In May last year we discussed the new Tax Free Savings Accounts (TFSA) that were announced in the 2015 budget speech.
The TFSA is for SA residents only and is useful as a long term savings vehicle, as withdrawals cannot be replaced by new savings. The funds chosen should therefore be aimed at long term growth.
To see our May 2015 Ascent Adviser, which explains how TFSA’s work, you can do so by following this link:Ascent Adviser | Tax Free Savings Accounts
Our advice is that if you are already saving your maximums into your pension funds and retirement annuities, then you can supplement those savings with a TFSA. The TFSA is also useful if you want to save money for your children or grandchildren as the R30,000 investment limit per year would apply to them and not to the individual putting the money into the account. You may need to consider donations tax limits.
Allan Gray have launched their TFSA which has a good fund choice and, unlike other TFSA’s, is structured as a life policy, so it is free from executors fees (up to 4%), if you have nominated dependents. Your estate will still however pay estate duty.
If you would like to set up an account, please let us know. The R30,000 annual limit is per tax year, so you could invest R30,000 before 29 February 2016 and then another R30,000 in the new tax year.