Reduce your tax liability during this retirement annuity season

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[ADVISOR VIEW] One of the ways in which individuals can maximise their tax deductions is by contributing towards retirement funds: MichaelHaldane - GlobalLocalZA. PersonalFinance FinancialPlanning

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As we are approaching the end of the tax year, the question to ask yourself is: Have I maximised my contribution to a retirement annuity? Have I maximised the tax deduction? Well, one of the ways in which individuals can maximise their tax deductions is by contributing towards retirement funds. This is because total contributions towards retirement funds are allowed as a deduction against tax liabilities.

Taxable income before including capital gains. Please note that the tax deduction will be capped at the actual contributions made by the individual. If you are not contributing towards a pension or provident fund via your employment, you can reduce your tax liability by starting your own retirement annuity. Thus, you would contribute towards a retirement annuity by way of a lump sum or monthly contributions. You would also have the option to add funds to the retirement annuity as and when funds are available.

Retirees who wish to take the permitted cash withdrawal portion at retirement, will be taxed in accordance with the retirement tax table which exempts the first R500 000. However, the R500 000 tax-free portion is a cumulative total in your lifetime. Thus, if there had been prior cash withdrawals the tax-free portion will be affected.

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