Tax Free Savings Account In’s and Out’s

What is a Tax Free Savings Account and how does it really work?

Save for long- and short-term goals in a convenient, cost-effective way. Customise your investment plan by choosing from a wide range of well-researched unit trust funds.

Investment income earned within the plan, as well as capital gains are tax free; you can adjust your portfolio when your needs and risk appetite change and it is easy to access your money if you need to.

Minimum contribution

R2 500 per month or
R30 000 lump sum

Maximum contribution

R30 000 per tax year, and
R500 000 per lifetime

How long to invest for

No fixed period but a minimum of three years is recommended to limit the negative impact of short-term market fluctuations.

Freedom to move your money

Transfers between providers of tax-free savings accounts will be deferred for at least the first year.

Freedom to change your choice

You have total freedom to change your underlying investments. There is no charge to make a change, but depending on where you move your money to, initial investment charges may apply.

Your investment choices

Access to the widest choice of investments:

  • A range of risk-profiled investment funds
  • Local or offshore funds
  • Actively managed or passive index-tracking funds
  • Single manager or multi-manager funds

Investment funds that charge performance fees are excluded. Investment in individual shares, exchange traded funds (EFTs) and other stockbroking instruments will also not be allowed.

Benefits

  • You can customise your investment portfolio according to your needs, circumstances and how much risk you are willing to take
  • Investment income earned through interest, dividends or capital gains is tax-free
  • You can easily access your money – see ‘Access to your money’ below
  • You can subscribe to a contribution report to help you monitor your contribution limits

How it works

  • You make a lump sum contribution of R30 000 or monthly contributions of R2 500
  • We invest the money in the underlying investments that you choose in collaboration with your financial planner
  • Your money can grow tax-free over time based on your underlying investments and can benefit from the effect of compound interest earned on any growth
  • You can invest a maximum amount of R30 000 per tax year, and R500 000 per lifetime

Access to your money

  • You can make tax-free withdrawals at any time
  • When you die, the investment will form part of your estate

Tax

  • You will pay no income tax on income distributions
  • You will pay no capital gains tax when you dispose of assets or sell or switch units within an investment

Fees

Fees vary per product and your underlying investment. Please speak to your financial planner to make sure you pay the correct fees and that you understand which fees you pay and why.

Why get financial advice

It is important to bear in mind that any investment has some risk. We therefore recommend that you consult a financial planner who can help you find the most appropriate products for your needs and circumstances.