With the Annual Budget Speech given by our Finance Minister Tito Mboweni, there were a few positives aimed at economic growth and overall sentiment change.
One of these changes effective 1 March 2020 is the TFI annual limit increase from R33 000 to R36 000. This will help the individuals who only started later in their lives with this type of investment to reach their lifetime limit of R500 000. The maximum allowed monthly contribution will increase from R2750 to R3000.
You don’t have to pay income tax, dividends tax or capital gains tax on the returns from these investments. Remember that you may have more than one TFI as long as the you do not exceed the annual/lifetime limit.
There will be a 40% penalty on the excess amount should you go over the annual limit and the excess will not roll over to the next year. This penalty will be added to the normal tax payable on assessment.
Also remember that parents can invest on behalf of their minor children. The annual/lifetime limits will be applicable to the minor child and not to the parent.
Contact your advisor for more information.
Ruvan J Grobler