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The end of 2022 is within touching distance.

Christmas trees are going up, December plans are being hatched, and the Vaalies are preparing to load up the Venter trailer en route to Slaapstad for a few weeks of getting sunburnt on the beach.

It’s not exactly the same story for the tax year, which runs until the end of February 2023. That means there is still a bit of time to make sure you’re maxing out your tax benefits before the end of the 2022/2023 period.

As tax expert Elke Brink points out on Moneyweb, there have been a few notable changes that make revising your portfolio important.

The first tip relates to maximising your annual tax benefit on your retirement funds:

In 2022, the offshore exposure allowed within a retirement product was increased from 30% to 45%. This is really a game changer for all South Africans, allowing you to have the best of both worlds − benefiting from a tax-efficient product while also allowing you to diversify offshore optimally.

Contributions up to 27.5% of your annual taxable income or remuneration (up to a maximum of R350 000 p.a.) can be deducted, reducing your taxable income and your tax liability. Anything in excess of the allowed 27.5% p.a. also has a great benefit at retirement…

The first R500 000 you withdraw [from your retirement product/s] will be tax-free (if you have not made any previous withdrawals). Any excess previously disallowed contributions can be “added” to the tax-free portion of your lump sum.

By utilising this to your advantage, you can build up a larger tax-free lump sum.

It’s never easy parting with money each month, knowing that you’ll only see it once you decide to retire. Go ahead and chat with a professional accounting service and they’ll explain why that should sting a little less and pay off down the line.

Secondly, and I’m still appalled to find out that some people don’t know about this, there’s your annual tax-free investment:

You are allowed to invest R36 000 p.a. and R500 000 in your lifetime. This applies to the contributions invested. This fund value can therefore grow indefinitely…

If you leave these funds for another 10, 20 or even 30 years you can accumulate quite a significant portfolio. And the proceeds will be tax-free. Allowing this investment enough time to reap the benefits of compound interest, you can essentially build your retirement around it.

If you’re able to stash away that maximum amount of R36 000 a year, you can hit the R500 000 amount in 14 years.

Then, when you have hung up your boots to live a life of leisure, you can withdraw monthly from this investment without paying tax on that amount.

It’s also something people often set up for their children, hitting the R500 000 mark early and then allowing maximum time for the investment to grow.

Ultimately, there’s a reason people turn to the likes of Galbraith | Rushby to ensure that every last benefit is ticked off each tax year.

You have until the end of February to do the same.

[source:moneyweb]