1 00:00:01,200 --> 00:00:06,560 Speaker 1: Seven two wee Game Breakfast Personal Finance with Paul rule Off, Sir, 2 00:00:07,440 --> 00:00:10,960 Speaker 1: it's not for our personal Finance feature with Paul Rulers, sir. 3 00:00:11,200 --> 00:00:13,160 Speaker 1: Thank you so so much. Good morning, Paul. Thank you 4 00:00:13,200 --> 00:00:13,760 Speaker 1: for your time. 5 00:00:14,960 --> 00:00:16,479 Speaker 2: Yeah, Hi, good to chat to you. 6 00:00:16,960 --> 00:00:19,439 Speaker 1: I mean, you know, I've been thinking about the budget 7 00:00:19,440 --> 00:00:23,680 Speaker 1: this week, and I've been monitoring the reaction from political 8 00:00:23,680 --> 00:00:29,040 Speaker 1: parties as well as ratings agencies and you know, analysts 9 00:00:29,040 --> 00:00:30,760 Speaker 1: as well, and there seems to be a lot of 10 00:00:31,000 --> 00:00:35,080 Speaker 1: positive responses, I think to this budget. But I suppose 11 00:00:35,120 --> 00:00:38,040 Speaker 1: the ultimate question is does this budget or will it 12 00:00:38,120 --> 00:00:38,920 Speaker 1: make us richer? 13 00:00:40,440 --> 00:00:43,040 Speaker 2: Well, you know that's it's kind of a robin Hood 14 00:00:43,040 --> 00:00:46,120 Speaker 2: budget when you really look at it, Yes, get takeaway 15 00:00:46,159 --> 00:00:50,200 Speaker 2: and give give back again. But look at we're positive science. 16 00:00:50,280 --> 00:00:53,519 Speaker 2: Yes that certain things were adjusted to our favor, and 17 00:00:53,560 --> 00:00:55,360 Speaker 2: I think those are the things that we should focus 18 00:00:55,400 --> 00:00:59,040 Speaker 2: on because we can then take some control of the 19 00:00:59,040 --> 00:01:02,520 Speaker 2: benefits going into this new tax here, which incidentally starts 20 00:01:02,560 --> 00:01:07,080 Speaker 2: today and subject to ratification, this budget will go through 21 00:01:07,360 --> 00:01:11,559 Speaker 2: and we can start enjoying some of the benefits. And 22 00:01:11,600 --> 00:01:16,080 Speaker 2: I think it's important to highlight which ones are really 23 00:01:16,120 --> 00:01:21,319 Speaker 2: affecting us in our households because although they're not dramatic changes, 24 00:01:21,400 --> 00:01:25,119 Speaker 2: although they're not big, big swings, there certainly is some 25 00:01:25,200 --> 00:01:28,839 Speaker 2: benefit in the new proposals that are being laid down 26 00:01:29,440 --> 00:01:31,920 Speaker 2: which will definitely benefit us. Yeah. 27 00:01:31,959 --> 00:01:34,399 Speaker 1: I mean, let's start with the easy one, the tax 28 00:01:34,600 --> 00:01:39,120 Speaker 1: free savings, and how that limit has now risen from 29 00:01:39,120 --> 00:01:42,440 Speaker 1: thirty six thousand to forty six thousand. They've been calls 30 00:01:42,640 --> 00:01:45,760 Speaker 1: for the limit to be or to rise, and that 31 00:01:45,800 --> 00:01:47,760 Speaker 1: actually comes into effect today, doesn't it. 32 00:01:48,440 --> 00:01:51,600 Speaker 2: Yes, it does. From here onwards, you can take forty 33 00:01:51,640 --> 00:01:56,720 Speaker 2: six thousand as a maximum. The lifetime amount is still 34 00:01:56,800 --> 00:01:59,800 Speaker 2: five hundred thousand, and I should imagine that will be 35 00:02:00,200 --> 00:02:02,720 Speaker 2: just over time. But the big news is that you 36 00:02:02,720 --> 00:02:05,760 Speaker 2: can put an extra ten thousand rand into your tax 37 00:02:05,800 --> 00:02:11,200 Speaker 2: free savings accounts with effect from today. And I think 38 00:02:11,240 --> 00:02:13,919 Speaker 2: that's that's a real plus. So we've got we've got 39 00:02:13,960 --> 00:02:17,840 Speaker 2: to understand that this particular type of savings is really 40 00:02:17,880 --> 00:02:23,080 Speaker 2: beneficial for everyone young and old, because when I invest 41 00:02:23,200 --> 00:02:27,720 Speaker 2: in that particular instrument or that that entity, I don't 42 00:02:27,800 --> 00:02:31,959 Speaker 2: pay any tax at all. Two songs. So if I've 43 00:02:31,960 --> 00:02:36,680 Speaker 2: had it invested in, say shares, you normally have a 44 00:02:36,919 --> 00:02:40,360 Speaker 2: what when you withdraw the shares a tax at a 45 00:02:40,440 --> 00:02:44,320 Speaker 2: rate of twenty percent. They call it dividends tax. That's 46 00:02:44,320 --> 00:02:49,040 Speaker 2: a withholding tax. It's kept aside your interest if you 47 00:02:49,120 --> 00:02:51,639 Speaker 2: have it in a money market account, which a lot 48 00:02:51,680 --> 00:02:56,760 Speaker 2: of tfsas have got, that is totally tax exempt as well. 49 00:02:57,360 --> 00:03:00,480 Speaker 2: And so what it's saying is that because of there's 50 00:03:00,480 --> 00:03:05,840 Speaker 2: no tax applied inside the investment, your future returns are 51 00:03:05,840 --> 00:03:08,120 Speaker 2: that much more enhanced because you now got a better 52 00:03:08,200 --> 00:03:12,000 Speaker 2: compounding rate, Your rate of return is that much better 53 00:03:12,320 --> 00:03:15,200 Speaker 2: over time. And I think that's a plus altogether. So 54 00:03:15,600 --> 00:03:18,160 Speaker 2: let's not ignore that. And the ten thousand is certainly 55 00:03:18,200 --> 00:03:20,919 Speaker 2: an extra amount over the thirty six and I think 56 00:03:20,960 --> 00:03:25,320 Speaker 2: that should be a standard plan for all of our households. 57 00:03:25,480 --> 00:03:27,320 Speaker 1: Yeah, I was about to say that that ten thousand 58 00:03:27,440 --> 00:03:32,160 Speaker 1: is significant, especially because they have been calls for that increase. 59 00:03:32,240 --> 00:03:36,760 Speaker 1: Let's speak about the remedies to the dreaded bracket creep. Right, 60 00:03:38,800 --> 00:03:42,040 Speaker 1: for the longest time, we all know how income bands 61 00:03:42,240 --> 00:03:45,520 Speaker 1: that are not fully adjusted to account for inflation linked salaries. 62 00:03:45,640 --> 00:03:47,840 Speaker 1: I mean, it's always a mess. Right, You get your increase, 63 00:03:48,000 --> 00:03:50,920 Speaker 1: but nothing really changes. Nothing really, you don't feel it 64 00:03:50,960 --> 00:03:52,880 Speaker 1: in your income at all because of the bracket creep. 65 00:03:53,960 --> 00:03:56,520 Speaker 2: Well, that's a great point, and you know what has 66 00:03:56,600 --> 00:04:01,080 Speaker 2: happened in the last the preceding two budget speeches. We 67 00:04:01,480 --> 00:04:04,000 Speaker 2: stayed the same. There was no bracket creep at all 68 00:04:04,200 --> 00:04:07,480 Speaker 2: in the sense of being adjusted to inflation. And as 69 00:04:07,480 --> 00:04:11,200 Speaker 2: you correctly say, if we don't have an adjustment on 70 00:04:11,240 --> 00:04:15,320 Speaker 2: our brackets are tax brackets to accommodate inflation, we simply 71 00:04:15,360 --> 00:04:18,520 Speaker 2: get poorer, don't we because inflation is still here. You 72 00:04:18,600 --> 00:04:22,359 Speaker 2: get this increase based on inflation, but there's no adjustment 73 00:04:22,400 --> 00:04:26,440 Speaker 2: in the tax, so you pay you pay more tax effectively. 74 00:04:27,120 --> 00:04:29,480 Speaker 2: And the good news was that it was adjusted this 75 00:04:29,640 --> 00:04:32,359 Speaker 2: time round. I think it's still a still a little 76 00:04:32,480 --> 00:04:35,920 Speaker 2: saw point. It wasn't adjusted to compensate the previous two 77 00:04:36,000 --> 00:04:39,520 Speaker 2: years which weren't adjusted, so it's just basically caught up 78 00:04:39,560 --> 00:04:42,240 Speaker 2: a little bit. But I think over a three year 79 00:04:42,279 --> 00:04:45,800 Speaker 2: period certainly we're done a bit. But this Europe and 80 00:04:45,920 --> 00:04:50,040 Speaker 2: we can expect now from our next page slip which 81 00:04:50,080 --> 00:04:53,040 Speaker 2: comes through the end of March, that the take home 82 00:04:53,120 --> 00:04:55,159 Speaker 2: pay will be that much better. Yeah. 83 00:04:55,680 --> 00:05:00,840 Speaker 1: I think the developments with regards to retirement annuity deductibility 84 00:05:01,560 --> 00:05:05,160 Speaker 1: at maximum deductible contributions rising also from three hundred and 85 00:05:05,200 --> 00:05:07,080 Speaker 1: fifty thousand to four hundred and thirty thousand. 86 00:05:07,960 --> 00:05:11,920 Speaker 2: Well, that's great news. It appeals to I think people 87 00:05:12,000 --> 00:05:16,839 Speaker 2: with a lot more the wealthier will certainly benefit from 88 00:05:16,839 --> 00:05:20,080 Speaker 2: that because what it says is that you can put 89 00:05:20,120 --> 00:05:24,560 Speaker 2: away a retirement and newity contribution, which is generally twenty 90 00:05:24,600 --> 00:05:27,480 Speaker 2: seven and a half percent of your taxable earnings. That 91 00:05:27,600 --> 00:05:32,680 Speaker 2: was the maximum, but there was this ultimate ceiling before 92 00:05:32,720 --> 00:05:34,960 Speaker 2: the budget speech where you could only go up to 93 00:05:35,080 --> 00:05:37,680 Speaker 2: three hundred and fifty thousand rand in a given year, 94 00:05:38,360 --> 00:05:40,640 Speaker 2: and that's been pushed up to four hundred and thirty now, 95 00:05:40,800 --> 00:05:44,080 Speaker 2: and that's significant. If you can afford that to that 96 00:05:44,200 --> 00:05:47,200 Speaker 2: kind of savings, it's certainly going to give you a 97 00:05:47,240 --> 00:05:50,920 Speaker 2: good start. But I think basically we should also look 98 00:05:50,960 --> 00:05:53,320 Speaker 2: at retirement and news us in the context of what 99 00:05:53,440 --> 00:05:57,920 Speaker 2: they are. You get to a deduction on your contributions, 100 00:05:58,520 --> 00:06:02,760 Speaker 2: and effectively whatever rate of tax you're being paid or 101 00:06:02,800 --> 00:06:06,039 Speaker 2: you are paying. Let's say you're a thirty percent taxpayer 102 00:06:06,480 --> 00:06:09,120 Speaker 2: and I put in one hundred rand into a retirement 103 00:06:09,120 --> 00:06:12,800 Speaker 2: in nuity at thirty percent, I get thirty percent of 104 00:06:12,800 --> 00:06:14,880 Speaker 2: that one hundred and thirty rand back. For every one 105 00:06:14,960 --> 00:06:19,440 Speaker 2: hundred rand I put into the retirement nuity. Now, obviously 106 00:06:19,480 --> 00:06:23,000 Speaker 2: the more tax you pay, the better the benefit. So 107 00:06:23,520 --> 00:06:26,280 Speaker 2: I think in the context of this maximum ceiling being 108 00:06:26,839 --> 00:06:31,680 Speaker 2: moved upwards from fifty to four thirty, it's going to 109 00:06:31,720 --> 00:06:34,919 Speaker 2: really be significant for the higher tax bracket in particular. 110 00:06:35,680 --> 00:06:37,720 Speaker 1: And I mean, I know that of that increase wasn't 111 00:06:37,760 --> 00:06:40,040 Speaker 1: on the cards, but it's great news that that stayed 112 00:06:40,040 --> 00:06:42,200 Speaker 1: the same. Does that change anything? Does it change much? 113 00:06:43,080 --> 00:06:45,440 Speaker 2: I think I think we learned a very harsh less 114 00:06:45,480 --> 00:06:48,640 Speaker 2: and last time round didn't be Yeah, I think you know, 115 00:06:48,680 --> 00:06:52,160 Speaker 2: there was such a drama around it, and I think 116 00:06:53,200 --> 00:06:56,279 Speaker 2: there was a lot of lessons learned. The sensitivity of 117 00:06:56,360 --> 00:06:59,400 Speaker 2: that being increased any further from what it is right 118 00:06:59,440 --> 00:07:02,720 Speaker 2: now is more harmful than anything else. And I think 119 00:07:02,720 --> 00:07:05,320 Speaker 2: that that was a solid statement. It wasn't even looked at, 120 00:07:05,800 --> 00:07:08,440 Speaker 2: which I think is a good thing. We learned, as 121 00:07:08,480 --> 00:07:11,679 Speaker 2: I said, from the previous budget proposal, and going forward, 122 00:07:11,760 --> 00:07:13,600 Speaker 2: it doesn't look like this is going to be the 123 00:07:13,640 --> 00:07:17,600 Speaker 2: target for the Natural Treasury in terms of future tax revenue. 124 00:07:19,080 --> 00:07:21,040 Speaker 1: All right, Paul, I don think that's all we have 125 00:07:21,120 --> 00:07:23,120 Speaker 1: time for. And I suppose now from that we can 126 00:07:23,160 --> 00:07:26,840 Speaker 1: all evaluate whether you know, we'll be a little richer. 127 00:07:27,120 --> 00:07:30,080 Speaker 1: I suppose the analysis that I've seen is that this 128 00:07:30,200 --> 00:07:34,760 Speaker 1: might not necessarily make us more comfortable currently or in 129 00:07:34,800 --> 00:07:39,040 Speaker 1: the present time, but it certainly does point to, you know, 130 00:07:39,120 --> 00:07:41,560 Speaker 1: us being a little more having a bit more breathing 131 00:07:41,960 --> 00:07:43,000 Speaker 1: room in the future. 132 00:07:44,080 --> 00:07:48,000 Speaker 2: I think so, yes, certainly this isn't leaving us worse off. 133 00:07:48,240 --> 00:07:52,080 Speaker 2: We certainly got some benefit coming forward. But just really 134 00:07:52,440 --> 00:07:54,800 Speaker 2: for everyone just to really get into the details of 135 00:07:54,880 --> 00:07:58,440 Speaker 2: how it affects us and take full advantage wherever we can. 136 00:07:59,520 --> 00:08:02,960 Speaker 1: Absolutely, absolutely, thank you so so much. That's Paul Rules 137 00:08:03,000 --> 00:08:06,000 Speaker 1: are there helping us make sense of the numbers. He's 138 00:08:06,000 --> 00:08:10,240 Speaker 1: the resident certified financial advisor taking a look at what 139 00:08:10,520 --> 00:08:14,880 Speaker 1: the latest budget in the past week really means for households, 140 00:08:14,920 --> 00:08:17,760 Speaker 1: and I, you know, I'm choosing to be more optimistic. 141 00:08:18,040 --> 00:08:21,960 Speaker 1: I'm choosing to take advantage of these developments in any way. 142 00:08:21,840 --> 00:08:22,480 Speaker 2: That I can. 143 00:08:23,040 --> 00:08:25,280 Speaker 1: Like the tax free savings account, I think it's an easy, 144 00:08:25,360 --> 00:08:28,680 Speaker 1: low hanging fruit. And I suppose the question I was 145 00:08:28,720 --> 00:08:31,239 Speaker 1: confronted with the question a few days ago, why don't 146 00:08:31,280 --> 00:08:34,079 Speaker 1: you have a tax free savings account? Why? I mean, 147 00:08:34,120 --> 00:08:36,160 Speaker 1: it's an easy thing to do, It's an easy way 148 00:08:36,200 --> 00:08:39,480 Speaker 1: to go about saving. And you know you keep complaining 149 00:08:39,559 --> 00:08:42,280 Speaker 1: about tax, Well here's a perfect way to avoid that. 150 00:08:42,640 --> 00:08:44,920 Speaker 1: And I had to call myself out actually to say, 151 00:08:45,080 --> 00:08:46,920 Speaker 1: you know what you need to do better. So the 152 00:08:47,000 --> 00:08:48,920 Speaker 1: lesson here for you and I is how do we 153 00:08:48,960 --> 00:08:52,959 Speaker 1: take advantage of these new developments and the small developments, 154 00:08:53,080 --> 00:08:55,600 Speaker 1: what seems to be small developments, in order to make 155 00:08:55,920 --> 00:08:59,559 Speaker 1: our financial standing a little better. I am a little 156 00:08:59,600 --> 00:09:01,840 Speaker 1: hopeful aboute IT, and I hope that in the future 157 00:09:02,120 --> 00:09:05,080 Speaker 1: we will be able to see the effects of these developments.