Tax Free Savings & Investment Accounts

Tax Free Savings & Investment Accounts


The tax free savings account (TFSA) was established as an incentive by the South African Governement to encourage people to save. The account allows you to invest/save to certain maximum amounts annually and as a total over your lifetime. The growth and interest on these accounts as completely tax free.

Historically, there culture od saving and preparing for retirement by saving and investing has not been the norm. In many cultures the children are expected to look after the older generation but as our society moves forward, this is becoming more difficult for the younger generation. The Government want us to save as much as possible for our retirement and for our futures, so as not to be a burden on the State. The South African Social Security Agency (SASSA) is groaning under the number fo people it needs to support from the fiscus and the tax payer is becoming further burdened as the financial needs of so many who did not save for retirement are leaning on the State for pensions.


Off-shore Tax Free Investments

Off-shore Tax Free Investments

Local Tax Free Investments

Local Tax Free Investments

Annual Maximum Investment in TFSA

Every individual South African citizen is entitled to open a tax free savings account and is entitled to invest up to a maximum of R33 000 per annum as a tax free investment.

Lifetime Maximum Investment in TFSA

Each Individual is entitled to invest a maximum of R500 000 in a Tax free investment account only. This includes minors, so if you open an account for a minor, their maximum starts when opening the account.

Withdrawel of Funds from TFSA

As the holder of a tax free savings account or tax free investment vehicle, you are able to withdraw the money at any time. This however counts against your total investment. Eg: If I Invest R33 000 in January and then withdraw R13 000 in August. I will still have R23 000 in the TFSA but the R13 000 I have withdrawn remains part of my total allowable investment.

Penalties for Abuse of TFSA

The Government has made it quiote clear that there will be a no tolerance attitude to those who exceed the maximum allowable investment. There is a 40% penalty for any individual who uses a tax free savings account to invest/save more that the maximum R500 000 over a persons lifetime. It is for this reason that it is essential to get good tax free investment advice.

Changing behaviour to a savings culture

Each South African needs to start saving for their own retirement and to start preparing for an independent life with enough money for retirement. Taking advantage of a tax incentive to start saving is a fantastic way for us as individuals and also for us to use as a tool to teach our children a culture of saving.

Many cultures in SA are contributors to stokvels and make payments religiously each and every month. As a stokvel member, the money is not invested for a return and is not invetsed for the long term, however the culture of putting aside money each month is established.

We do not think it is a far stretch to change the mindset of stokvel contributors to using a portion of their stokvel contributions to make long term savings contributions and the TFSA is the ideal vehicle to start to change these behaviours for the better and the long term.

Why it is important to use an advisor

An Investment advisor is the best possible person to advise you on which TFSA is the best for you. See Tax Free investment options for the different investment opportunities that allow you to take advantage of the tax free savings allownace. An advisor will establish what your needs will be and what your goals are for your savings and advise accordingly. 

At different stages of life we are best advised to use different investment startegies according to the risk attached to these investments. Each different investment vehicle with the opportunity to take advantage of the tax free savings comes with it’s pro’s and cons and it is and advisors job to guide you in the right direction.

Every Rand you save in Tax you can enjoy during your retirement!

  • Withdraw money at any time during the term.
  • Maximum of R33 000 per year can be invested
  • Maximum lifetime contribution limit of R500 000

Financial independence requires planning! Contact one of our financial advisors.

If you save the maximum R2750/month for 15 years you will have invested R495 000 and could save as much as R189 000 in Tax with a total possible saving of R1 180 000. This is simply too get to not take advantage of, Get advice on the best options for you.

Tax free savings account FAQ

What is a Tax free savings account?
A tax free savings account can be one of a number of different account types, from a fixed term savings account to an exchange traded fund (ETF). It is best to chat to a consultant about the best type for your needs.

Any interest earned, dividends received or capital gains is completely free of tax.

Can I withdraw funds from a tax free savings account if I need to?
You can withdraw the money at any time. When you make a withdawel from your tax free savings account, your maximum life time allowable limit to invest tax free is affected.
Is there a limit to the amount I can invest?
The maximum you are allowed to invest tax free in any single year is R33 000 and in your lifetime R500 000.

There is no limit to the capital gain you can get tax free from the investments. If your investment returns 5% or 55%, the gains are completely tax free.

Do I have to invest every month in the tax free savings account?
No, you do not have to make monthly savings, you are able to add to your TFSA whenever you are able to up to the stipulated maximum annual and lifetime limits.
Can I open a Tax free savings account for my children?
Yes you can open a tax free savings account for your children. The amount you invest in their TFSA will effect their personal annual and lifetime limits so be upfront with them as over investment in TFSA accounts can result in a 40% tax penalty.

Tax free Investments FAQ

Can I invest in the stock market tax free?

Yes you can. Thjere are various financial products from Unit trust accounts to index trackers that have been established to cater for investors of all ages to ntake advantage of Tax free savings.

Are there any fees or charges for investing tax free?

There are fees that the financial institution will levy against your tax free investments which are in line with the fees charged for any other investment.

There is no tax on the growth or dividends you earn from these investments.

Is there a limit to what I can invest in Tax free investments?

Yes there is. You are entitled to invest a maximum of R33 000 perr annum with a per person maximum over your lifetime of R500 000.

These maximums include all tax free investments, whether they are in the form of savings accounts or investment in unit trusts or any other tax free investment vehicle.

If I withdrawe the money tax free can I start investing again tax free?

Providing you have not exceeded the R500 000 threshold for your lifetime, you can continue investing tax free.

By way of example: If you invest R450 000 over 20 years in the tax free investment scheme and yoiu take out R200 000 to pay off your car, you only have a further R50 000 that you can contribute to the scheme.

Why is the SA Governement doing this?

The level oif savings in South Africa is pitifully low which could result in the state having a burden of support for more people that they can afford to support.

The tax free savings and investment drive is to help people develop a culture of savings and to help people become financially secure in retirement.

Any savings that you are able to invest Tax Free should be taken advantage of! It is not often that we are presented with an opportunity to not only save Tax Free, but have access to the money. This is not a fixed term investment or a policy of any sort, this is simply the SA Government encouraging you to save and in so doing, offering you an incentive in the form of a tax free amount.