With Simon celebrating his birthday on the beach, this week’s episode is a tax bonanza. De Wet de Villiers, King of the Tax Elves and Great Guy finally shares with all of you what he shares with me for free every Monday. I love talking about tax, which is why this week’s episode is much longer than usual, and much shorter than it could have been.
He gives us a useful checklist of things all of us should do when we submit our tax returns, among them:
- If you earn less than R500,000 per year, you don’t need to file a tax return.
- You can ask your HR department to factor in your medical aid and retirement contributions, even if you signed up for those services privately.
- You should check your details annually, including address, SMS number, email and bank details.
- Keep a record and declare all income streams available, including directorships and side hustles.
- Make sure all your investments and bank accounts are included.
- Provisional taxpayers should keep track of the following expenses:
- Expenses: Rental property magazine, conferences
- Side-hustle: Phone calls, data costs,
- Business travel: fuel, vehicle expenses
- Home office: Fibre at home, cleaning costs
- Don’t accept the auto-assessment. It doesn’t work yet.
- Check your prior-year tax return to look for things you may have forgotten. This is especially true if your circumstances haven’t changed much.
- Get a statement of account from SARS from e-filing.
- Don’t do everything in one go – do a tax recon every quarter so it’s not so overwhelming.
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The bleeped show is below:
Win of the week: Jess
Let me start by saying that the Fat Wallet Show and Just One Lap have completely revolutionised the way I think about my personal finances. In fact, I used to avoid thinking about it at all because I found it so overwhelming and confusing. But since listening to your show I actually understand words like “equities” and “diversification” and “All Share Index”. I feel like a brand new person, so thank you for that.
I was working on cruise ships and earning USD but thanks to Covid I had to come home. I am currently working in the public sector but might go back on board for another contract.
Since listening to your podcast I have corrected some financial errors that the ignorant past-Jess made. Luckily, keeping expenses low and saving money comes naturally to me so I was doing that anyway – but my mistake was saving a lot of cash and being afraid of equities. I have an RA to which I am currently contributing 10% of my income, but other than that all my savings are in cash. Thanks to you, I am now moving my Tax Free Savings Account. A fully tax-free investment account is limited (as at 2021) to R36,000 a year and R500,000 lifetime limit. Only certain ETFs are eligible for this product. These posts are a good place to start: Video: Everything ETFs and tax-free OUTstanding money: Saving tax free Wealthy Maths: The impact of tax-free investing Podcast: Your first tax-free investment More (currently at max) from cash to ETFs (which I did via EasyEquities much to my financial advisor’s annoyance – now she won’t reap the benefits of my In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price. 'Saving' is not the same More). I also have a home loan on a house that I am renting out. The rest of my savings is in cash (32 day account for emergencies, standard savings account, extra payments into my It helps to think of bonds as an IOU from the government. When you buy a fixed interest rate bond or bond ETF, you are lending money to the government in return for a fixed interest rate (also called a coupon) over time. You can invest in local and foreign government bonds. This post covers the subject in more detail: ETF: and a USD global account) – I know, really silly!
I want to move more cash to equities but I have a few questions and would like to hear what you think?
- Should I contribute even more to my RA (which has high fees and a financial advisor fee) first to get the tax benefits or should I rather buy a discretionary investment with lower fees?
- I stopped paying extra into my bond because of the low Interest is how much it costs to borrow money. You can either earn interest when you lend money to somebody else or pay interest when you borrow money. Interest is the reason why debt is expensive. In addition the money you borrowed, you have to pay back an additional fee in exchange for using money that you didn't have. These More rates at the moment (in order to keep my rental income profits low and reduce my income tax). Is this wise? Or should I rather continue to put extra into the bond and just pay the income tax but get rid of the debt quicker?
- Since I have USD I want to open an EasyEquities USD account too. For someone who has no idea where she might live one day, what is a good balance between local and Offshore investments refer to investments made in countries other than the one you live in. These investments allow you to take advantage of a better investment environment, different tax regulations, or simply to protect your portfolio from risks affecting your local investments. Here are some posts that discuss offshore investing: ETF: How to buy the whole world Podcast: Offshore ETFs More investments? And this might be a stupid one, but what is the difference between investing in global ETFs in ZAR vs buying ETFs via the USD account?
Can you possibly spend a bit of time on Physical Offshore investment accounts and how these things should be declared to SARS.
I have an EasyEquities USD account, and they withhold 15% of Div tax, so do I get a credit for that or should I apply for a credit?
The Fat Wallet Show is a no-nonsense personal finance and investment podcast hosted by Kristia van Heerden and Simon Brown. Every week we answer questions by a growing audience of finance enthusiasts. Submit your pressing money and investment questions to email@example.com.