Happy retirement annuity season 2017
IF YOU are like me and enjoy receiving annual returns from the taxman, now is the time to act!
You must be thinking, “How can retirement annuity season be happy?” Well, I have some good news for you.
Think back to March last year when Treasury implemented the following with regards to the retirement savings industry:
ý A taxpayer is allowed a combined deduction for all contributions to pension, provident, and retirement annuity funds;
ý The deduction is up to a maximum of 27.5% of the greater of remuneration or taxable income;
ý The annual limit for deductable contributions is R350 000;
Simply put, Treasury has increased the amount a tax-paying individual can contribute towards a retirement fund from the previous maximum of 15% to 27.5%, thus allowing for a higher potential tax return – so I say again, happy retirement annuity season to you!
Retirement annuities also have other advantages, namely:
ý All growth within a retirement annuity is free of income tax and capital gains tax;
ý In most instances, the entire value of your retirement annuity will fall outside of your estate on death, thus reducing your potential estate duty tax. Only contributions above the 27.5% or R350 000 per annum will form part of your estate;
ý Legislation forcing members to retire at the age of 70 has been amended and numerous funds allow for members to retire after the age of 70.
With the imminent conclusion of the 2016-17 tax year, it’s important to contact your financial planner to ensure you take full advantage of the new regulations.
You have until February 28 to ensure you have made your maximum contribution.
If you would like to receive advice regarding your retirement and/or estate planning, please do not hesitate to contact Edge Financial Group. – Stephan Steinmann