Take the next step towards tax-smart investments

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As the 2021 tax season comes to a close, it becomes clear just how important it is to make use of every available savings avenue that presents itself to you. This is an  opportune time to start investing in tax smart solutions that help you pay less taxes and save money simultaneously.

Two investment vehicles that help you do just that are Section 12J investments and retirement annuities. Both of these allow you to lower your taxable income and so also lower you overall taxes, all while you invest in the future.

Section 12J is a concept that is revolutionising the way South Africans invest. Initiated as a way to encourage South Africans to invest in small to medium-sized enterprises in South Africa, Section 12J of the Income Tax Act offers investors the opportunity to enjoy a 100% tax deduction on investments while they support the businesses that need it the most. The end result of a Section 12J investment is that your overall taxable income is lowered by the amount you invested, meaning you pay less taxes overall.

Look at the chart below to see just how Section 12J investments will help you lower your taxes:

Now, more than ever, small to medium-sized enterprises need all the assistance they can get, and you can benefit from giving them that support thanks to Section 12J Venture Capital Companies, who invest your money where it can help your portfolio and the economy grow simultaneously.

Retirement annuities may be a retirement instrument, but just like Section 12J investments, they can be of immediate benefit to reduce your taxes now. Contributions towards Retirement Annuities are tax deductible (up to a limit), which means it lowers your taxable income while also providing you with a means of saving for the future.

Look at the table below to see how a retirement annuity can help you lower your taxes:

Example A(No RA contribution) Example B(27,5% RA contribution)
Total IncomeRA contribution
Taxable Income
Total Tax
R1 272 727R0
R1 272 727
R   434 589
R1 272 727R   350 000 (maximum)
R   922 727
R   291 089
Tax Savings R0 R  143 499

Find out how you can pay less taxes now by investing in the future.


This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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