Martin Riekert, Chief Commercial Officer, Momentum Investments

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

You can provide for your retirement, and be tax-savvy, by using a retirement fund and a tax-free investment (also known as a tax-free savings account) from Momentum Wealth.

Top-up your retirement annuity

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

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

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

In addition to the tax break you get on the money you invest, you also enjoy tax-free growth in your retirement fund

– you don’t pay income tax, dividends tax or capital gains tax while the money is growing.

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

Top-up your tax-free investment

Although you don’t get a tax deduction for money you invest in a tax-free investment, you still enjoy tax-free growth.

And you won’t pay any tax on the proceeds when you decide to take money out of the investment.

You can invest up to R36 000 every tax year in a tax-free investment, limited to R500 000 over your lifetime.

The secret is to make sure that you use these tax incentives optimally every year and consistently over time. By doing this you can reduce the impact of tax on your financial plan and increase the growth potential of your investments.

Discuss your options with your financial adviser so that you can reap the full benefits of tax incentives available to all taxpayers every year.

ENDS