How do I maximise benefits, afforded by the tax man, as we approach the end of another tax year?

The end of the tax year is fast approaching and many of us are looking to maximise the benefits afforded to us by the tax man.  This can be done through “topping-up” your retirement annuity and tax-free savings account. Both have their advantages.


1. Tax efficiency

•   Contributions are tax-deductible within certain limits.
•   There is no income or capital gains tax applicable during the term of the investment.
•   Dividends tax does not apply to RAs.
•   Unclaimed or disallowed contributions may be deducted on retirement.
•   At retirement, the remaining value (minimum two-thirds) can be transferred to an annuity on a tax-neutral basis.

2. Financial planning tool

•   Individuals can contribute to an RA at any age and can choose to let their RA mature at any time from age 55,
as there is no longer a compulsory retirement age for members of RAs
•   On the death of an RA investor, lump sums received by beneficiaries are exempt from estate duty
(excluding disallowed contributions).
•   Beneficiaries may also take advantage of tax-free amounts, if a member had not done so during their lifetime.
•   Living annuity benefits are free from estate duty (excluding disallowed contributions).

This is an ideal medium to long-term discretionary savings option.  Tax free savings accounts are tax efficient savings vehicles on which no income tax, capital gains tax or dividend withholding tax is charged.  The max annual contribution is R36 000 with a lifetime limit of R500 000.

Should you wish to make a top-up to either your retirement annuity or tax-free savings account for the 2022 tax year, please contact us by the no later than Thursday, the 17th of February.