Cheat THE Tax Man (LEGALLY)

IS there any way you can avoid paying more tax than you need to, without breaking the law?

- VANESSA PAPAS

THEY say that nothing is certain but death and taxes. Unfortunately, paying tax is an inescapable part of earning an income; however, there are some clever ways to reduce your tax liability and maximise your chance of a tax refund while remaining on the right side of the law. Marc Sevitz, tax expert and co-founder of TaxTim, unpacks some of these for us.

CONTRIBUTE TO A RETIREMENT FUND: If you contribute to a pension, provident or retirement annuity (RA) fund, you will qualify for a tax deduction of up to 27.5 percent of your taxable income (up to a maximum of R350 000 per year). This means your taxable income is reduced and therefore you pay less tax, whilst saving for your future – a win-win situation for sure!

OPEN UP A TAX-FREE SAVINGS ACCOUNT: This is a type of savings account where your money is invested in a combination of financial products such as unit trusts, bank savings accounts, fixed deposits, and bonds. The difference between this and more traditional investment accounts is that you pay no tax on interest, dividends or capital gains. The catch is that you can only contribute up to R33 000 per year and there is a lifetime limit of R500 000; however, this is still great way to invest and save some tax in the process.