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PS, I love you SARS

As February draws to a close in South Africa, so does the tax year. This is a time where we tend to reflect on our overall finance management and how we survived our responsibilities this past year. It is a pivotal moment, signalling the need for taxpayers to gather their financial records and ensure compliance with South Africa's tax laws.

For many South Africans, navigating tax season can be daunting, with complexities ranging from understanding deductions and exemptions to grappling with changing tax laws and regulations. However, with careful planning and attention to detail, you can effectively manage this and fulfil your obligations to the South African Revenue Service (SARS).

But there aren’t only obligations to pay your dues, there are obligations to plan for the future. As you enter a new financial season, it is also an opportunity for you to improve how you handle and manage your financial affairs: including, how/if you invest – getting the best rewards for yourself and your family and preparing for retirement.

With a weakening Rand and uncertainty in the SA economy, keeping money in cash means that your money devalues with the impact of inflation. Investing encompasses an expectation that your money will increase in value, thereby enhancing the worth of your assets and earnings rather than waiting – as many South African’s do – for things to change.

Depositing a lump sum into retirement annuities (RAs) at the close of the tax season enables you to leverage SARS rebates and allocate funds toward long-term plans poised for growth over time. With an annual threshold of R350 000, you need to work out what your contributions to all retirement funding has been for the year. Then you subtract this from the annual threshold to ascertain your availability. This lump sum contribution results in either a substantially larger rebate on your tax return or the investor drops in to a lower tax bracket, mitigating their obligation to SARS.

The structure of these funds and the costing of a portfolio are further factors to be considered when trying to achieve specific wealth goals.

Seeking professional advice and assistance can be invaluable. Financial advisors can provide guidance tailored to your personal circumstances. Our advisors at 1.618 are equipped and ready to help guide you in the right direction as you enter your ‘New Year’.

Get in touch with us today to find out more.