A Fin24 user wants to know the best salary structure for tax purposes.
FedGroup sales executive Scott Field responds:
Over the past few years, the SA Revenue Service (Sars) has put numerous measures in place to close tax loopholes when it comes to salary structures.
Car allowances and many similar schemes that were previously available as benefits are no longer considered as an opportunity to gain a tax advantage.
Now more than ever, you as a taxpayer need to consider your full financial position when maximising your salary package.
Recent studies indicate that only 6% of South Africans have accumulated enough savings to retire comfortably, so it really makes sense for you to save for your old age as well as cover your current needs out of your monthly salary.
If you decide to save for retirement on your own, you can choose to receive your full salary (which attracts tax) and then save a portion of this money towards retirement.
A more efficient strategy would be to utilise a company pension fund and contribute the maximum amount possible to achieve the tax deductions available in terms of pension savings.
Saving through a company pension fund is the most tax and cost effective way to save towards retirement, as there are no additional commissions or investment fees payable on your contributions.
Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.
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