TFSAs: the basics
Whether it’s for your retirement or the wedding you’ve always dreamed of, using a tax-free investment will help you get to your goals faster
On 1 March 2015 the regulations that allow for tax-free savings accounts were introduced. South Africans are able to save up to R30,000 a year in designated tax-free savings accounts (TFSAs). Alifetime limit of R500,000 of contributions also applies, which would take about 17 years to reach if you contributed the fullamount each year. Savers can withdraw at any time but that does not affect the limits: new contributions are still subject to the annual and lifetime caps.Regulations also cover what kinds of accounts can qualify as TFSAs and how they should be managed. Broadly, the rules ensure that TFSAs are low cost, do not take on excessive risk and provide maximum flexibility for savers to be able to withdraw or switch between accounts.Qualifying productsThe regulations stipulate that qualifying products should be simple to understand and transparent in their disclosure. They may have no restrictions on the level of returns paid to theindividual or on when returns are paid out. Per...