Do you know what tax benefits you qualify for? Retirement Annuities & Tax-Free Investments.


With the 2019/2020 tax year around the corner, now is an opportunity to take advantage of the available tax benefits.

Here are the benefits of investing in a Retirement Annuity or Tax-Free Investment.

Retirement Annuity

  • By increasing your contributions towards retirement your taxable income is reduced. (i.e. pay less tax).

  • Tax is payable when you retire and could be at a lower tax rate.

  • Growth in your RA is tax-free.

  • When you retire and convert the retirement annuity to a living annuity, you will not pay tax on growth within the living annuity. On compulsory annuity, you pay tax on the full annuity as determined according to normal tax tables. If it is a voluntary annuity you only pay tax on the growth.

Points to bear in mind when investing in a Retirement Annuity:

  • Your money can only be accessed from age 55 onwards (except in specific circumstances). Not being able to access your retirement savings is a good thing. It removes the temptation of spending the money you set aside specifically for retirement on things that may be short-term distractions.

  • Your contributions are tax-deductible. This deduction is limited to 27.5% of the greater of your taxable income or remuneration, capped at R350 000 per tax year. The tax benefit for contributions in excess of these amounts may roll over to the following tax year.

  • In the unfortunate event of your death prior to retirement, your RA benefit will not be subject to estate duty. Always ensure that you list all your dependents and/or beneficiaries on your retirement investment application.

Tax-Free Investment

  • Maximise the growth on your investment as the interest, capital gains and dividends you earn are completely tax-free.

  • With the winding up of an estate, the money will be paid to your beneficiaries immediately and there are no executor fees.

Points to bear in mind when investing in a Tax-Free Investment :

  • You can invest R33 000 per tax year up to a lifetime maximum of R500 000. Where contributions exceed the maximum limit, penalties will be incurred.

  • Money which has been withdrawn, cannot be re-contributed since your contribution limits remain the same after a withdrawal

For Independent financial advisers, you can trust contact us below...

Phone: 011 803 9686

Email: vivian@pbafsa.co.za

Fax: 086 552 3057

https://www.pbafsa.co.za/

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