For many budget 2020 may have now paled into significance against the major catastrophes that have befallen the world and world markets since. We believe on always taking a positive spin however and truth be told there were some aspects of Budget 2020 that may help us all to find the pot of gold at the end of the rainbow that will surely follow this global storm.
Analysts will have written long diatribes going into detail about every negative aspect of the budget and many observers have cautioned against certain aspects saying that not enough concessions and preparations have been made. As one analyst put it “the large deficit, debt ratio, primary deficit, combined with still week economic growth will continue to pose risks for the future.”
This may well be so, but our articles are about offering financial advice and let’s see what benefits can be derived as a result of what has been decided by the government in 2020. These are the various tax incentives and how they can be built into your overall wealth plan…
Tax incentives and thresholds for over 50s
Personal tax relief will be granted to individuals over 50’s who have a taxable monthly income of over R45, 600 – giving a tax saving of R285 per month. If you are between 65 and 74 you can now earn up to R128, 650 before your income becomes taxable.
Our take on this – It illustrates the benefits that those who are reaching retirement or are already retired can enjoy and presses home the point that it really pays to put any tax saving into a good retirement plan.
Remember you can now contribute a whopping 27.5% of your income to a retirement fund, which is entirely tax free. It is a no brainer that this is therefore the best way to plan for retirement as it is saving you on your taxes now.
Tax free savings
To add weight to what we’re saying, the Government is really encouraging savings to by increasing the amount of tax free savings from R33, 000 to R36, 000 per annum. Talk to an expert financial Advisor about how you can combine all these tax free benefits into a comprehensive, tax saving retirement package.
Transfer duty reductions
Another suggested part of a good retirement plan is to invest in a retirement property for your senior years. Once the kids are out the house and you no longer want high maintenance, a smaller ‘lock up and go’ is all you need.
This is a buyer’s market if ever there was one and a great time to invest in a property under R1Million because since Budget 2020 there is no transfer duty to pay on such an acquisition.
Medical aid rebates
Tax concessions have been made here too. Rebates for medical aid contributions have been increased by R319 for main members and first dependants. Our suggestion – why not invest that saving on tax as part of a good disability plan?
Given the alarming extent that the Coronavirus has spread in such a short time just reminds us that the only thing that can always be expected is the unexpected. Many of us are travelling for the holidays during April too and accidents can happen, on the way, or on holiday.
Be prepared for any extended period that you may not have an income. If you aren’t this could have the most devastating effect on any wealth planning you may have been doing prior to when it happens.
For better or for worse….
The Hereford group are there for you in the good times and through the bad. Budget 2020 was a bit of both, but much benefit can be derived from the good and we can balance out the bad through astute and qualified investment advice.
Contact us to appoint an experienced, expert advisor for you and to find out about our policy of being different – because we know that you are!