Understanding Tax-free Savings Accounts

by / Monday, 13 January 2020 / Published in Investments

Contributions to a tax-free savings account are made from post-tax income and gives you the liquidity of a flexible investment.

You can withdraw from your investment at any time. Withdrawing funds, however, may prevent you from reaching your savings goals and will decrease your tax-free savings lifetime limit.

The total annual contribution in a tax year may not exceed R33 000 per tax year and your total lifetime contribution may not exceed R500 000.

 

A tax-free savings account is therefore an effective way to save for your goals as any interest, dividends or capital gains from your tax-free savings account will be free of tax.

Tax-free savings accounts can be used for the following purposes:

• Tax utilisation

• Long-term investing

• Supplement retirement savings

And remember it is compulsory to submit the investment information with an IT3(s) statement in your annual tax return issued by the provider.

Ruvan J Grobler

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