What happens if I contribute more than my annual allowable amount?

If you contribute more than your annual allowable amount of R36,000 in a tax year the amount contributed above the annual allowance will be taxed at a rate of 40%, regardless of your personal income tax rate. This is a risk, especially if you are contributing towards multiple TFSAs.

For example: If, in one tax year, you invest R16,000 in a TFSA with provider A and R30,000 in a TFSA with provider B, you will have contributed R10,000 more than the annual limit. You will have to pay 40% tax on the excess R10,000 you have invested ie a tax penalty of R4,000 on the R10,000 above the annual limit.

It’s important to monitor your TFSAs across all accounts regularly to avoid exceeding the limit.

10X Index Fund Managers (RF) Pty Ltd is a Manager registered under the Collective Investment Schemes Control Act.