Tax Tips & Tricks


Tax-Guide

There are three tax benefits associated with Retirement Annuities:

1. Contributions are tax deductible – greater of R1750, or R3500 less current fund contributions deductible, or up to a maximum of 15% of non-pensionable taxable income. If you contribute more, you may claim excess amounts in future tax years. You may also add your excess contributions to the tax-free portion of any lump sum you receive.
2. Investment returns are tax free – there is no income tax or capital gains tax on the investment return earned in a RA.
3. Benefits are taxed on a favourable basis – lump sum benefits are taxed on a sliding scale with a portion of the benefit tax free.

From March 2014 an employer’s contribution to retirement funds on behalf of an employee will be treated as a taxable fringe benefit in the hands of the employee. Individuals will from that date be allowed to deduct up to 27.5 per cent of the higher of taxable income or employment income for contributions to pension, provident and retirement annuity funds with a maximum annual deduction of R350 000. Contributions above the cap are carried forward to future tax years.

Commonly made tax mistakes:
Be aware of your rights and obligations as a taxpayer. Understanding this process and, in particular, the strict deadlines within which you must act will enable you to make informed decisions – which ultimately may result in more cash in your pocket. Failure to keep & maintain all relevant documentation e.g. logbooks & invoices for medical expenses not covered by medical aid.

Tax reduction:
SARS is currently reviewing the travel allowance & company vehicle fringe benefits, and as a result have implemented stricter controls on the allowance of these deductions.

Save by keeping an accurate logbook. Maintaining an accurate logbook is a tedious affair but the benefit of additional tax savings may make it worthwhile. An accurate logbook means you can base your claim for travel expenses for business and private use on the actual distances travelled. You may also be able to reduce the taxable benefit of the company vehicle used by you. No logbook puts you at the mercy of the provisions of the Income Tax Act, which can in some cases be extremely costly.

New tax rates and legislation: The Rates of Tax in respect of the 2013/2014 Tax Year:

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Click here to view the 1.618 Financial Services Tax Guide.

This information is not “advice” as defined and contemplated in the Financial Advisory and Intermediary Services act, 37 of 2002, as amended. It is important to speak to a Financial Adviser about Taxes.

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