Have you ever wandered why you are paying so much tax on your salary and how you reduce or bring down the amount to a less figure? Well the answer to that is never answered however there are smart ways of saving on your monthly income tax. In the below sections, we are going to discuss some of the popular options you can implement in order to reduce your monthly tax.
Maybe you are that type of a person which likes to have their money and spend it while they can. Bare in mind that the idea of saving on monthly income tax may results in less returns at the end of the year/ tax season. Otherwise if you are interested in the big returns at the end of tax season, then there’s no other way you can save on tax.
Please also note that there are people out there acting as smart agents whom claims can get you a large lump-sum of cash as returns of your tax. Be honest with yourself, if you pay less tax, let’s just say from your salary, you shouldn’t expect huge returns at the end, it should be common sense.
Ways to save on tax on monthly salary
One most popular way of saving in your monthly tax is through contribution Retirement Annuities (RAs). These are not pension funds, RAs are investment opportunities that allows individuals invest their money each month until their retirement age to enjoy the benefits. Seems like pension funds however these funds get taxed differently.
So how exactly does one save on tax?
Basically how it works is very simple, if you earn a salary amount of up to R20 000 for example, according to the South African tax laws, the government will take 14% from your salary and will take home an amount close to R17 900. Lets be honest, you can’t really do much with that, you can’t invest in your pension funds and other investments such as real estates. How you can go about this is have your investment companies and banks to take debit orders directly from you employer’s banking account.
This means that as soon as your investment and bonds are deducted directly from your company’s account, then you will automatically become a low income earner which at the end you will get taxed small percentage. Let’s say for example, after all the deductions, you are let with R12 000, then according to the law, you will only be taxed the remainder which is very less.
With that said and discussed above, at the end of tax season, you are going to get less returns and your company will enjoy the benefits. Once again, you need to have valid reasons as to why you’d want to save on your taxes.
BeSpoke is one company that helps with Retirement Annuities should you be interested in real investments. The specialise in helping valued clients create new wealth and protect their accumulated wealth.