Did you know that contributions to retirement funds are tax deductible?
The maximum tax deduction per tax year is limited to the greater of 27.5% of your taxable income or remuneration and subject to an annual limit of R350,000.
By way of example, let’s assume the following:
Your deductions would have been limited to 27.5% of R300,000 since R300,000 is greater than R200,000. Thus, your deduction would have been limited to R82,500.
Any excess contributions can be carried over and deducted in the next tax year. Excess contributions can also be used to reduce the taxable portion of a lump sum taken at retirement, which is currently a third of your total fund value for retirement annuities and pension funds.
Have you made the most of your tax deductions? If you’re unsure, contact one of our wealth managers who have the skills, expertise and personal focus to help you navigate this process.
Courtesy of Carrie Furman, published on www.allangray.co.za
To read the full article, click here