With February around the corner and tax year end draws near, we want to remind you of the benefit of using your entire annual tax allowance. Note that any portion of the unused annual limit is forfeited.
Although you can contribute as much to retirement annuities as you like, the tax-deductible amount is up to 27,5% of your annual taxable income and capped at R350,000 per tax year. This amount includes all contributions towards retirement funds.
Retirement Annuities and their added benefits
A retirement annuity has several benefits other than a tax deduction on annual contributions:
- No tax on interest, dividends, or capital gains while you remain invested.
- Protection against creditors.
- Protection against yourself because you can’t access the money until age 55.
- Allows you to stop contributions at any time and take it up again at a later point in time.
- If you already contribute towards retirement through employee benefits but have not maxed out your 27,5%, it will be wise to contribute towards a retirement annuity too.
If you have not contributed enough to maximize the benefit, you have time until February 20th.
Ready to contribute an additional lump sum to your retirement annuity before the end of the tax year? Chat with your Optimum financial advisor today or email info@optimumgroup.co.za