Help your clients be more tax savvy

By Fränzo Friedrich, Head of Marketing at Momentum Investments

Have your clients maximised their tax benefits for this tax year? Help them take advantage of the tax incentives for the tax year before 28 February 2025.

Most financial decisions your clients make have a tax impact. Although tax can be complicated, with a few smart moves with your clients, they can benefit significantly from tax incentives, especially when planning for retirement. In the process, they can also improve the probability of achieving their investment goals.

Clients can provide for their retirement, and be tax-savvy, by using a retirement fund and a tax-free investment (also known as a tax-free savings account).

Top-up your retirement annuity

Every tax year, a person can claim a tax deduction for the money invested in a retirement fund. To make the most of this deduction, clients can invest up to 27.5% of their taxable income or salary before any deductions are made, whichever is higher, subject to a maximum of R350 000.

They can do this whether they are self-employed or earning a salary, but they are not yet contributing the full amount to their employer’s retirement fund.

If clients have not yet used the full tax deduction available to them for the year, they can make an additional lump sum payment to their retirement annuity before the tax year ends on 28 February 2025.

In addition to the tax break clients get on the money they invest, they also enjoy tax-free growth in their retirement fund. They don’t pay income tax, dividends tax or capital gains tax while the money is growing.

If clients have not yet maximised the 27.5% benefit with their regular contributions, they can add a lump sum to their retirement annuity (RA) before 28 February 2025.

Top-up your tax-free investment

Although clients don’t get a tax deduction for money they invest in a tax-free investment, they still enjoy tax-free growth. And they won’t pay any tax on the proceeds when they decide to take money out of the investment.

Clients can invest up to R36 000 every tax year in a tax-free investment. This is limited to R500 000 over their lifetime.

You need to ensure that clients maximise tax benefits optimally every year and consistently over time. By doing this they can reduce the impact of tax on their financial plan and increase the growth potential of their investments.

Discuss these options with your clients so that they can reap the full benefits of tax incentives available to all taxpayers every year.

Read more about saving for retirement here.

For more on the Retirement Annuity Option from Momentum Wealth click here.

For more on the Flexible Tax-free Option from Momentum Wealth click here.

The Retirement Annuity Option and Flexible Tax-free Option are life insurance products, underwritten by Momentum Metropolitan Life Limited, a licensed life insurer under the Insurance Act and administered by Momentum Wealth (Pty) Ltd.

The information is for general information purposes and not an invitation or solicitation to invest. The information is not intended to be accounting, tax, investment, legal or other professional advice or services as set out in the Financial Advisory and Intermediary Services Act 37 of 2002 (FAIS), or otherwise. The information in this document, including opinions expressed, is derived from proprietary and non-proprietary sources that Momentum deems reliable, and is not necessarily all-inclusive but is accurate at the publication date. While we make all reasonable attempts to ensure the accuracy of the information in this document, neither Momentum Wealth (Pty) Ltd, Momentum Metropolitan Life Limited nor any of their respective subsidiaries or affiliates make any express or implied warranty about the accuracy of the information in this document. Past performance is not necessarily a guide to future returns. Financial advisers should conduct a suitability analysis and due diligence with clients on the investments mentioned in this document as part of their investment mandate and investment advice process. Terms apply. Available from your financial adviser and Momentum.

For investments in collective investments schemes (CIS) (unit trusts), refer to the minimum disclosure document (MDD), which is available from the relevant CIS manager. The MDD contains important information about investments in the particular CIS.

Momentum Wealth (Pty) Ltd is an authorised financial services provider (FSP 657) and is part of Momentum Metropolitan Life Limited and Momentum Group Limited. Momentum Metropolitan Life Limited is an authorised financial services (FSP 6406) and registered credit provider.