Dear fellow taxpayer,

Welcome to this week’s bulletin.

Times are tough at the moment, with many families facing an uncertain future. Retrenchments are the order of the day with many companies being forced to let key staff in order to survive the current economic situation.

If you are in this unfortunate situation, you will know that now is the time to think outside the box and make a plan. Most companies have put all hiring on ice, so that leaves most with only one option: starting your own business.

The general sentiment is that starting a business in bad times like this is potential suicide. This is probably true if you are trying to sell luxury goods or a service that your client doesn’t actually really need. However, I read an article last week that recessions and bad times are a perfect opportunity for starting a business that does one of two things:

• helps people save money; or
• helps people make money.

If you can crack an idea that genuinely delivers on of these two things, you should be fine!

And don’t forget, with the turnover tax system, having your own small business is a tax dream!

Your business will be probably taxed less than you were as an employee...how’s that for something to smile about?

Get advice before you cash in your retirement monies

You may be so cash strapped and under pressure to keep your house that the pressure to withdraw a large portion of life savings could be very high. But don’t be hasty: you could end up making a move you’ll regret forever.

For example, the tax free portion you can withdraw from a pension fund before retirement is only R22 500, thereafter you will be taxed on your withdrawal. At retirement, the tax free amount is R300 000!

Tip: Speak to your advisor to find out if you fund always for a withdrawal and what the tax consequences will be!

Until next week.
 
Regards
 
Nothando Hlatshwayo

Managing Editor
The Practical Tax Handbook