We are drawing closer to the end of the 2019/2020 tax year and we would like to notify you of the deadlines with regards to Retirement Annuity and/or Tax Free Savings top-up contributions.
Retirement Annuity Top-up
New Legislation encourages retirement savings and contributions towards retirement. There are significant tax benefits in contributing to Pension-, Provident- or Retirement Annuity Funds. Since the 1st of March 2016 an individual can deduct contributions to Pension-, Provident- or Retirement Annuities to the value of 27.5% of the greater of taxable income or remuneration limited to an amount of R350 000 per annum. We would like to bring to your attention that this essentially means that more can be deducted from tax than in prior years. If your estimated tax is more than expected, you should strongly consider an additional contribution towards your Retirement vehicle to reduce your tax liability. This is a much better way of reducing tax as opposed to settling the tax or the deduction of more PAYE in the month of February (which we often see occurring in practice).
Tax Free Savings Account Top-up
An individual is allowed to contribute R33 000 per annum to a Tax Free Savings Account with a lifetime limit of R500 000. This is a long term investment vehicle and should not be used as a call account. Please also note there are hefty fines and penalties if the annual limit is exceeded.
Ultima would dearly like to assist you to process these transactions before the end of the tax year but we are subject to our service providers’ deadlines. Ultima’s deadline for submitting a top-up request will be close of business Friday 21st of February 2020. Please send your instruction through before the 21st of February 2020 to ensure that it is processed in the month of February.
We encourage you to consider these top-up payments to obtain the maximum tax benefit available.
Please contact me for more details on the Retirement Annuity or Tax Free Savings top-ups or to explain these top-up payments in more detail.
Lastly, we’d like to remind you of the following:
- Provisional taxpayers’ 2nd provisional payment is due by the end of February 2020.
- The annual budget speech is planned for Wednesday, the 26th of February 2019. We look forward to seeing who will be delivering this years budget.