Tax tips for young professionals

Vox Populi Vox Dei

Vox Populi Vox Dei

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So I'm sure there are a fair number of mid to late 20-somethings on this forum who have some work experience and but who, like me, are completely confused about all the bedazzling about of information regarding tax and the like.

What I'd like to know is: what tips are out there to minimise our tax obligations (which is legal I might add) and make maximuse use of rebates etc. ? The tips should ideally be easy to implement (i.e. investing in a unit trust) and not cost an arm and a leg. I'm not interested in stuff like creating shell companies etc. !

Thanks!
 
Unfortunately, there isn't much you can do if you're earning a salary and paying PAYE except
(i) max out your retirement savings up to the maximum tax deductible amount
(ii) if you don't have a medical aid, get the cheapest one you can (the tax credit system benefits those that pay less on medical aid more than those that pay higher premiums)
(iii) take out an income protection policy as the premiums are tax deductible

EDIT: (iii) may not be applicable anymore from 1 March 2015
 
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Chris, I see you're in CT. If you're close to or in the Goodwood area go see Lionel Fisher

Fisher Consulting
151 Vasco Boulevard, Goodwood
South Africa, 7460
phone: +27 (0) 21 591 0303

When I started out working I didn't know jack and he did and still does everything from my retirement, medical aid to tax returns. The nice thing about him is he doesn't charge you for anything, but draws commission from whichever company you take a product out through him.
 
the eskimo said:
Unfortunately, there isn't much you can do if you're earning a salary and paying PAYE except
(i) max out your retirement savings up to the maximum tax deductible amount
(ii) if you don't have a medical aid, get the cheapest one you can (the tax credit system benefits those that pay less on medical aid more than those that pay higher premiums)
(iii) take out an income protection policy as the premiums are tax deductible

EDIT: (iii) may not be applicable anymore from 1 March 2015
Click to expand...

Where can I find more detail regarding (i) and (ii) ?

YingYang said:
Chris, I see you're in CT. If you're close to or in the Goodwood area go see Lionel Fisher

Fisher Consulting
151 Vasco Boulevard, Goodwood
South Africa, 7460
phone: +27 (0) 21 591 0303

When I started out working I didn't know jack and he did and still does everything from my retirement, medical aid to tax returns. The nice thing about him is he doesn't charge you for anything, but draws commission from whichever company you take a product out through him.
Click to expand...

Thanks - sounds great.
 
Keep all ur.medical receipts and use ti to claim back.
 
Maybe at the start of your career no (i) is a good idea. But even though you are saving on tax now you will be paying tax on it when you use it - and you have no idea what the tax climate is going to be like then. Me, I don't max it out.

If you are young and don't earn that much you won't be paying income tax anyway so there won't be a real tax benefit until you cross that threshold.

Personally - get your TFSA going ASAP and leave that for retirement. And don't let those vulture financial planners eat up hour earnings with cost. You can handle the TFSA by yourself.

If you buy ETFs and shares - keep them for at least 3 years before selling. Then you'll pay capital gains tax instead of income tax which is way less.
 
Contribute 15% of your gross monthly income into an RA, that's the only tax benefit you're ever going to get. Maybe the wonderful government will put up the contribution rate to 27.5% next year like they said they were going to this year.

Otherwise work hard and give the government free money for doing absolutely zero, just like everybody else.
 
Hamster said:
Maybe at the start of your career no (i) is a good idea. But even though you are saving on tax now you will be paying tax on it when you use it - and you have no idea what the tax climate is going to be like then. Me, I don't max it out.

If you are young and don't earn that much you won't be paying income tax anyway so there won't be a real tax benefit until you cross that threshold.

Personally - get your TFSA going ASAP and leave that for retirement. And don't let those vulture financial planners eat up hour earnings with cost. You can handle the TFSA by yourself.

If you buy ETFs and shares - keep them for at least 3 years before selling. Then you'll pay capital gains tax instead of income tax which is way less.
Click to expand...

TFSA contributions are from post-tax income so wouldn't it be better to at least do 15% into an RA and then the balance up to the threshold limit into the TFSA?
 
It is a good idea to get the policies and all the rest of the stuff set up, but it is also very easy to get taken for a ride.

You need to understand what you are buying, and what you are getting. Remember most financial advisors get a kick back from the product they are selling you, and they are salesmen first and your "friend" second.
 
Isn't the medical aid tax credit the same for everyone? I thought it was a fixed amount per main member, spouse and other beneficiaries?
 
googoodoll said:
Isn't the medical aid tax credit the same for everyone? I thought it was a fixed amount per main member, spouse and other beneficiaries?
Click to expand...

Fixed.. so if u have a basic hospital plan above the sars amount +/-800/mo then u get rebate.. if u spent 5k/mo on medaid... u get the same rebate :P
 
^^vampire^^ said:
TFSA contributions are from post-tax income so wouldn't it be better to at least do 15% into an RA and then the balance up to the threshold limit into the TFSA?
Click to expand...
I dunno....very interesting question "TFSA vs. RA for retirement". One that deserves it's own thread if you could be bothered.
 
Hamster said:
I dunno....very interesting question "TFSA vs. RA for retirement". One that deserves it's own thread if you could be bothered.
Click to expand...
Without actually crunching the numbers I'm inclined to say RA will yield better results.
 
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