Tax-Free Savings Accounts: The best ones in South Africa
In our series of articles supporting good financial habits, we investigate South Africa’s best tax-free savings accounts.
In our ongoing series of articles that nurture good financial habits, we investigate South Africa’s best tax-free savings accounts (TFSA). What is a tax-free savings account, which institutions offer the best ones and how can you benefit?
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As we know, the cost-of-living crisis is hitting many South Africans hard. And one of the best ways to save money and nurture wealth is through one of South Africa’s best tax-free savings accounts. Let’s get into the details …
SOUTH AFRICA’S BEST TAX-FREE SAVINGS ACCOUNTS
In short, it’s a non-retirement savings account designed for maximum tax relief. Whether it’s a fixed-term bank account, money market, unit-trust investment a JSE-listed exchange-traded investment fund, check if it’s tax free it’s a winner.
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Basically, in South Africa’s best tax-free savings accounts, capital gains, interests, and dividends earned are 100% untaxed investments. However, there is a limit to the total annual and lifetime contribution that qualifies for tax exemption.
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This figure stands at approximately R30 000 annually, while the lifetime contribution limit is R500 000. Any contributions beyond the annual and/or lifetime limit are subject to 40% tax. This is to deter abuse of the tax-free benefits. Thankfully, interest gained that exceeds R500 000 is still credited as tax free and there is no limit to the amount of tax-free accounts you can have. So, let’s list them …
TAX-FREE ACCOUNTS LISTED
According to the experts at MoneyToday, these are the best tax-free accounts currently on the market (listed in alphabetical order):
| Bank | Tax Free Account | Nominal Interest Rate (annually) | More info |
| ABSA | Tax-Free Savings Account | 0.5 – 4% | Apply Online |
| African Bank | Tax-Free Investment | 5.7 – 5.85% | Apply HERE |
| Capitec | tax-free savings account | 2.25 – 5.3% | Apply Online |
| FNB | Tax-Free Cash Deposit | 3.25 – 3.90% | Apply HERE |
| Investec | Tax Free Fixed Deposit Account | 4.78% | Apply Online |
| Nedbank | Tax Free Savings Account | 1.75 – 4.5% | Apply HERE |
| Old Mutual | Tax Free Savings Account | You decide | Apply Online |
| Standard Bank | Tax-Free Call account | 2.8 – 3.5% | Apply HERE |
IT’S NOT ONLY BANKS THAT ARE TAX FREE
Beyond South Africa’s best tax-free savings accounts, insurers, unit-trust managers, exchange-trade managers and government-owned savings bond schemes also offer tax-free savings accounts. Note that tax-free savings accounts are not chargeless, they’re simply free from capital gains and other taxes.
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This article is for informational purposes only and should not be construed as financial advice. Be sure to share your thoughts on South Africa’s best tax-free savings accounts with our audience in the comments section below. And don’t forget to follow us @TheSANews on Twitter and The South African on Facebook for the latest updates.