Maximise your tax benefits
Retirement annuities (RAs) and tax-free investments (TFIs) offer attractive tax-saving benefits. To avoid missing out on these benefits, make use of them before the end of the tax year.
By investing before the deadlines, you could get back some of the tax you've paid to SARS (if you invest in an RA) and therefore get more from your investment over time.
Interactive example: See how much Zandi could get back from SARS by investing in an RA
Before the end of the tax year, she decides to invest a lump sum into her RA of
Make the most of your tax benefits
- You save tax and your money is safeguarded for your retirement.
- Your investments into your RA are tax-deductible. This means you can deduct the amount(s) you have invested from your annual income and reduce your taxable income. You therefore pay less income tax or get a refund from SARS when you complete your tax return.
- You pay no tax on interest, dividends and capital gains while invested in the product. As a result, your investment value over the long term could end up far higher than in a basic unit trust investment where your money’s growth is taxed.
- You have further tax benefits when you retire. At retirement, you can only withdraw up to one-third of your investment as cash (the first R500 000 is tax-free but this includes all previous taxable lump sums and applies once-off over your lifetime). The rest must be transferred to a product that can provide you with an income in your retirement, which will be taxed according to your marginal income tax rate at the time.
- You pay no tax on interest, dividends and capital gains while invested in the product. Because the growth of your money is not taxed, your investment value over the long term could end up far higher than in a basic unit trust investment where your money’s growth is taxed.
- You have the flexibility to access your money if you need to. However, you will benefit most from the tax advantages if you remain invested for the long term, giving compound interest time to work for you. Although you can access your money, you cannot re-contribute amounts you have withdrawn – your contribution limits remain the same after a withdrawal.
| RA | TFI | |
| How much can I invest? | Any amount. Your investments are tax-deductible, but this deduction is limited to 27.5% of the greater of your taxable income or remuneration, capped at R350 000 per tax year. | Up to R33 000 per tax year, capped at R500 000 over your lifetime (across all service providers). |
| What if I invest more than the limits? | Your tax benefit for investments in excess of the limits may roll over to the following tax year until you’ve received it in full. | You will have to pay a tax penalty of 40% on the amount you invest above the maximum (mentioned above). |
| Will investing decrease my taxable income? | Yes. Investments up to the annual maximum (mentioned above) will decrease your taxable income in that tax year. | No. |
| When can I access my money? | Any time after you reach age 55. You can only access your money earlier in certain circumstances. | Any time, but your contribution limits remain the same so you cannot re-contribute amounts you have withdrawn. |
| What are the estate planning benefits? | Your money is not part of your estate, except in specific circumstances. The trustees will decide who receives your money, but you can nominate who you would like them to consider. | You may nominate beneficiaries and they will receive the money directly, without waiting for the estate to be wound up - there are no trustees involved. Estate duty is payable, but if you nominated beneficiaries, there are no executor fees. |
Don’t miss the 27 February deadline
To maximise your benefits and invest before the end of the tax year, you will need to submit your instruction and your money must reflect in our bank account by 14:00 on 27 February 2020. Payments can take two to three days to reflect in our bank account.
This deadline is applicable to all payment methods:
- EFT (RA only)
- Electronic collection (RA and TFI)
- Cheque deposit (RA only)
Log in to invest
You can log in to your secure online account to add money to your existing investment, or start a new one.
Please note: Our daily cut-off is 14:00. If you meet the above deadline and your investment is finalised on the last day of the tax year, the transaction date on your statement may reflect as 2 March 2020. However, your investment will still be part of this tax year and included on your 2019/2020 tax certificate.
Deadlines for moving money from your unit trust investment to an RA or a TFI
(basic unit trust investment)
(via the investment platform)
You will need to send us two separate instructions to move your money:
- Withdrawal from your unit trust investment
- Additional contribution for your RA or TFI
You can send us both instructions at the same time. Please make a note on both forms indicating that the money must be paid into and then collected from the Allan Gray RA or TFI bank account. The money will not be paid into your bank account.
Remember the withdrawal may trigger capital gains tax.
You will need to complete the forms, as our online functionality currently does not allow you to move money between these investment accounts.
Please note: Our daily cut-off is 14:00. If you meet the above deadline and your investment is finalised on the last day of the tax year, the transaction date on your statement may reflect as 2 March 2020. However, your investment will still be part of this tax year and included on your 2019/2020 tax certificate.