Hardly the cry of the ‘colonies’ prior to the American War of Independence, I know, but the thought of anything being tax-free makes me giddy with excitement.

When it feels like so much of our hard-earned money is swallowed by tax, what with VAT, Income tax, ‘sin tax’, sugar tax, import duties, capital gains tax, PAYE, Transfer Duties and Estate Duties, it is hard to believe that we have enough left over to even pay attention.

Back in 2015 the South African government introduced the Tax Free Savings Account (TFSA) as part of non-retirement savings to help maximize tax relief. Possibly not the route I would take but let us be honest, we take what we can, when we can.

So, what makes this financial instrument so wonderful?

Well… All proceeds, which includes interest income, capital gains and dividends from these accounts, are tax free. That’s right. TAX FREE!

Sadly, there are limits to how much you can contribute into these beautiful little gems. You are only permitted to invest R36,000 per year into your TFSA with your lifetime allowance maxing out at R500,000. But the great thing is that for as long as that investment is in place, all growth is free from taxation.

Besides the fact that the TFSA enjoys a hand-off stance towards the tax man, it also boasts that performance fees are also not allowed to be charged on these accounts, but there are other fees such as management fees, commissions, etc., so make sure that you look for the lowest possible charges when choosing your TFSA provider.

These TFSA’s are not transactional so if you do remove money from a TFSA, you essentially reduce the maximum investment cap down by the amount you have pulled out, so only withdraw as an absolute last resort.

TFSAs make excellent savings vehicles for education and smart parents should open a TFSA account in the name of a child as soon as possible after birth. A family of four could be saving as much as R144 000 a year in tax-free savings.

Young people starting to save may also find such accounts useful for long term savings. For example, if a 25-year-old invested R36 000 each year in an interest-bearing bank account, by the age of 65 they would have just more than R1.8million after tax. In comparison, a tax-free savings account with the same interest rate would be worth R3.24milion, because no tax is payable.

It is a no-brainer.

On a closing note, in my shopping around for low charge TFSA options, I stumbled upon an excellent option offered by a boutique investment firm in Cape Town called Walt Capital Management. Their TFSA fees are low and their returns are currently sitting at around 1% per month which compounds to a lovely annual return. You can find out more at, alternatively give me a shout for more guidance at

Steve Hughes is an independent financial specialist and the founder of the PLATINUM EDGE financial model.

About The Author

Steve Hughes is an independent financial advisor specialising in personal and business solutions. He has a passion for empowering people through better understanding and has created a fresh and highly sought-after approach to financial planning. He is the founder of the PLATINUM model of fringe financial services and the PLATINUM EVENTS, and you can catch him on LIFE MATTERS, OneFM 94.0’s weekly business & finance show which he produces and presents. As a private wealth consultant and business owner, his approach to personal and business consulting is industry leading, and it is his desire to reshape the financial service world that drives his passion. Steve can be reached at

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