Pay Less Tax in 2017, is that really possible? We know that the title of this piece grabbed your attention, as really, who does not want to save on taxes? And, if you Google similar terms you will come up with dozens of articles and videos offering tips to save on your taxes. The problem is, do you really want to take advice from a website that also features articles on the latest fad diet and the newest gossip about the Kardashians? Or from a random financial blog written by someone you have never heard of? Possibly not.
Taxes are a serious business. Get them wrong and you can be in some deep trouble, financially and even potentially legally. So where you take your tax advice from is certainly something you have to be rather careful about.
With that being said, how about a surefire tax savings tip straight from the horse’s mouth; the government themselves? One that may also help you secure a better financial future for that supposedly ‘golden’ time in your life when you finally get to retire? Sounds good? But what could such a tip be?
The RA, the Tax Saving, Future Boosting, Investment You Need to Know About
Historically, as a whole, South Africans are not great savers. Which, these days, is not a good thing at all. There are far fewer pensions or provident funds out there offering a guaranteed pension based on years of service, the way there was in your grandparent’s day. And many of us don’t stay in one position for decades in the way that people used to in years gone by and so even if such a scheme exists at your current place of employment you may not be around for long enough to really take advantage of it.
The fact is that in 2017 many South Africans know that it is really down to them to secure their own retirement fund. And one way to do that is the tax friendly RA – retirement annuity – a financial instrument far safer than risky and expensive tax avoidance schemes and one that yes, is being backed and even actively touted by the government.
How do RAs Work?
A cross between an insurance product and an investment, annuities come in lots of different shapes and sizes and in varying degrees of usefulness and risk. Retirement annuities are completely unique though as although they provide a stream of income just as other fixed annuities do, these deferred annuities don’t begin paying out for years, basically when you decide to retire and begin tapping this particular source of income.
But that does not mean that RAs do not offer some advantages right away. These include:
- They offer a guaranteed tax deduction of up to 40%
- They are protected from capital gains tax
- They are protected from estate duty
- They are protected from insolvency
- They do provide for beneficiaries should you not live long enough to take advantage of them yourself.
Until recently the funds from any RA were not allowed to be made payable until an individual was at least 70 years of age, not making them the most attractive option for someone who wanted to be done with work five or six years earlier than that, as many of us do. However, they are now payable as early as 55.
An RA is an investment, and as such, does carry risk. However, with the right professional guidance, they can provide a way to save on your taxes now and enjoy a much nicer retirement in the future. Your next best step is to speak to one of our Financial Advisors to find out how you can “Pay Less Tax in 2017” and benefit from a financially secure retirement.No Fields Found.