Finance
OUTSMART THE TAXMAN BY MAKING THE MOST OF TAX SEASON
Published
2 months agoon
By
admin
By Rita Cool, certified financial planner at Alexforbes
The start of the new year brings ‘tax season’ upon us – a good time to review your financial situation and use any available tax benefits before the end of the tax year on 28 February.
You have until this date to make additional contributions towards a retirement fund, a retirement annuity (RA) or a tax-free savings account (TFSA) to get the benefit in time for your next tax submission. The South African Revenue Service offers generous tax deductions when you make contributions to your RA, pension or provident fund. This means you can save more for retirement, and at the same time, pay less tax.
You can make contributions of up to 27.5% of your total taxable income, up to a maximum of R350 000 per year, and get the tax back. On a contribution of R100 000, if your tax rate is 30% this means that you get R30 000 back in tax and it only reduces your take-home income with R70 000.

Rita Cool
There is no tax on growth in a retirement fund or a TFSA. This has a big effect on the long-term compounding of your investments compared to an after-tax investment, where you have to pay tax on growth as well. If you combine the tax-free growth with the tax benefits on the contributions you get money that works for you, not only you working for your money.
Other benefits of saving in these products are:
- The proceeds of retirement funds and RAs are excluded from your estate when you die, which reduces estate duty.
- If you make yearly contributions that are more than the 27.5% or R350 000 per year, you don’t lose the tax benefits on the contributions over the limit. If you are not able to claim the tax allowance before retirement, you can get these contributions over the limit back as a tax-free lump sum at retirement or it can be offset against your retirement income to reduce income tax in retirement.
- The contributions over the limit would form part of your estate if you haven’t received the full tax benefit by the time of your death, but only if your beneficiaries take the amount in cash.
- You can take up to one-third in cash from your RA and retirement funds after 1 March 2021 at retirement, or all of your provident funds before 1 March 2021 if you were 55 years or older on that date. On the current tax table, the maximum tax rate at retirement is 36%. If your retirement income tax rate is going to be higher than 36%, you can access the one-third lump sum at a lower tax rate than receiving it as an income. You can use this cash to supplement the income set up with the two-thirds, which attracts tax. By combining after-tax and taxable income streams after retirement you reduce your overall income tax.
The table below shows the long-term benefits of different contribution rates as well as the impact to your after-tax income if we assume that you earn R40 000 per month.
You can add extra contributions to your retirement fund whenever you want, and there are generally no administration fees charged for these voluntary contributions. One way to do this is to ask your employer if you can increase your contribution rate – if you contribute an additional 5%, your take-home pay will not decrease by the full 5%. Your taxable income would have reduced by 5% and your tax is then also less. This means more money is invested in your retirement savings, and less goes to the tax man.
Another way to make the most of your tax benefits is to open a tax-free savings account, which allows you to save up to R36 000 per tax year and R500 00 over your lifetime, tax-free.
If you can’t make extra contributions to an employer fund, you should consider an RA to make use of the tax benefits. Most annuities have a minimum investment amount to get started.
Speak to your financial adviser if you have questions on the options or if you want to get tax benefits for this tax year.
Finance
Efficient Ways Construction Firms Can Bring Down Costs In 2023
Published
24 hours agoon
March 30, 2023By
admin
Consistent, high-quality construction projects being underway is often a sign of a thriving economy. The future of the US is assured when new infrastructure and homes are under constant development.
As has been well-documented already, construction isn’t as productive as it could be in the US today. Numerous factors are causing these types of projects to be stalled and subsequent price hikes to occur. Economic and sector-wide conditions could be far better.
That said, it’s important for construction firms to feel like they have some say in their future. While things aren’t ideal, there’s plenty these entities can be doing that can bring down costs for the remainder of the year.
We’re a good way into 2023 now, but bringing down costs is not work that can be postponed to 2024. So, here are some efficient ways construction firms can do just that in 2023.
Review Fleet Logistics
It might seem like a curious place to start, but it’s a good idea to review how you utilize your fleet if you have one. The operational costs can sometimes be underestimated, and mismanagement in this area can be more costly today for firms in any sector.
Some companies bring their fleet management costs down by optimizing the routes they travel. Others will run tighter maintenance programs to avoid damaging repair costs in future. Some firms will rent out their vehicles, too, rather than purchasing them outright. Drivers may be subject to refresher training courses, ensuring they adhere to their employer’s money-saving policies.
Then there’s the matter of going green, which more companies are turning their attention to. For example, PepsiCo Vice President, Mike O’Connell, stated at the end of last year that, despite hefty costs around the infrastructural changes, his company believed that “the operating costs over time will pay back” to make the arrangement worthwhile in the long run. That sentiment applies to construction firms as well.
There’s also fleet management software to consider. These digital tools can be encrypted on a cloud server and give all users insights into things like fuel usage, the condition of the cars, and the routes travelled. More intricate oversights can be gleaned from fleet usage, and associated costs can be tallied up instantly. Consequently, construction firms would do well to get that installed.
Install Management Software for Construction
Sticking with software ideas for a while longer, construction management software can come with an onslaught of cost-saving advantages for a construction firm. It’s a principle similar to fleet management software in that more detailed real-time analytics can lead to strategy adjustments.
Cost change management can be streamlined with the use of these tools. Project team communication can also be simplified, which leads to time and money being saved all the more. There’s often a modern and intuitive AI to make these systems operational in days, too, which means construction firms can quickly adapt.
Firms like Kahua are often the obvious choice for these solutions. Their cloud-based project management software in construction has been fine-tuned to be tailored perfectly to a firm’s needs. A flexible approach can be undertaken when utilizing it, and firms can be confident that both their present and future business processes can be more carefully managed.
Create Stronger Supplier Links
Suppliers are the lifeblood of any construction business. It’s possible to work more closely with them.
At the end of 2022, Forbes reported that inflation and supply chain disruptions made getting the necessary construction materials more costly and time and consuming today. Their recommended solutions included rather expected budget control measures, but more notably, fostering stronger supplier relations. That way, construction firms can better understand the factors leading to surging material costs.
It may also be better for construction firms to work with local suppliers where possible. That way, they have a better chance of establishing common ground, supporting the local economy and perhaps having more mutual connections in the industry. Delivery costs can also be slashed along with emissions, which are factors that also contribute to a more robust working relationship.
Outsource Where Possible
Construction firms can depend on more than their suppliers to bring costs down. Further help is available.
Such support is usually accessed via outsourcing. Opportunities to do this may involve:
- Outsourcing waste management – some of these firms may pay closer attention to the potential of recycling and reusing materials, creating further cost savings.
- Outsourcing IT infrastructure – Construction firms have sensitive data they need to protect like any other company and are becoming more digitized like their peers too.
- Outsourcing to off-site construction firms – These entities will design and assemble building components away from the area they’ll be used. They’re often pitted against onsite firms, but both can be required for large-scale development projects.
Outsourcing can reduce costs in the long run, but it isn’t an answer to every struggle. Construction firms must continue doing many things for themselves – even monitoring the weather to ensure potential storms won’t cause hazardous work conditions or delays. That self-starter spirit that often drives construction firms should never be lost.
Banking
Top banking trends of 2023 and global outlook of banking and fintech for the year ahead
Published
3 days agoon
March 28, 2023By
editorial
Author: Professor Marco Mongiello, Pro Vice-Chancellor, The University of Law Business School
You’d be forgiven for assuming that the global outlook for banking and fintech will be dominated by the usual suspects:
Artificial Intelligence – AI plays an increasingly prominent role in banking and fintech by enabling personalised services, fraud detection, predictive analytics, use of chatbots and robo-advisors.
Blockchain and Cryptocurrency – the secure, decentralised and swift system for financial transactions that blockchain has brought to the fore a few years ago, is now becoming ubiquitous. An increasing number of transactions are recorded through blockchains technology, primarily in the cryptocurrency market.
Digital Banking and fintech – accelerated by COVID-19 pandemic, the adoption of digital banking is a trend that will persist as customers have become accustomed to the convenience and efficiency of digital banking. Moreover, fintech enables access to financial services for previously underserved populations in developing countries or less affluent social groups in more affluent societies. This includes mobile banking services, peer-to-peer lending platforms, and microfinance solutions.
Open Banking – another global trend is the use of open APIs (Application Programming Interfaces) that allow third-party developers to build apps to facilitate customers’ access to financial data and services from banks.
Nonetheless, the challenges posed by these rapid changes are reminders that banking, an industry that by its very nature needs to be conservative, risk averse and solid, wobbles on the unchartered grounds of fast and turbulent innovation, where entrepreneurship instead thrives. The underlying rationales of banking and fast digital innovation are not incompatible but do need solid operations and thought-through decision-making to avoid causing catastrophic collapses.
The recent examples of Silicon Valley Bank, Silvergate, FTX and Wirecard are stark reminders that digital entrepreneurship applied to banking doesn’t just bring to customers the visible transformation of valuable new services, but also dents (perhaps as an unexpected consequence) the rationale itself of the role of banks in the global economy. Moreover, the central banks’ ability to contain the effects of single banks’ defaults is no longer a certainty, as experienced just over a decade ago and more recently. The markets’ sentiments are hardly reassured by the commitments of even the most coveted players, such as the European Central Bank, the Federal Reserve, and the President of the United States himself.
Regulators are lagging behind and their attempts to catch up may cause further seismic shocks to the global banking system. For example, another trend that is emerging is one of artificial intelligence decision-centres (i.e., decentralised offices of banks which take autonomous decisions on behalf of investors) outside the most stringent regulatory environments, enabling banks to operate globally more efficiently and more competitively. And we can expect that regulators will close the gap either abruptly, as it is currently happening in China, where private banks are subject to an escalation of regulatory and monitoring restrictions, or more gradually as it is happening in Europe and in the US.
The questions we face, as individual or trade customers of our high street banks, as direct investors or clients of managed funds, are whether banking will become more user-friendly yet, for our daily use but riskier, too, or is it simply becoming more efficient, transparent and also safer.
I’m afraid that the answer is by no means an obvious one. Therefore, caution, level-headed decision- making and critical thinking have never been as important as these days. Whether you are looking after your family savings or growing your pension reserve, the imperative is that you keep updated about the providers of the financial services you rely upon as well as about the general regulations that apply to your financial transactions. This is where, for example, you need to be familiar with your rights in case of cyber fraud, as well as learning how to minimise the risk of becoming a victim thereof. Also, taking additional steps to evaluate the credibility, solidity and reliability of the online provider of that app that was recommended by a trusted friend, may prove a very good move.
Similarly, whether you are the CFO of a medium or large company, or are a sole trader wrestling with your own business’s finances, you need to reflect on what you really want from your bank in the first place. That is before you started to be swayed by the whirlpool of offers of ‘opportunities’ to multiply your financial investments. Chances are that your initial approach to your bank was dictated by either a need for financing your working capital, as per your budget and strategic plans, or to find a safe place for your temporarily idle liquidity. Perhaps you were also after some basic treasury services such as swift payments and debt collection. Maybe some other financial services closely related to your business operations, e.g. factoring. The advice is to give very careful consideration to services that are more remote from your business, because the trend for the next years is that more and more of those will be offered to you. But many new services will disappoint those who, sadly, cannot afford financial mishaps as they look to run and grow their business.
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