The Tax Free Savings and Investment allowance has been available since 2015 and many South Africans have taken up the opportunity to get tax free returns. What exactly does Tax free mean?
Tax Free means just that. Any interest, capital gains, dividends, or any form of gain is not taxable. There is no catch.
Frequently asked questions about Tax Free Savings/Investment accounts in South Africa
We get many messages at www.taxfree.co.za asking us if this is legitimate? and what is the catch?, or is my money safe? and many other questions regarding tax free savings and investment accounts.
Simply put, The South African treasury is trying to incentivise people to save. It is a well known fact that less than 10% of people who retire today and in the foreseeable future, will be able to enjoy the financial freedom that we all hope for in retirement. In the end, unless the SA government can increase the number of people that will be self sustaing in retirement, the financial burden on the Treasury will grow.
How much can I invest tax free?
Each individual is allowed to invest R33 000 per annum to a maximum lifetime amount of R500 000 per person
Can I open a tax free account for my children?
Yes you can. Whatever the amount is that you invest tax free for your children, becomes part of the maximum tax free investment allowance.
Can I invest in Unit trusts or other funds tax free?
Yes you can. There are a number of funds and financial instruments available for tax free investing, including unit trusts and ETF’s (exchange traded funds)
Where can I open a tax free savings account?
Most banks and financial advisory services offer tax free investment products. We would recommend that you contact an independent advisor who will give you unbiased advice about where to get the best returns on your tax free investments. Go to www.taxfree.co.za for free tax free investment advice.
Can I open more than one tax free savings/investment account?
Yes you can, provided the total invested in all of the accounts does not exceed the R33 000 annually or R500 000 lifetime allowance. This allows you to open an account to help you save for a deposit on your new car, a second tax free savings account for your childs schooling and then a third account to save for a wedding ring?
What happens if I invest over R500 000 in the Tax free savings accounts?
It is very importasnt not to exceed the allowable R500 000 in tax free savings/investments. There are penalties applicable to those who try to beat the system.
Is there a maximum return on investment allowed?
No, whether you invest in a money market account giving you 6.5% interest or a unit trust portfolio that returns 22%, the gains are all not taxable. Consult one of the experienced Tax free investment advisors at www.taxfree.co.za and get the best advice for your tax free portfolio completely free of charge.
You may be a young woman who has a good appetite for risk, or an older man who needs a conservative investment strategy in retirement. Either way, you should talk to an advisor to get the complete ruindown on what the best tax free savings accounts there are for your stage in life.