Let Trevor help you save

If you want to make the most of the tax breaks that Trevor Manuel allows, you need to take action before the end of the tax year o¬n 29 February 2008.

By taking out a Retirement Annuity (RA) or increasing the current contribution to your existing RA within the prescribed tax-deductible limits, you will reduce the tax that you pay o¬n your overall income in the tax year. In effect, therefore, Trevor will help you save for your retirement.

Mike Harper, Managing Director of Retail Affluent at Old Mutual, says "this is the perfect opportunity to save adequately for retirement and to do continuous financial planning with a qualified adviser to acquire financial wealth at the time when you retire".

The Income Tax legislation allows you to deduct contributions to RA funds from tax subject to certain limits.

Current contributions are limited to the greatest of:

* 15% of non-retirement funding taxable income; or
* R3 500 less deductible current pension fund contributions; or
* R1 750.

Currently a member of the retirement annuity fund may deduct at least R1 750 of their current contributions to a RA fund every year. However, you may enjoy a tax deduction greater than R1 750 if you earn non-retirement funding income. This is income such as bonuses or commission, which is not taken into account for purposes of calculating what you need to pay to your employer's retirement fund each month.

A maximum of R3 500 less any amounts in respect of current contributions to a pension fund may be deducted from tax, should the amount exceed R1 750.

"Another advantage is that the money that you invest in a RA is protected against creditors according to the Pensions Fund Act," Harper says.