The February Countdown: Your Last Chance to Cut Your Tax Bill and Build Wealth

As the financial year hurtles toward its 29 February deadline, South Africans have one final, critical window to take control of their tax liability and set themselves up for long-term financial health. This period is not just about closing the booksit’s about actively shaping the tax return you’ll file in July and making strategic moves that can save thousands.

According to Alexforbes financial adviser Zander Loots, this is when clients urgently ask how to legally reduce their tax bill. The answer consistently circles back to one powerful, dual-purpose strategy: investing in a Retirement Annuity (RA).

Why a Retirement Annuity is Your Most Powerful Tool

If you’re not in a company pension fund allowing extra contributions, an RA is arguably the most effective vehicle for lowering your taxable income before the year-end. Here’s why it’s a cornerstone of savvy financial planning:

• Immediate Tax Relief: You can deduct up to 27.5% of your taxable income (capped at R350,000 per year) from your taxable income.

• Tax-Free Growth: No tax on interest, dividends, or capital gains within the RA, allowing your money to compound far more efficiently.

• Estate & Creditor Protection: RA funds fall outside your estate, reducing estate costs, and are generally protected from creditors.

• Flexibility & Portability: You can change contributions, make lump-sum payments, and keep the RA regardless of job changes.

The Stark Difference on a Payslip

Loots provides a clear example: two individuals under 65, each earning R1 million.

• Person A makes no RA contribution. Their tax payable is R292,003.

• Person B contributes the full 27.5% allowance (R275,000) to their RA. Their taxable income drops to R725,000, and their tax bill falls to R181,911.

The result? Person B saves R110,092 in immediate tax and sees their effective tax rate drop from 29.2% to 25.1%. That’s over R110,000 not sent to SARS, but instead invested for their future.

The Deadline is Real

The message is urgent and clear. The strategies you implementor fail to implementbefore 29 February 2026 will define your tax burden for the year. Contributing to an RA is not just a tax tactic; it’s a disciplined step toward long-term wealth, forcing savings you cannot easily access until retirement.

This is your final call. It’s the difference between simply paying your dues and strategically building your future while keeping more of your hard-earned money. The clock is tickingyour wealth, and your tax bill, depend on the moves you make now.

{Source: DailyInvestor}

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