RA Top-ups

Retirement Annuity (RA) and Tax-Free Savings Account (TFSA) top-ups are here!

Time is running out fast to ensure that your contributions to your retirement annuity (RA) can take full advantage of the current tax Year’s deduction regime.

I’ve been writing an article each year for the past nine years on how beneficial it is to invest in RAs. All the benefits still exist, and they are even better than they used to be. Here is the 9th edition of my article, THE VALUE OF RETIREMENT ANNUITIES 2025.

The 2024/2025 year of assessment ends on 28 February 2025. This means you only have until the middle of next month to make additional (tax-deductible) contributions to your RA fund or a lump sum (tax-deductible) contribution to a new RA fund if you don’t already have one.

Don’t miss this opportunity to maximise your tax deduction and boost your retirement savings. Also, don’t leave it until Feb 27th to decide to make additional contributions. The product providers have strict cut-off times and if you miss the boat, you miss the tax you could have saved.

If you are not sure what an RA or TFSA is or are still on the fence about making the extra contributions, have a look at this Retirement Annuities And Tax Savings For 2024 - 2025  we wrote about the benefits of each of them and why everyone is SA that pays tax should at least have a RA.

If you already have enough to retire on yourself, reducing your estate by making TFSA contributions for kids or any other people you care about is a great way to reduce your estate duty. You could create generational wealth with only R36,000 paid into this investment until the lifetime allowance of R500,000 is used up.

Provisional Tax

Your provisional tax returns due at the end of February, is always an opportune time to re-evaluate your Retirement Annuity (RA) contributions for the year.

The RA tax allowances aren’t fair and equitable. It grossly favours the higher earners, where the more you earn, the more beneficial it is.  

This is to such an extent, that there's little tax incentive for people who earn less taxable income.

Many individuals, especially business owners and contractual employees whose income can fluctuate substantially, prefer to ensure positive cash flows during the year, by making lower regular monthly contributions and adding additional lumpsum contributions before the end of the tax year (more commonly referred to as "RA top-ups").

The end of February is the deadline for investors who wish to make additional top-up contributions to their RA’s. 

Rand Over the Last Few Weeks

Over the past month or so, share markets have been particularly strong both locally and abroad, following a weak December festive period.

Where, Importantly, the South African Rand currency has been much in line with the rest of Emerging Market’s currencies for the past 3-5 years, although the Rand was on the upper end here the last year.

To the end of January now, the Rand has been the strongest currency against the US dollar over the last one-year period;  

Peter Brooke Making sense of Market conditions amidst all the Noise

The past few weeks have seen many negative news headlines. Last week as an example, despite all the news flow, we saw the JSE share market going higher (up 1,76% for the week), and the Rand strengthening (by 1,43% for the week).

Then following this, on Wednesday we saw the JSE reaching all-time new highs.  

This goes to show that news headlines are not useful portfolio management tools.  Patience will probably be even more important than always, and also finding a way to tune out the news (and the noise).

The local markets and the ZAR currency being rather resilient, Old Mutual’s Macro Solutions head Peter Brooke explains that the recent local strong market and currency has more to do with how SA fits into the global framework, as a commodity-producing country.     

Gold is up nearly 8% in the last few weeks on possible offshore inflationary fears resulting from the Trump tariffs, most other resource prices are also up by a similar amount, except for oil which is down -7%.

Peter Brooke on Monday night in this radio interview, in these 5 minutes (that is a good short listen), gave much context on market movements last week, where the developed markets were softly negative, and us in SA well up, as well as EM markets.

To listen to the interview, simply click on the link below;

Market Insights with Peter Brooke

Peter explains that with all the geopolitical risks and Trump tariffs, commodity prices increased, and therefore Emerging Market countries including SA, those who have strong mineral resources, did better.

And that this is what mostly has been driving equity (share) and currency markets the past few weeks.

FRIDAY FOOD FOR THOUGHT