Do you have any queries about Smart Invest? If you don’t find the answers below, you’re welcome to contact us.

What is a tax-free investment?

National Treasury has introduced tax-free investments to encourage people to save. The investment return earned on a tax-free investment isn't taxed and the money in a tax-free investment can be withdrawn at any time.

Why save in a tax-free investment?

  • A tax-free investment is an effective way to save for your goals. Any interest, dividends or capital gains from your tax-free investment will be tax-free. This means that you don't pay tax on the growth on your investment.
  • Your money can grow faster in a tax-free investment than in a regular savings account because you don't pay tax on the investment return.
  • Saving in a tax-free investment gives you flexibility as you don't have to commit to any future contributions. You can withdraw from your investment at any time. However, withdrawing funds may prevent you from reaching your savings goals and will use up part of your lifetime limit for tax-free savings.

How much can I save in a tax-free investment?

National Treasury has put limits on the amount you can save in a tax-free investment. The total annual contribution in one tax year may not exceed the annual contribution limit, which is currently R33 000 per tax year. The total lifetime contribution may not exceed R500 000. Make sure you keep track of how much you've paid so that you don't exceed your limit across all approved tax-free investments (at Sanlam Investments or other providers).

Can I have more than one tax-free investment?

Yes. There is no limit on the number of tax-free investments you can have. Make sure your annual payments across all approved tax-free investments (at Sanlam Investments or other providers) do not exceed the annual contribution limit.

What happens if I invest more than R33 000 per year in tax-free investments?

Any contribution over R33 000 per tax year or R500 000 over a lifetime is taxed at 40%, so you would need to monitor your contributions closely.

Can I transfer a tax free investment from one provider to another?

No transfers between tax free investment providers is allowed as yet. National Treasury intends to expand the Regulation to allow individuals to transfer any amount in a tax free savings and investment account from one institution or product provider to another.

What if I’m an existing client with Sanlam Investments?

The final Regulations provide that a client may not convert existing investments into a tax free investment. National Treasury is investigating the possibility and any changes will only be finalised later this year.

What is the impact of withdrawals?

Although allowed, withdrawing may not be a great idea. For example, if you invested R20 000 and then withdrew R20 000 in the same tax year, you would only be able to contribute an additional R13 000 in the same tax year before reaching the R33 000 annual contribution limit.

Can I open an account on behalf of a child?

Yes, you can open a tax-free account in the name of your children and sign the application on their behalf, if they are minors. By doing this you will be using part of their tax-free allowance, which limits their ability to save for themselves via this type of product later on. Also be careful of donations tax if you donate more than R100 000 per year. You need to declare the amount that you invested in your child’s account in your tax return.

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