Money Heroes

Money Heroes is an empowering 13-part series that will take you on a journey to applying the power of expert advice in achieving your unique financial goals.

From investments to tax, we've got you covered with empowering advice from industry leaders in South Africa that will accelerate your journey to success.

Tax may seem like a very complex and detailed subject for many of us, and that's because it is. Fortunately, we have a wealth of tax experts on hand whose knowledge we can tap into to simplify our tax questions.

In this episode of Money Heroes, we talk to tax expert Professor Keith Engel, the CEO of the SA Institute of Tax Professionals who gives us his 5 basic tax principles, as well as financial planner Gerald Mwandiambira, who looks at the best tax products to consider.

Tax

Tax is a topic that people often try to avoid, and for different reasons. It's sometimes so complex that many don't feel equipped to have a proper conversation about tax.

Well, deputy CEO of Momentum Metropolitan Jeanette Marais says you are in good company, as everyone should be looking to tap into the power of expert advice to make a success of their tax journey.

"I would never try and attempt to do my own tax planning. I have a tax expert that helps me with the structuring of my assets and investments, because that is where most of the complexity comes in."
Jeanette Marais - Deputy CEO, Momentum Metropolitan

Marais encourages everyone to use a tax expert to help them annually, or Momentum clients can use TaxTim - a free online service that takes you through a step-by-step process to successfully complete your tax return on an annual basis.

We will never avoid paying tax as long as we are earning an income, so Jeanette has some success tips to maximising the reality of tax.

1. Utilise the available tax incentives - There are many products that are supported by the receiver of revenue that have been created to help you maximise returns without paying too much on tax, such as retirement annuities. Utilise them to pay less on tax.

2. Understand the products:

a) A tax-free investment plan allows you to invest up to a certain amount a year to a maximum level, tax free. A tax-free investment from Momentum allows you to invest up to R36 000 a year (R3 000 per month), limited to R500 000 over your lifetime. These limits may be adjusted by the government from time to time, so check in with your financial adviser.

b) Saving through a retirement annuity allows you to receive money back annually from SARS if you have saved a portion of your salary for retirement. Depending on how much you've saved, you can receive up to R350 000 back as a tax deduction as a way to encourage you to save for retirement.

3. Partner with a tax expert - The best thing you can do is to join forces with a tax expert to get you through your planning, help you with a selection of products, and help you understand your tax payments.

"There are two certainties in life: death and taxes. We can't do anything about death, but we certainly can make sure that we never pay too much tax."
Jeanette Marais - Deputy CEO, Momentum Metropolitan

Tax Tips

Theo Vorster, CEO of Galileo Capital, says there are two periods in which you have to consider your tax questions: the period when you are saving, and the period when you are withdrawing.

Both periods will have different implications for your retirement savings, but there is one point that Theo stresses, and that is to fully utilise the tax laws that have been set up to encourage citizens to save and invest.

"Make sure that you use the tax laws and structures to the actual maximum, otherwise it's simply money from your pocket to the pocket of the receiver," says Theo.

Here are Theo's tax success tips for when you are saving or withdrawing:

Success Stories: Professor Keith Engel

Professor Keith Engel is the CEO of the South African Institute of Tax Professionals, and says paying tax will always be a reality, as we will always owe money if we are making money.

He gets straight to business to give us the five most basic principles we need to know when dealing with our taxes.

Pay on time – "File your returns on time. Once you’re late, you're going to run into trouble in the form of interests and penalties. Don't throw your money away."
Professor Keith Engel - SA Institute of Tax Professionals

Keep your slips – The hardest part of tax season is not filling out the return, it’s getting all your slips, salary stubs, and payments together. Have a system to do this regularly throughout the year.

Business expenses – Legitimate business expenses can be claimed. Sometimes a person may claim a car allowance, for instance, but make sure you're actually driving for business purposes.

Side income – Don't forget to report money earned outside of your job, which is also taxable. SARS can sometimes pick that up and if you don’t report it, it can be deemed fraud. "Don't play games with the revenue authority."

Watch the video for the last tip from Keith on thinking about how you save

Success Stories: Gerald Mwandiambira

Gerald Mwandiambira is a certified financial planner at Sugar Creek Wealth.

Gerald has a few ideas on what products to consider for the best tax purposes, including what would be the best birthday present for your child on the day that they are born.

Start an RA early – For every rand you put into your retirement annuity, SARS can give you up to R350 000 back as a tax deduction, depending on how much you've saved. This is a lot of money and is a way the government encourages us all to save toward retirement.

Record-keeping – There are many ways in which you can save on your tax liability, especially if you're self-employed. Keep note of your mileage, keep note of the spending you make towards earning a living, especially those who earn commission.

Cover and protect your family– In the event of your passing, you may be in a position to still owe SARS taxes. Spare your loved ones the burden by preparing for that liability, by taking out a special life policy that will pay out to SARS in the event of your death.

Watch the video for more from Gerald on why you should get a tax-free savings account for your child as a birthday present when they are born…