Exit plan for farmer owners

FINANCIAL LEGACY: OPTIMISING YOUR PENSION, ESTATE DUTY BY UNDERSTANDING TAX BENEFITS

- Gerrie Cilliers

Ever wonder why ABBA wore those outrageous outfits on stage? Turns out it wasn't just for show.

In 2014, the band revealed that the Swedish tax code allowed them to write off those costumes as a business expense, but only if they were too ridiculous to be worn off-stage.

This fun piece of tax trivia is a perfect example of how knowing the ins and outs of tax implications for your investments can lead to unexpected benefits. This is especially true for your retirement income when it comes to reducing estate duty and income tax.

As you approach retirement, stepping back from the family business or selling it altogether might be on your mind. However, navigating the financial landscape during this transition requires careful planning, especially if you want to minimise the tax burden and preserve wealth for future generations.

In this article, we'll explore how Section 10C of the Income Tax Act can help you reduce estate duty and income tax by illustrating how to take advantage of tax-exempt income from your living annuity until previously disallowed contributions are depleted, creating a financial legacy for your heirs while ensuring you enjoy a tax-efficient retirement.

Whether you're a farmer looking to pass the torch to your children or a business owner considering the sale of your company, understanding how to leverage tax benefits can be a game-changer in your retirement planning strategy.

What is Section 10C of the Income Tax Act?