The new year has just begun but the tax year is coming to a close. The end of the tax year is a great time to take a look at your finances and find opportunities to save money. This is a friendly reminder to take a look at taxes and find the deductions and refunds that matter.

South Africans pay a hefty amount in taxes without the certainty that those taxes will end up working for us. With economic challenges ahead, from growing inflation to volatile markets, it is important to save as much as possible for the year ahead. Consider these tax optimisations:

Retirement annuities

Contributions to a retirement fund are tax-deductible. If no prior retirement savings have been made, this is a great place to put some money. Up to 27.5% of taxable income and no more than R350,000 is tax-deductible. Not only does this reduce taxes but it ensures that a comfortable retirement is possible. There is a lifetime tax-free amount of R500 000 for retirement withdrawals.

It is possible to claim your RA tax contribution upfront, on a monthly basis. This will need to be discussed with a company’s HR or payroll supervisor, but the option to claim your refund on a monthly basis is there. This amount will most likely be a much smaller refund after your tax return is submitted. However it puts less reliance on SARS in the case of a tax rebate.

Tax-free savings and Endowments

Up to R36 000 can be contributed to savings funds without incurring additional taxes (with some limitations). A great way to save up for the years ahead as well as on taxes. Many savings accounts are tax-free meaning that the investor is not liable to pay taxes for the growth of the investment.

Endowments offer opportunity to investors who have income tax rates higher than 30%. This is because endowments are fixed at a tax rate (tax payable on income and capital gains tax) of 30%. All taxes are levied within the investment, and no tax certificates are issued.

Tax directives

In the case where more than 50% of your gross income is earned as commission, you are eligible for a tax directive. This is a complex process, and applicable to everyone, but it can assist in reducing your tax rate. Be sure to consult a financial advisor if you think you may be eligible.

Make the most of the end of the tax year. Take full advantage of RA’s, tax-free savings and other money saving opportunities. Better yet, contact one of Remnants expert advisors to get the most out of your money. Be sure to let your financial planner know of your contributions so that they can insure its inclusion in the 2022/2023 tax year. Contact Remnant today and make the most of your taxes.