In 2015 National Treasury introduced the SA Tax Free Savings Account. The reason was to encourage South African’s to save save and save some more. Many people have taken up this opportunity.
How to make the most of a Tax Free Savings Account:
Top up your retirement funding or save towards your long-term goals without using a retirement annuity which does have limitations. TFSA’s do not have the same rules that apply to retirement funding products, your funds can be withdrawn any time and without tax payable on the proceeds, whereas retirement annuities and pension funds you are limited to the amount you are able to withdraw as a lump sum (one third) and if your lump is over a certain amount you are taxed according to sliding scales. YOu do however not receive the tax deduction with a TFSA which you do with your retirement annuity or pension fund.
Save for your children, in their names. Your children can take out tax free savings account, obviously with your signature. Birthday money or pocket money can be deposited on an adhoc basis. With my children I encourage them to save atleast 50% of their pocket money, the TFSA has worked well for this.
TFSA vs traditional savings accounts: TFSA’s do not attract Capital Gains Tax, Dividend Tax nor Income Tax, making the compounded effect of your investment meaningful, even in low risk portfolios or funds including Money Markets accounts.
Maximum investment for the year: R30 000.
Contact PWH Wealth Group to top up your TFSA or take out one for yourself or your children.