DREAMING OF A LITTLE GIFT FROM SARS?

#HelloLifestyle

Don’t spend your tax refund before you get it!

The 2022/23 tax year is over and while you wait for all the paperwork to come in so you can file your return, you’re probably dreaming of getting a little something back from SARS after filing season.

Edwin Theron, CEO at Sanlam Indie, says while the best thing about a tax refund is that it’s ‘extra’ money that you didn’t take into account in your budget, there is plenty of need for caution in managing it. “From an objective financial perspective, the worst thing you can do with a windfall is probably to spend the money on something you want, but don't need - especially if the rest of your finances are not in a healthy state. If you need to buy a new car and your tax refund helps you borrow less to do it, then you’re on the right track!”

Theron has a couple of other constructive ideas and hints for managing your refund:

DON’T PLAN ON A REFUND

Regard any refund you get as ‘extra money’, even though it’s yours in the first place. Don’t bank on getting a refund to help you meet expenses, in the event you don’t get it because of a change in calculations.

Top Up Your Savings

If you do get something back from SARS, it’s best to bank at least most of it. Using it to clear debt is a good start, as is starting that ‘emergency fund’ you’ve meant to establish for ages. Consider keeping it in a separate bank account to help minimise the temptation to splurge.

Get Life Insurance

Use your tax refund, or a portion of it, to close any gaps in disability and life insurance to help take care of yourself and your loved ones, should disaster strike. It’s one of those things we avoid thinking about because it can be unpleasant, but it’s the responsible thing to do.

Spoil Yourself And Your Partner

Fancy some quality time with your partner? A little return might give you the chance to enjoy a night out at your favourite local restaurant – or stretch to a weekend away. Remember that while you’re rewarding yourself, you should manage your refund responsibly.

Share What You Have

Fun and responsibility come together in helping others in need. The last few years have been challenging for millions of people in South Africa, so consider giving at least a portion of your return to a charitable organisation. Helping others can be incredibly fulfilling and if you donate to a registered NGO, you can add your donation as a tax deduction towards your next return. H

Q @sanlamindie

1 www.sanlamindie.co.za