Helping you escape tax

SAVINGS: YOU INVEST WITHOUT PAYING TAXES

- Paul Roux

A tax-free savings account (TFSA) is an investment vehicle offered in South Africa that allows you to grow your investment without paying any taxes on the gains. No brainer? No brainer.

Savings or investment account?

A TFSA is an investment account, meaning you can invest in various asset classes, such as cash and bank accounts (there's the "savings account" part you were looking for), bonds, property funds and stocks.

What taxes are you saving on?

> Interest tax from interest on bank deposits and bond investments;

> Dividend tax from investing in company shares; and

> Capital gains tax from buying low and selling high.

Contribution rules

1. Contribution limits

> R36 000 annually (or R3 000 per month); and

> R500 000 over an investor's lifetime.

If you max it out every year, it takes roughly 14 and a half years to reach the R500 000 lifetime limit.

2. Unused contributions