Tax-free investments were introduced by government in 2015 to encourage South Africans to save more. These investment accounts allow you to grow your money without paying tax on the returns.
You don’t pay income tax, dividends tax, or capital gains tax on earnings from a tax-free investment.
Contribution limits
- You can invest up to R36 000 per tax year.
- The lifetime limit is R500 000 per person.
- If you exceed these limits, you will be taxed on the extra amount.
Note: The annual contribution limit was increased from R33 000 to R36 000. Always check the SARS website for the latest limits.
What types of investments qualify?
Only certain financial products can be offered as tax-free investments, including:
- Fixed deposits
- Unit trusts (also known as collective investment schemes)
- Certain endowment policies from long-term insurers
- Linked investment products
- Exchange Traded Funds (ETFs) classified as collective investment schemes
You cannot convert an existing investment account into a tax-free investment. You need to open a new, designated account.
How to open one
You can open a tax-free investment through:
- Your bank
- Insurance providers
- Investment firms
- Registered financial advisors
Ask whether the product they offer is a registered tax-free savings or investment account.
Need more information?
For full details and updates on tax-free investments, visit the SARS website
You can also:
- Call the SARS Contact Centre on 0800 00 SARS (7277)
- Visit your nearest SARS branch.
