Hi readers, this is John. I was worked as Independent wealth managers and like every common people me too have to care about my financial freedom in the future. And because I could rather my money go towards my future than paying tax. I have a good plan in the tax savings benefits of the retirement annuity.
A long term investing is designed as a tax structure for retirement annuity. Based on the type of investment i prefer the amount of tax to be paid will be reduced, which helps me to have a long-term savings. I just want to update you with what I have learned and that is, save money and reduce taxes.
The four ways your retirement annuity can help you save tax. Before taking a decision on financial investment you need to think about them, as your personal circumstances are never taken into account.
1. At the time when you put your investment on retirement annuity the first Tax saving begins. If you are investing your money outside of a retirement annuity, Then you invest hardly earned money after paying income tax on it. That's between 18 and 40 percent. But if you are investing that amount into a retirement annuity - it will act as a best tax saving method on your salary of about 18 to 40 percent. It is made with some certain money limits on how much you can invest in a retirement annuity. So you can consult and talk to a certified financial planner, professional about these.
2. The second Tax saving is when you invest the money and it starts growing in your retirement annuity fund. If your invested amount is outside of a retirement annuity fund, a deposit at a bank, rental property, a unit trust or shares, you will pay tax on your personal marginal tax rate based on the grown earnings from the invested amount. This can be between 18 and 40 percent. But if it is invested in a retirement annuity, you don't need to pay tax for the earning from the same investment. If you pay low tax, then your saved tax amount also grow along with invested amount.
3. The third tax saving is, if you put cash in your retirement annuity, once you touch the target fifty five or older, then the first half a million rand will be tax free and amounts above this will be taxed on a sliding scale starting at as low as 18%. This means that you got a tax deduction of 40%, but only need to repay 18%.
4. The fourth tax saving is when you die. Retirement annuity investment value is excluded from your estate for estate duty tax. It saves 20% tax. Thereby leaving your dependents with more money.
so the time when you:
1. Make your own investment (Contributions are tax deductible)
2. The period of your invested amount growth (Growth on Investment is Tax Free)
3. The time at which you put your cash in (First 1/2 million is tax free)
4. The date of the person's Death (No Estate Duty Tax payable)
Read: What are Annuities
Are four important steps in your life and a retirement annuity can help you save tax at each of those four steps which means, if you are keen to put money away for the future, the retirement annuity tax structure can be a very rewarding way to save.