JOHANNESBURG – In this tax column, Piet Nel, head of the School of Applied Tax at the South African Institute of Tax Professionals (Sait) answers a reader’s questions about life insurance policies. Q: I am a South African living in New Zealand and still have life insurance policies in South Africa. My concern is that at the current rate of decline of the value of the rand, the value in New Zealand dollars will be very low. At present the value on death is approximately R1.9 million. Here are my questions: Do I leave my policy as is until my death? Or do I accept an early payout of about 60% and transfer the amount to New Zealand now? What would the tax situation be in both? A: We can’t...
Continue reading...
You don’t wake up every day thinking about life insurance, do you? In fact, months and even years can roll past without us even thinking about spending money on a policy. Then one day you find yourself seriously contemplating your mortality and the implications of leaving your loved ones behind in a sticky financial situation. That’s the day you decide to take out life cover. Now, the concept of life insurance is easy enough to understand. In exchange for a premium (usually paid monthly) your life insurer undertakes to pay out a sum assured, when you pass away, to beneficiaries you’ve nominated in your policy. Provided you’ve been honest and upfront about all your health issues when taking...
Continue reading...
Once you’ve decided to look into buying term life insurance, it’s natural to consider ways to leverage that purchase into a tax advantage. You might wonder whether life insurance premiums are tax-deductible. For most of us, the answer is no. Life insurance premiums are not generally tax-deductible because IRS Pub. 502 considers those costs a “personal expense.” If you are looking for some wiggle room, you are not going to find it in Pub. 502, which states specifically that life insurance premiums are excluded as a deductible expense. Notwithstanding the above, there are a few situations where premiums might be tax-deductible. If your premiums are associated with one of the categories below...
Continue reading...
TLAA changes affecting retirement funds Important changes to the TLAA which affect retirement funds: Widespread amendments to the tax deductibility of employer owned policy premiums Taxation of divorce benefits Accrual of lump sum benefits. Employer owned insurance policies Section 11(w) of the Income Tax Act, provides for tax deductions in respect of policies owned by an employer, outside of a registered pension or provident fund. This provision is substantially amended in the TLAA. The 2010 Budget Review indicated Treasury’s concerns that tax leakage is occurring in the area of unapproved Group Life Insurance (“GLA”) policies where the payment of policy proceeds results in employees or...
Continue reading...
When you think about tax-free income in retirement, the traditional vehicles likely come to mind. Such as your 401(k) or 403(b), traditional and Roth IRAs, and your personal savings account. What you may not consider, however, is that life insurance can also function as a form of retirement income – with tax advantages. Permanent life insurance, which includes whole and universal policies, builds cash value over time and can function as a source of tax-free retirement income. The cash value accumulates over the life of the policy when the policy owner pays premiums. The insurer deducts the policy expenses from the premium payment. While the remainder of the amount contributes to the cash...
Continue reading...
Why contractors save tax with life insurance Independent professionals have, for time immemorial, faced problems finding relevant life insurance. That’s changed, but it’s taken a new product to plug the gap. Our guide explains. One of the biggest barriers contractors faced with life cover was the inflexibility of its policies. They came with a total inability to transfer their policy should they decide to stop trading. Another issue was the cost of setting up “like” cover that they’d enjoyed whilst working at a larger corporation. It’s difficult to find ‘Group Cover’ when there’s only one of you. A new product to market has revolutionised the way...
Continue reading...
RADNOR, Pa.--( BUSINESS WIRE )--With this year’s new tax deadline (July 15) quickly approaching, Americans are concerned about taxes but it’s not about filing on time . Nearly 7 out of 10 consumers are concerned that a change in taxes will have an impact on their retirement savings according to research from Lincoln Financial Group (NYSE: LNC). And yet, less than a third are currently preparing for the impact of taxes on their investments and retirement accounts . The good news is that consumers can make smart decisions today that can benefit them in the future. “Tax planning is a crucial part of retirement planning–something that all too often goes unaccounted for,” said Peter B. Robertson...
Continue reading...
After my cousin was killed, life insurance made a world of difference for my family Three evenly spaced dots forming an ellipsis: "...". Two crossed lines that form an 'X'. It indicates a way to close an interaction, or dismiss a notification. Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, like American Express, but our reporting and recommendations are always independent and objective. When my cousin was murdered two years ago, I found out that my aunt had taken out a life insurance policy on him. I was taken aback, but somehow she knew it was the right thing to do....
Continue reading...
Can you get a tax break for life, health or disability insurance? Sometimes. Here’s what to ask a tax professional to find out the answers for you. Has the latest coronavirus or COVID-19 pandemic sparked health and financial concerns in your everyday life? Then tax season is probably the last thing you want to deal with. That’s why the Canada Revenue Agency (CRA) has extended the tax deadline so that: you can file your 2019 taxes by June 1, 2020, and you won’t have to pay income tax until after August 31, 2020. When you do get a chance to think about filing your taxes, you may wonder, “Is there a simple yes or no answer to the question posed in the headline?” Sorry, but there’s no 1-word...
Continue reading...
Top slicing relief: calculation Chargeable event gains are treated as the top slice of total income. Where an individual has more than one gain assessable for the same tax year, the gains are aggregated. Any losses are not offset as part of this aggregation process directly. However, if a policy has given rise to deficiency relief for that tax year – see IPTM3860 – the relief is deducted in calculating the aggregate. For the purpose of determining total income, income arising from the following items is ignored: employment termination payments. The key to the calculation is to determine a fraction of the gain, or aggregated gains, by dividing it by__ ‘N’, where this is the number of...
Continue reading...
