Retirement Annuity Top Up Season
You may have heard several people by now talking about meeting with their advisor regarding a “Top up” for their RA.
What does this actually mean?
SARS allows taxpayers a deduction in their taxable income if they contribute to a registered retirement fund. SARS currently has a cap of 15% on this deduction (SARS have planned to increase this to 27.5% from the tax year starting March 2016).
Using an example to illustrate this:
If your taxable income for the year is R 300 000 or R 25 000 per month you will be able to contribute 15% of this to an RA and reduce your overall taxable income. If you have made no contributions for the year you can make a one off payment of R 45 000 (15% of R 300 000). This means you will be taxed on R 265 000, bearing in mind other deductions and rebates.
If you have been contributing to an RA your top up is simply the difference between what you have contributed and what you can contribute. This tax year ends February 2016 which means taxpayers have 2 weeks left to get contributions in before the end of this tax period.
If you are considering whether you can top up or not and would like to speak to a Financial Planner please let us know. We have a network of professional and qualified planners who could assist you. Time however for this top up is of the essence.
All information provided in this article is provided for information purposes only and does not constitute a legal contract between the party delivering this document, the client and any other person or entity unless otherwise specified. Nothing contained herein is intended to be, or should be construed as advice, guidance or a recommendation.