans to save money over the long term. The rules around the account are quite simple:
1) Every tax year (1 March - 28 February), an individual is permitted to make deposits to the total value of R33,000. Should the allocation not be used, there is no carrying over allowance. Also, if a withdrawal is made on the TFSA, one is not permitted to make up the allocation thereafter.
2) The contribution limit over a lifetime was set at R500,000 which means that the quickest it would take to reach this threshold through the maximum contribution per year is 16 years and 1 day (as the final allocation could be made on the first day of the new tax year - 1 March of the 17th tax period).
3) We are also confined by what type of investment vehicle can be used in a TFSA. Here is a quick list of what can be included:
To get more information Tax Free Savings , contact Ray or Kevin email: email@example.com tel no: (011 658-1333)