Peter Pyburn 2010 Income Tax AdviceARE YOU GOING TO PAY ADDITIONAL INCOME TAX THIS MONTH?
Then this is for you….
29th February is an important month for taxpayers.
This day marks the end of the tax year.
It is the last date open to you for reducing your income tax for this year!And you know just how important any tax deduction is for you!
If you can reduce your gross earnings, you pay less income tax.It's that simple!
So how do you reduce your income tax?
SARS allows every tax payer to "divert" a portion of their income tax into a Retirement Annuity.
Instead of losing it to the government, why not save it for your own pension?It's a gift no one should ignore!
(Why every taxpayer does not have a RA is a mystery to those of us who do!)Very few retirement funds allow you to inject an additional lump sum amount of cash into the fund in the last days of February - but not a Retirement Annuity!
How does it work?
The tax laws allow you to deduct a portion of your savings into a Retirement Annuity.
There are certain limits - depending upon how you earn your income and if you have a company pension or provident fund already.
BUT, even if you have a company pension fund, you can still benefit from this gift!How do I get my share?
All you have to do is work out how much you earned (including income like commission, dividends, car allowance and interest) - your Gross IncomeThen deduct your exempt amounts like basic interest, dividends and so on. That is your Income.
Now this is the key...you are allowed to deduct certain amounts from your income.
The more you can deduct, the lower your income tax!SARS has substantially reduced the deductions most salaried persons can use - BUT NOT RA's!
So you need to have a deduction into your RA!
You can deduct the greater amount out of the following…
15% of your income earned where you DO NOT contribute to any other pension fund. Or if you do contribute to a pension fund - R3,500 less what you contributed to that pension fund Or R1,750 I can assist you, if you need help.
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Does this seem too technical?
Well at the end of the day consider this…
Say your taxable (non-pensionable) income is R200,000 per annum.
Your Marginal tax rate is thus 30%.
You can invest R30,000 per year in a RA fund. (15% of annual taxable earnings)BUT, due to the tax exemption of his investment, your actual cost will only be R 21,000.
But you are saving R30,000.
So SARS actually increasing your contribution by almost 43% BEFORE your investment even begins!!
That's the gift I am talking about. You must be crazy not to take it!
And then your investment still has to grow, so imagine what you final return could be!
These tax savings can be substantial and can greatly improve the overall return on your investment. What if you don't have a lump sum at the end of your tax year to pay in?
Don't let that prevent you from getting your share!
You can always start a monthly contribution to a Retirement Annuity.
Then at the year end you can top it up if you have not used your full deduction.Either way CONTACT ME IF YOU WANT TO GET WHAT BELONGS TO YOU!
I am here to assist you should you have any concerns about your
PERSONAL FINANCE.Please call me directly on my mobile: 083 377 88 93
or Email me as below.
So PLEASE, get your gift, take out an RA or add a lump sum to an existing RA to bring your contributions up to the maximum amount you are allowed to deduct from your taxable income! Let me assist you in doing this, BUT REMEMBER YOU ONLY HAVE UNTIL 29TH FEBRUARY SO ACT TODAY!!
Especially if you are concerned about Your Income Tax Liability.
