Here is a straightforward checklist to ensure you start the new year on the right foot:
1. Revisit Your Will
The discomfort of discussing death and taxes never eases, yet having an up-to-date and valid will is key to preventing unintended hardships for your loved ones. Reflect on any significant changes in your personal life this year – such as marriages, births, or asset shifts – and consider how they might affect your will.
2. Generosity and Tax Planning
Reflect on your charitable giving in 2023. Donations not only support worthy causes but can also offer tax benefits. Ensure that you have obtained a S18a certificate for your contributions to make them count against your taxable income.
3. Boost Your Retirement Contributions
If you have received a year-end bonus, consider directing a portion into your retirement annuity. Extra contributions can significantly impact your long-term savings, reducing your taxable income while securing your future.
4. Invest in a Tax-Free Savings Account
Consider starting or topping up a Tax-Free Savings Account (TFSA). With a TFSA, you can invest in a variety of instruments like equities, fixed income, or property funds, with the flexibility of tax-free gains and withdrawals. The annual limit for 2023 is R36,000, and it is a brilliant way to grow your wealth over time without incurring taxes on interest, dividends, or capital gains.
5. Update Insurance Coverage
Insurance needs evolve. Review your policies – including auto, home, life, and health insurance – to ensure adequate coverage. It is also a time to think about personal liability, especially in a society that is increasingly aware of legal rights.
6. Investment Portfolio Review
Year-end is an ideal moment to reassess your investments. Examine your asset allocation, risk tolerance, and the performance of individual investments. This review is crucial in turbulent economic times and can best be done with a trusted financial advisor.
7. Utilising Your Foreign Allowances
For those looking at international investment opportunities, remember to utilise your foreign investment allowance effectively. As of 2023, South African residents over 18 years of age can invest up to R10 million abroad each calendar year. This can be a strategic part of diversifying and protecting your wealth against local economic fluctuations.
8. Beneficiary Audit on Investment Policies
Life changes quickly; ensure your investment policies reflect your current wishes. Checking beneficiaries on these accounts is as vital as having a will and is often simpler to update. Remember, certain accounts, like retirement funds, bypass the estate and go directly to named beneficiaries, providing potential tax benefits.
As we bid farewell to a remarkable year and welcome the promises of 2024, remember that a little planning goes a long way. Your local Moore team is here to guide you through these steps, helping to put your financial house in order as you relax and enjoy the holiday season.
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