Getting the best out of R120 000 investment

What is the optimal investment option for R120 000 to achieve the highest return while minimising tax deductions?

- Jaco Prinsloo

Question:

The answer: With inflation eroding returns and taxes biting into gains, structuring your investments to minimise tax liabilities is more than just smart – it's essential.

For South African investors, the type of tax you pay depends on what you invest in, and above certain thresholds, the impact can be significant.

This article unpacks how to allocate R120 000 tax-efficiently using available investment vehicles and the current tax landscape.

Taxes on investments South African residents are subject to four key types of investment-related taxes:

► Interest income tax: Applicable on earnings from savings accounts or fixed deposits.

► Dividend-withholding tax: A flat 20% applied to dividends from shares.

► Capital gains tax (CGT): Payable when you sell an asset at a profit.