LAST TIME I

@zolangqisha

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The Financial Metaverse

Why it worked

The video provides practical, actionable financial advice relevant to a broad audience in South Africa, specifically addressing tax implications on savings. It uses a relatable case study and breaks down complex information into understandable terms, making it highly shareable and valuable.

Summary

The video explains how interest earned on savings accounts is taxed in South Africa and how individuals can utilize tax-efficient structures to minimize their tax liability. It highlights that many people are unaware of these structures, leading to them paying more tax than necessary.

Structure

1Introduction to Lindiwe's situation and her savings
2Explanation of interest income taxation by SARS
3Details on interest exemption thresholds
4The concept of compounding interest and its tax implications
5The role of tax-efficient structures
6The team's work in restructuring client savings

Product placement

SARS (South African Revenue Service) - collects taxes from individuals and businesses. Removing it would change the entire context of the video. The video discusses how SARS taxes interest earned on savings and how tax-efficient structures can reduce the amount owed to SARS. This is a core part of the video's narrative.

Original caption

Your savings account could be quietly increasing your SARS bill every single year. Part 2 of our SARS tax season series looks at the interest exemption every South African saver needs to know, R23,800 if you're under 65 and R34,500 if you're 65 or older, and why your money might be sitting in the wrong place. Zola Ngqisha unpacks how bank savings, money market accounts, and fixed deposits get taxed, and where a tax free savings account fits in. 📲 DM us or WhatsApp the number in my bio if you want your investments structured properly this tax season. #TaxSeason #SARS #InterestExemption #TaxFreeSavings #financialadvisor

More from @zolangqisha

On-screen text

LAST TIME I LAST TIME I TOLD YOU ABOUT TOLD YOU ABOUT LINDIWE, LINDIWE, A CLIENT OF MINE WHO THOUGHT A CLIENT OF MINE WHO THOUGHT AT HER RETIREMENT, AT HER RETIREMENT, THAT UNIT ALONE THAT UNIT ALONE FROM SARS. FROM SARS. WELL, IT WASN'T WELL, IT WASN'T ENOUGH. ENOUGH. THAT WAS REASON THAT WAS REASON NO. 1. HERE'S NO. 1. HERE'S REASON NO. 2, REASON NO. 2, AND IT CATCHES AND IT CATCHES THEY ARE DOING THEY ARE DOING EVERYTHING RIGHT. EVERYTHING RIGHT. LINDIWE HAD SAVINGS. LINDIWE HAD SAVINGS. LINDIWE HAD SAVINGS. LINDIWE HAD SAVINGS. REAL SAVINGS MONEY REAL SAVINGS MONEY BANK ACCOUNT, BANK ACCOUNT, MONEY MARKET ACCOUNT, MONEY MARKET ACCOUNT, SOME IN FIXED SOME IN FIXED DEPOSITS AND SOME DEPOSITS AND SOME IN GOVERNMENT RETAIL BONDS. IN GOVERNMENT RETAIL BONDS. OF THAT. AND RIGHT, OF THAT. AND RIGHT, SO SHE SHOULD SO SHE SHOULD BE PROUD BECAUSE BE PROUD BECAUSE SAVE AT ALL. SAVE AT ALL. BUT NOBODY HAD BUT NOBODY HAD THE INTEREST YOU THE INTEREST YOU EARN ON THAT EARN ON THAT MONEY GETS ADDED MONEY GETS ADDED STRAIGHT INTO YOUR STRAIGHT INTO YOUR TAXABLE INCOME EVERY TAXABLE INCOME EVERY SARS LETS YOU SARS LETS YOU EARN 23,800 RAND EARN 23,800 RAND IN INTEREST TAX IN INTEREST TAX FREE IF YOU FREE IF YOU ARE UNDER 65, ARE UNDER 65, OR 34,500 RAND OR 34,500 RAND 65 YEARS AND OLDER. 65 YEARS AND OLDER. ABOVE THAT, EVERY ABOVE THAT, EVERY RAND OF INTEREST RAND OF INTEREST GETS ADDED TO GETS ADDED TO YOUR TOTAL INCOME YOUR TOTAL INCOME AND TAX AT AND TAX AT YOUR MARGINAL TAX RATE. YOUR MARGINAL TAX RATE. SO THE MORE SO THE MORE THIS INTEREST BEARING ACCOUNTS, THIS INTEREST BEARING ACCOUNTS, THE MORE OF THE MORE OF THAT INTEREST BECOMES TAXABLE THAT INTEREST BECOMES TAXABLE AND IT COMPOUNDS AND IT COMPOUNDS EVERY YEAR. EVERY YEAR. THIS IS ONE THIS IS ONE PAINFUL CONVERSATIONS I PAINFUL CONVERSATIONS I WITH CLIENTS. WITH CLIENTS. AND IT HAPPENS AND IT HAPPENS PEOPLE WHO ARE OLDER, PEOPLE WHO ARE OLDER, WHO'VE HAD DECADES WHO'VE HAD DECADES THEIR SAVINGS THE THEIR SAVINGS THE HARD WAY. HARD WAY. YOU THINK YOU YOU THINK YOU ARE GETTING AHEAD ARE GETTING AHEAD BY EARNING THAT INTEREST, BY EARNING THAT INTEREST, AND THEN SARS AND THEN SARS COLLECTS IT AT COLLECTS IT AT THE BACK END THE BACK END YEAR AFTER YEAR, YEAR AFTER YEAR, AND YOU FEEL AND YOU FEEL ACTUALLY MOVING BACKWARDS. ACTUALLY MOVING BACKWARDS. WE SEE THIS WE SEE THIS WITH MY TEAM WITH MY TEAM CONSTANTLY RIGHT NOW CONSTANTLY RIGHT NOW SEVERAL CLIENTS TO SEVERAL CLIENTS TO RESTRUCTURE EXACTLY THIS. RESTRUCTURE EXACTLY THIS. MOVING MONEY INTO MOVING MONEY INTO TAX EFFICIENT STRUCTURES TAX EFFICIENT STRUCTURES INDIVIDUAL NEEDS IS INDIVIDUAL NEEDS IS NOT ABOUT EVADING TAX, NOT ABOUT EVADING TAX, WHICH IS ILLEGAL, WHICH IS ILLEGAL, BY THE WAY. BY THE WAY. IT'S ABOUT USING IT'S ABOUT USING THE STRUCTURES YOUR THE STRUCTURES YOUR OWN GOVERNMENT HAS OWN GOVERNMENT HAS MADE AVAILABLE TO MADE AVAILABLE TO DON'T HAVE TO DON'T HAVE TO PAY SARS A PAY SARS A CENT MORE THAN CENT MORE THAN WHAT IS LEGALLY WHAT IS LEGALLY DUE TO THEM. DUE TO THEM. BUT UNFORTUNATELY, MOST BUT UNFORTUNATELY, MOST PEOPLE DON'T KNOW PEOPLE DON'T KNOW HOW TO USE HOW TO USE THESE TAX EFFICIENT THESE TAX EFFICIENT STRUCTURES PROPERLY. STRUCTURES PROPERLY. BUT WE FIXED BUT WE FIXED LINDIWA'S RETIREMENT CONTRIBUTIONS. LINDIWA'S RETIREMENT CONTRIBUTIONS. WE RESTRUCTURED HER WE RESTRUCTURED HER SAVINGS. SAVINGS. BUT THERE WAS BUT THERE WAS STILL ONE MORE STILL ONE MORE REASON SARS KEPT REASON SARS KEPT KNOCKING ON HER DOOR. KNOCKING ON HER DOOR. THIS ONE HAD THIS ONE HAD NOTHING TO DO NOTHING TO DO WITH HOW MUCH WITH HOW MUCH IT HAD EVERYTHING IT HAD EVERYTHING TO DO WITH TO DO WITH HOW MANY PLACES HOW MANY PLACES HER MONEY WAS HER MONEY WAS COMING FROM. COMING FROM. WHAT I MEAN WHAT I MEAN IN PART 3.

Transcript

Last time I told you about Lindiwe, a client of mine who thought at her retirement, that unit alone from SARS. Well, it wasn't enough. That was reason number 1. Here's reason number 2, and it catches they are doing everything right. Lindiwe had savings. Lindiwe had savings. Real savings money in a bank account, money market account, some in fixed deposits and some in government retail bonds. She felt proud of that. And right, so she should be proud because most people don't save at all. But nobody had told her that the interest you earn on that money gets added straight into your taxable income. Every single year. SARS lets you earn 23,800 rand in interest tax free if you are under 65, or 34,500 rand if you are 65 and older. Above that, every rand of interest gets added to your total income and tax at your marginal tax rate. So the more you save in these interest bearing accounts, the more of that interest becomes taxable and it compounds every year. This is one of the painful conversations I have with clients. And it happens most often with people who are older, who've had decades to build up their savings the hard way. You think you are getting ahead by earning that interest, and then SARS collects it at the back end year after year, and you feel actually moving backwards. We see this with my team constantly right now. We are helping several clients to restructure exactly this, moving money into tax efficient structures based on their individual needs. It's not about evading tax, which is illegal, by the way. It's about using the structures your own government has made available to you. So you don't have to pay SARS a cent more than what is legally due to them. But unfortunately, most people don't know how to use these tax efficient structures properly. But we fixed Lindiwe's retirement contributions. We restructured her savings. But there was still one more reason SARS kept knocking on her door. This one had nothing to do with how much she saved. It had everything to do with how many places her money was coming from. I'll show you what I mean in part 3.