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I had a nice return last year on normal equities. I'd ordinarily leave the shares as-is, but I haven't maxed out my pension contributions. If I sold and moved money across, would I be taxed?
Taking money out would normally generate a tax bill, but I assume putting it into a pension would offer relief. Anyone know? (My accountant doesn't.)
Thanks Simon. 100% agree on tax event, but income contributed to a pension fund brings relief on the tax. Does it apply to e.g. only salary and not investment income?
Theoretically retirement offer tax relief. Just wait until you cash out 1/3 of your retirement and receive the balance as monthly income. It will all go back to SARS........
If you sell shares owend in your own name then there is a CGT disposal - unless I am missing/missed something? Subject to income you can compensate for these gains via your income tax relief on your RA contributions - subject to percentage and maximums. But if you are going to act then you have little time to clear funds!!!
Once you reach the point when you start to draw down an income
eg via a living annuity then the extent of your actual income tax on income will depend on your level of drawings and other reliefs...
What is interesting (?) is that the Reg 28 requirements that relate to funds pre retirement - apparently don't apply - so you could have a post retirement
portfolio where the asset class exposure is not limited - as in a max of 75% in equities and only 25% offshore - if my memory serves me correctly. BUT you
must consult with a CFP - not some idiot broker or repreentative. And pay fees - not commissions for your advice.
Very Intelligent . I am not a tax expert but i try to give you a general understanding.
Sale of equities will trigger a capital gain tax. Any gains can be ofsett against the exemption available of R40K (me think).
If you take that money and invest it into your pension fund, the additional contributions will be exempted from taxes upon withdrawal. (please seek tax advise on this, as my tax knowledge is rusty), however here is the trick that no one tells you, every member that passes on before retirement is insured for argument sake 4 times their cost to company.
The Pension Fund pays the family 3 times the employee cost to cost whilst the Pension Fund keeps 25% (1/4) of the payout which then goes to the Fund to be shared by its members based on their Share Of Fund ratio. So the higher you SOF (share of Fund) , the more you benefit from this.
I last audited Pension Fund in 2003, rules could have changed since then. Best to contact a Pension Fund Administrator ie Jeremy Gallet and Associate and have a general chat to one of their Pension Adminstrator.
Hope this help.....
Preston-well I never knew that Pension funds could do that so that expanded my knowledge.It of course depends on the rules of the fund.my own fund has ho insured benefit and therefore on death pays out share of fund only-I know of other funds that pay out 100% of share of fund plus all of insured benefit-that seems the right thing to do by the member and his family in my mind-enriching other members on the death of another member feels wrong or am I being a prude here