Make the most of your tax benefits

by Carla Rossouw - Tax Team Leader at Allan Gray
Make the most of your tax benefits before 29 February 2020

There are tax benefits associated with both retirement annuities (RAs) and tax-free investments (TFIs), but the benefits are structured differently, and the product rules are quite distinct. Depending on your goals and objectives, there may be a place for both products in your investment portfolio.

Understand your options

Table 1 summarises the key features of the Allan Gray Retirement Annuity and the Allan Gray Tax-Free Investment. A good, independent financial adviser can help you decide which product is most appropriate for your circumstances.

Key Features of the Allan Gray Retirement Annuity and the Allan Gray Tax-Free Investment

Let the magic of compound interest work for you

The longer you leave your money invested, the harder compound interest can work for you. Graph 1 shows how much an initial investment of R33 000 (the annual TFI contribution limit) could grow over 20 years. The total growth is shown in nominal terms (i.e. includes inflation) and we have assumed an average annual return of 10%.

The magic of compound growth.

Make sure you submit your instruction in time

Table 2 provides the cut-off dates for instructions for the 2019/2020 tax year. All payments need to be accompanied by the applicable instructions (applications for new investments and additional contributions for existing investments) and must be submitted by 14:00 on the relevant date.

If you would like to contribute to the Allan Gray Retirement Annuity or Allan Gray Tax-Free Investment from your basic unit trust account (i.e. an account number that starts with AGLP or AGUT) instead of from your bank account, you will need to submit two separate instructions - a withdrawal instruction from your AGLP/AGUT account and a new investment or an additional contribution into your RA or TFI account.

Cut off dates for Allan Gray RA and TFI contributions in the 2019/20 tax year.

This article was published on the Allan Gray Website on 20 January 2020.

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