Make the Most of the Tax Year-End: Maximise Your Savings with UA Contributions and Key Tax Information

February isn’t just the shortest month of the year—it’s also one of the most critical for South Africans when it comes to financial planning. As the tax year closes on 28 February, it’s the last opportunity to review your finances, reduce your tax liability, and set yourself up for a stronger financial future. One of the most effective ways to achieve this is through Retirement Annuity (UA) contributions and understanding key tax-saving strategies.

Why is the Tax Year-End So Important?

The tax year-end deadline presents a final window to make financial moves that could lead to a reduced tax bill. If you wait until March, you’ll miss out on any tax savings opportunities tied to the current financial year. That’s why February is often a busy time for individuals looking to boost their UA contributions and maximise any deductions available to them.

How UA Contributions Can Help You Save on Tax

One of the best tax-saving tools available to South Africans is a Retirement Annuity (UA). When you contribute to a UA, you are allowed to deduct contributions of up to 27.5% of your taxable income (capped at R350,000 per year). This deduction reduces the amount of income you are taxed on, which means you could potentially receive a tax refund or owe less to SARS when it’s time to file your return.

Let’s break it down with an example:

  • If you contribute an additional amount to your UA before 28 February, you’ll likely see an immediate reduction in your taxable income. For instance, if you’re in the 30% tax bracket, an extra R10,000 contribution could reduce your tax liability by R3,000.

These contributions don’t just help you now—they build long-term wealth for your retirement by growing tax-free until you start drawing on them after retirement.

Key Tax Information to Keep in Mind

To make the most of your tax-saving opportunities, you’ll want to stay on top of a few critical areas:

  • Medical Tax Credits: Ensure you’ve kept records of any out-of-pocket medical expenses, as these may qualify for tax rebates.
  • Section 12J Investments: Although the 12J tax incentive has been discontinued, it’s important to double-check if any carryover deductions are applicable.
  • Interest and Dividend Income: SARS allows an exemption on interest earned, up to a certain limit. Be sure to account for any interest or dividends received during the tax year.

Also, make sure you’ve gathered all supporting documents, such as medical invoices, RA contribution statements, and proof of charitable donations, before filing your return.

Planning Ahead: Don’t Wait Until Next Year

While the current tax year-end is a key moment for making contributions, planning for next year can help reduce last-minute stress and allow you to take full advantage of savings opportunities. Consider setting up automated UA contributions monthly, which not only helps spread the cost but also ensures you don’t miss out on deductions throughout the year.

Let’s Maximise Your Tax Savings Together

As the tax year winds down, now is the perfect time to review your financial position with an expert. Contact Innofin Financial Solutions to explore how UA contributions and tax planning strategies can help you maximise your savings and meet your financial goals.

Don’t wait—time is ticking until 28 February!