With the uncertainties associated with the Covid-19 pandemic and continued economic difficulties, now is the time to maximise your savings and you can do it tax-free.
Encouraging the use of tax-free investment vehicles, Al Baraka Bank's Assistant General Manager: Retail Banking, Nasir Seedat, said: "In these difficult times, financial security has become increasingly important and the tax-free investment mechanism introduced some years ago is a very good way for people to save more effectively."
He said the bank fully supported the Government's efforts to promote a savings culture in this country through tax-free investment and added that optimising savings in the face of the prevailing economic turmoil, job uncertainty and salary cuts was critical. The tax-free investment offering enables people to enjoy the benefits of paying no tax on earnings, regardless of the investment period.
Seedat said: "Savings levels in South Africa have historically been poor, a trend which is likely exacerbated by the current climate, the consequence of prolonged financial uncertainty stemming from the pandemic. Many have applied a 'live-for-the-day' attitude to money in the past, but the current situation and concern about how long it is likely to last could result in financial ruin and increased debt for people without a savings back-stop."
"A need exists to change society's mindset, encouraging people to instead embark on sustained savings programme, setting aside funds for use when it is really needed," he added.
Investors are freed from paying income tax on the returns from their tax-free Investment accounts and may invest up to R36 000 per tax-year and to a lifetime limit of R500 000. Exceeding the prescribed limits will, however, result in penalties.
Seedat said: "A minimum initial deposit of R1 000 is required to open a tax-free savings account and the minimum top-up deposit level thereafter is R250, putting people on the fast-track to excellent tax-free savings for a safer financial future."
"This is an ideal way to grow wealth effectively for financial security in an uncertain future, particularly for those not yet in the habit of saving and as a means of inculcating in our youth the culture, habit and self-discipline of saving, instead of living for today."
"We all have a responsibility to ourselves to think about the uncertainties of tomorrow. Now is the time to think tax-free," said Seedat.
PERSONAL FINANCE