Three smart tips to ensure you pay less tax
These tips will ensure anyone who is employed and trying to reduce their tax payment can get a reduction.
Governments collect taxes to ensure the smooth running of the country.
The money gets channeled into education, health, and ensuring that roads and other infrastructure managed by the government can operate well.
The money also helps the government pay for things such as social grants.
Although paying taxes is important, taxpayers sometimes feel the pinch.
If you are one of those looking for ways to cut down on your taxes, here are three tips that will work for you.
Open a retirement annuity
A retirement annuity is money you put aside on a long-term basis that will help you during the time that you have retired.
You will be able to get a regular income after your employment years.
Not only is it beneficial for you as an individual when you retire, but it can do wonders when it comes to taxes.
Those who pay money towards their retirement annuity get to benefit from reduced tax payments.
Support a registered charity
Charities are set up to support the less fortunate in the country or to ensure that most of the basic needs of the vulnerable groups in society are met.
Supporting charities is a way of extending love and offers you an opportunity to make a difference in the lives of those in need.
Another benefit of supporting a charity is that you can get your tax payment reduced, provided that you donate to a Public Benefit Organisation (PBO).
PBOs are registered with SARS, and issue donors with a certificate in terms of Section 18(a) of the Income Tax Act.
READ: Shakira denies alleged tax fraud allegations
Tax-free savings
A tax-free savings account (TFSA) is set up in such a way that any interest, dividends, or capital gained on your savings will be free of tax.
You are allowed to invest up to a maximum of R36,000 a year, and your investment is capped at R500,000 in your lifetime.
It was introduced on 1 March 2015.
'The tax free investments may only be provided by a licenced bank, long-term insurers, a manager of registered collective schemes (with certain exceptions), the National Government, a mutual bank a co-operative bank, the South African Postbank, an administrative financial services provider and a person authorised by a licensed exchange to perform one or more securities services in terms of the exchange rules,' states SARS.
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