National Treasury has just delivered the 2018 Budget Review. Again, due to a persistent Budget deficit, certain taxes were raised. An increase in VAT to 15% is the headline story, but for individuals in the top four income tax brackets the range of the income brackets was not adjusted for inflation. In effect, your clients will therefore have less real income left after tax in the coming year.
Taking stock of your finances at the start of February can make or break your tax plan for the year ending 28 February. Now is the ideal time to spot the gaps where you haven’t yet fully used all of your tax-free allowances, whether it’s via a retirement annuity (RA) or a tax-free savings account (TFSA). But which one should you use? RA or TFSA?
The three-year anniversary of the first tax-free unit trusts launched in 2015 is coming up and you’ll be pleasantly surprised at the superior three-year returns compared to their standard, taxable counterparts, particularly for pure equity and high equity funds. Not paying any dividends tax now and no capital gains tax in future will make a dramatic difference to your pocket. So, make sure to use this tax year for planting the seeds for a tax-free harvest in future.
With the total tax burden of South Africans on the rise, it’s time to look more closely at those products that give you that much needed tax break. Retirement annuity (RAs) have been around for many years and most investors are familiar with this product, but tax-free savings accounts (TFSAs) were only introduced in 2015, and is fast gaining popularity among retail investors – for obvious reasons.
Last week we introduced our tax-free investment range and explained how the tax, the annual and lifetime limits and the withdrawals would work. This week we cover the lesser asked, but important, questions relating to these tax-free investments.