Effective personal tax planning is not something that is done when you submit your tax return. Diligent people who reduce their tax liability are those that consider the tax consequences of every transaction or investment they make. Tax planning is an ongoing process that requires that the individual’s knowledge is up to date on current tax legislation and on potential upcoming changes to tax legislation. The Accounting Team is a knowledgeable personal tax advisor that can really save you money.
Each year there are new regulations and amendments which aim to combat tax avoidance and ‘loopholes. These updated regulations are a means of ensuring tax payers are contributing as much as possible to the fiscus.
There are still some clever ways to get your filings in order and save money when you submit your personal tax return.
Below are few of the many tips and tricks available to The Accounting Team clients on how to optimise your tax position (current at 2018):
Up to 27.5% of taxable income, capped at R350,000 per year, can be deducted from your income personal income tax in respect of retirement annuity contributions made before 28 February. If this could affect you, contact The Accounting Team
Every individual taxpayer may make donations of up to R100,000 annually free of donations tax. These donations must be made in cash or kind. If you are using a trust for estate planning (or any other) purposes, such donations can be made to the trust. This has the net effect of lowering the individual’s personal estate and increasing the assets of the family trust.
In March 2015 the government introduced a tax-free investment product to encourage South Africans to save after-tax money. Individuals can invest R33,000 per year (up to a maximum of R500,000 over your lifetime) and benefit from growth free of dividends tax, income tax on interest and capital gains tax.
Individuals are currently entitled to an annual exclusion of R40,000 on any capital gains earned during the tax year. By selling growth assets before year-end (eg. unit trusts) and re-purchasing them shortly thereafter, the tax-payer can capitalise on this annual exclusion and increase the base cost of his or her portfolio. Increasing the base cost of the portfolio, the eventual Capital Gains Tax on disposal of the assets is reduced. Transaction costs will have to be factored into making this decision.