Financial Planning

Take advantage of tax breaks before 28 February 2025

The end of the 2024/2025 tax year is just around the corner. While no one can predict what Finance Minister Enoch Godongwana will announce on the tax front in his Budget Speech in February, it may be prudent to take advantage of the tax benefits still in place before the current tax year ends on 28 February 2025.

Here are some ways to make the most of the available tax breaks:

Make a lump sum, tax-deductible contribution to a retirement annuity (RA), or increase your monthly RA debit order.
Open a tax-free savings account (TFSA), or add to your existing TFSA – you can contribute up to R36 000 per tax year (and up to a lifetime maximum of R500 000 in aggregate).

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Boost your retirement
savings portfolio

Investing in an RA can boost retirement savings and reduce tax, as no dividends, income or capital gains tax applies. Contributions up to 27.5% of taxable income (capped at R350 000 annually) are tax deductible, with any excess carried forward to be deducted from future taxable income. RAs can be used even if you contribute to a pension or provident fund.

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TFSA

Tax-free Savings Accounts

By contributing to a TFSA, you won’t pay tax on interest, dividends or capital gains. TFSAs offer different investment options to suit your objectives and risk profile.

Additionally, a TFSA provides a unique opportunity to use your annual donations tax exemption to donate up to R100 000 (R200 000 if both spouses make use of their exemptions) per year to your children without incurring donations tax. This is an alternative estate planning tool, as the funds will be invested in your children’s names in a tax-efficient investment.