Estate Living Magazine Retirement Living - Issue 40 April 2019 | Page 57

L I v E
S M A R T
difference. Another great advantage is that
dividends earned in a TFSA are also exempt
from the normal tax of 20%, so the growth is
truly tax-free.
Retirement annuity
Offshore investment
The future is uncertain, so it’s a good idea to
put some of your investment eggs into a basket
that is geographically and administratively
distant. Ben Mitchell, senior consultant at IP
Global, gives some guidelines for selecting
the best partners and products for starting
an offshore portfolio. It’s all down to good
research, and due diligence. As you may
know, IP Global have a dedicated investment
N
Other good reasons to look at RAs are that the
growth on your investment is tax-free, and the
lump-sum benefit at retirement is also exempt
from tax. You will pay tax on withdrawals during
your retirement, but as the tax rebates, rates
and allowable deductions are favourably
adjusted for people aged 65–75, you will
ultimately pay less tax.
Investing in property in order to create
an income stream is a great idea but you
should make sure that you understand the
tax implications. Owning property in your
personal capacity, a trust or in a business all
have their different tax advantages, so you
should consult a tax expert to find the best
solution based on your circumstances. If you
already own property, and have not consulted
with a tax practitioner in the past few years,
then you should consider doing so to make
sure that you are running things as efficiently as
possible.
Another investment option to consider is a
retirement annuity (RA). Contributing to an RA
will reduce your taxable income (meaning you
pay less tax) but only up to the limit of 27.5%
of either your taxable income or remuneration
(whichever is higher), capped at R350,000 per
tax year. You could calculate the tax you save,
and then invest that too; it’s essentially ‘free
money’.
Property