South African Retirement Annuities and Tax-Free Savings Accounts are the ideal way to invest tax efficiently for your retirement.
Tax deductible Retirement Annuities Contributions of 27,5% of gross remuneration or taxable income (the higher) are tax deductible subject to an annual limit of R350 000. For employees who also have a pension/ provident fund, the total retirement funding may not exceed the said 27,5% or R350 000 for tax deduction purposes. Income tax and capital gains tax are not applicable to the investment return in the Retirement Annuity (RA) resulting in a bigger lump sum on retirement. Upon retirement or exiting the RA at age 55, lump sum benefits are taxed on a favourable basis according to the SARS sliding scale with a portion being tax-free. An Example can demonstrate the Value With RA Without RA Gross income R1 000 000 R1 000 000 Less RA contribution - R 275 000 Taxable income R 725 000 R1 000 000 Tax payable (2017 rates) R 216 681 R 329 431 Less 2017 rebates - R 13 500 - R 13 500 Tax liability (before medical credits/other credits) R 203 181 R 315 931
The tax saving is R112 750
Who can benefit from a Retirement Annuity? - Self-employed persons - Employees with no corporate pension fund - Employees with a corporate pension fund who wish to save extra for retirement
Benefit from a Tax-Free Investment Account A tax-free investment account may be utilised to further supplement retirement funding or to save for shorter term lifestyle events. There is no tax on income or interest, no dividend tax and no capital gains tax. You can choose from a wide selection of bank account products or equity funds depending on your risk profile and needs. You can also invest for minor children. An investment of a maximum of R30 000 per person per annum is allowed subject to a R500 000 lifetime limit. The TFSA investment of R30 000 per annum is allowed in addition to the normal interest exemption which currently stands at R23 800 for persons under 65.
Submitted February 16, 2017 at 07:44AM by Rutherford_Capital http://ift.tt/2lVtZbC
