What is a Tax-Free Savings Account?

Tax-Free Savings Accounts (TFSAs), which were introduced in South Africa in 2015, provide tax benefits to turbocharge your savings and grow your investments tax-free. Savers are not liable for any capital gains tax, dividends withholding tax, or tax on interest received. Legislation allows you to invest up to R36,000 per year, or R3,000 per month, towards a TFSA, with the maximum lifetime contribution of R500,000. You can choose the investments you include in your TFSA, such as a money market fund or a unit trust investment. 

A TFSA also gives flexibility as you do not have to commit to making future contributions. You can withdraw funds any time you choose, but it is not advisable as the real growth will come over time. Also once you have used those limits (annual or lifetime allowances) you cannot replace funds you have withdrawn.

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