Are you a taxpayer?
Do you have deductable RA contributions available?
If your answers are ‘YES’ to
the above mentioned 2 questions, continue reading to find out how it is
possible to have an increased investment value of 22% - 67% on
recurring retirement annuity payments, before you have earned any returns on
your investment itself!
We will demonstrate above mentioned statement with an
example. Your can do your own personalized calculation on the ( www redirect co
za ) website to determine how much you will save.
According to current tax legislation your
payments to a retirement annuity fund qualify for tax relief.
For the demonstration we assume a taxable income of R 30 000
pm and an available tax deduction of R 1000 pm:
Gross yearly RA payment R 12 000
Possible tax saving R 4 200
Net yearly Payment R 7 800
This saving is an equivalent to receiving 54% return on your
investment pa! A marginal tax rate of 35 % is assumed. (Taxable income R 346
001 - R 484 000 pa.)
Explanation of this
tax saving on a retirement annuity work?
you pay R 1000 pm towards a retirement annuity it would be the equivalent of
spending or saving R 650 pm in another product where you use money that has
already been taxed at your marginal tax rate of 35 %.Summary: You are actually saving R 650 + the tax of R
350 you would have otherwise paid. This means your investment of R 650 is
immediately worth R 1000, and that is the equivalent of 54% interest paid on
your investment before you receive any returns from the funds you are investing