We are starting to head into Budget season – and pretty soon the predictions will come through – followed by Minister Nene’s Budget presentation. It’s always a busy week. I am not sure if there will be big tax changes or not – subtle ones maybe but a big bang tax increase – I’m not so sure. As pragmatic as the ministry has shown itself to be – South Africa is in need of a confidence boost. Perhaps Thursday will work but I rather think for most South Africans that horse has bolted.
Tax season is on us.
I heard a very good tip from financial planner of the year Peter Hewett – on the 28th take a photo of your odometer for travel records.
While we complete provisional taxes and get our records ready for the end of the tax year – we also start preparing for the new tax year. Big tax news for savers is the official introduction of the tax exempt savings accounts. I think these are a fantastic development – and should definitely be considered and used. As some have pointed our previously – they are tax exempt and not tax deductible. An important difference. So you cannot claim money invested in these accounts as a tax deduction as you can for example for an RA. But once that money is in the account the exemption kicks in.
Point number two to note is that there are limits and it is not in the investor’s interests to breach those limits. You can contribute up to R30 000 a year up to R500 000 in total – and that is not per product or per provider – it is to the scheme. You may have an account with provider A and provider B and bank C. In total you cannot contribute more to all three than the R30k per year without incurring massive penalties. This really is important and its going to require a vigilant investor – make sure you know which of your products is a tax exempt and which is not. In our mag we will be covering a lot of this in upcoming months.
Having said that – is it not fantastic that we have some incentive to save or the long term? It should be lauded with bells and whistles. Perhaps not perfect, but a really good start.
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