Make Your Money Work Harder: Maximise Your Retirement Annuity Tax Benefits Before Tax Year-End

With the end of the tax year approaching fast, now is a great time to make sure you’re getting every rand of tax benefit available from your retirement savings.

If you haven’t used your full annual retirement contribution allowance, you could be leaving valuable tax deductions on the table, and once the tax year closes, any unused benefit is gone for good.

How Much Can You Deduct?

South African tax legislation lets you claim a tax deduction for contributions to retirement funds (including retirement annuities) up to 27.5% of your taxable income (or remuneration), with an annual cap of R350 000. 

That means you could reduce your taxable income, and potentially your tax bill, by contributing more into your retirement annuity before the tax year ends.

Why Choose a Retirement Annuity?

A retirement annuity doesn’t just help you save for the future, it comes with additional benefits that make it a smart part of your financial plan:

• Tax-free growth: Your investment grows without being taxed on interest, dividends or capital gains while you’re invested.

• Protection from creditors: Your retirement savings are safeguarded against creditors.

• Built-in discipline: You can’t access the money before age 55, which helps keep your long-term goals on track (apart from the portion allowed under the two-pot system).

• Flexible contributions: You can stop or restart contributions anytime, giving you flexibility as your financial situation changes.

• Complements employer benefits: If you’re already contributing to a retirement fund through your employer but haven’t reached the full 27.5% limit, a retirement annuity can help you top up and maximise your tax benefit this year.

Don’t Miss the Deadline

You have until the tax year-end to make additional contributions and claim the full deduction available to you. Making a lump-sum contribution now could mean less tax and more savings growing for your future.

Ready to Make a Contribution?

If you’re considering topping up your retirement annuity before year-end, talk to your Optimum financial adviser today, or contact us on info@optimumgroup.co.za.

We’ll help you structure a contribution that makes sense for your tax position today, and your retirement goals tomorrow.

General information only. Please consult your financial adviser for personalised advice. Tax benefits are subject to current legislation.