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Tax Planning

Saving where it counts

There is no prohibition in South African tax law on minimizing your tax payable. The principle is actually well part of our common law. We have a section enacted in our Income Tax Act that deals with transactions that are solely entered into for the purposes of tax evasion. However, SARS has lost a couple of cases when applying this section, as tax saving plans often pass a business or substance test. In the 2005 Budget Speech it was announced that the anti-avoidance section may be re-drafted to give it more teeth.

Why Choose Rockfin as your Tax Planning Advisory?

Tax Strategy

Helping you take full advantage of tax exemptions available under the law.

Smart and Simple

Ensuring you get the optimum use of tax-exempted incomes.

Tax Saving

Taking advantage of permissible tax deductions and rebates.

How We Can Help

Income splitting: The husband earns a large salary and the wife, effectively nothing. All investment income that goes to the husband is taxed, after some exemptions, at 40%. There are legitimate means of letting the wife earn all income, and therefore make her use her tax exempt threshold completely, and thereafter start to pay tax, after using her own exemptions, at 18%.

Donations: Few people make use of the annual amount exempt from donations tax. Over years this reduces your estate significantly, and also lessens your taxable income. The amount is currently R100,000 per taxpayer, and where husband and wife use this together to transfer wealth to children, we can start talking serious savings after a couple of years.

Retirement funding: Making investment decisions with after-tax income, when you can achieve the same investment decision with before-tax income, makes little sense. You should use your full retirement amount that is tax deductible, every year. This really makes a lot of sense when you start seeing the effect over a couple of years.

Capital gains tax exclusion: The annual amount of capital gains that is exempt per person per year is R10,000. This is available to every taxpayer and people should use this even if it means buying and selling some shares to realize the gain. It starts costing money when you sell all your shares after five years and make a R50,000 gain. After the R10,000 exclusion, and with a 40% tax rate, you will end up paying R4,000 tax, which is completely unnecessary.

Tax compliance: It pays to have your tax returns correctly and completely submitted every year. For some reason, South Africans like talking about how they get away with not paying tax. Many are caught, as SARS has become a much more professional organisation, and they are becoming more efficient every year as their collection targets increase. We see many people getting caught, and there is nothing we can really do to help. For some reason, South Africans do not like talking about these experiences.


What is the difference between a tax-free savings account and a tax-free investment plan?

Our product is called a Tax Free Investment Plan, but the core rules between the products, no matter the name the provider uses, do not change. These include the type of instruments that may be invested in as well as the annual and lifetime limits.

What are the advantages of a Tax free Investment Plan?

  • You will not pay any tax on investment returns.
  • You can invest in any clean class, single manager unit trusts that do not charge performance fees.
  • There are no limits on when you can access your investment, and there are no exit fees.
  • You can start and stop contributions at any time.
  • You can make debit order investments or lump sum investments.
  • You can have several different tax-free investments with different product providers. However, the annual and lifetime limits still apply (i.e. your combined contributions across all your tax free investments must be within the set limits). It is up to you to monitor your investment limits.
  • You can choose to have your investment contribution increased automatically every year.

What are the disadvantages of the Tax free Investment Plan?

  • You are limited to investing R33 000 per year and R500 000 over your entire lifetime. For example, if you reach your investment limit of R500 000 and withdraw R50 000, you will not be able to add a further R50 000 at a later stage.
  • This product is only available to individuals who are South African tax citizens.
  • You cannot convert existing investments in other products to the Tax Free Investment Plan, even if the underlying assets are the same. You would have to withdraw your existing investment and reinvest in the tax-free product.

For More Information