TAX FREE SAVINGS ACCOUNT


  • You don’t have to pay income tax on the interest earned on this account – so it may be a good investment for you if you already earn interest above the tax-free threshold, or if you expect your savings to attract interest above this threshold at some time in the future.
  • You can only contribute a maximum of R33,000 per year* to tax free savings or tax free investment accounts (*South African Individual Tax Year - 1 March to 28 February).
  • Any portion of unused annual limit is forfeited (that is, it is not carried forward to the new tax year).
  • There is currently a lifetime limit of R500,000 per person.
  • If a person exceeds their contribution limits, there is a penalty of 40% of the excess contribution. For example, if person X contributes R38,000 to tax free investment accounts in a year – exceeding the annual limit by R5,000 – he or she will have to pay 40% of R5,000 (= R2,000) to SARS. The GBS cannot monitor contributions that you are making to tax free savings or investment accounts held with other institutions.
  • The capitalisation of interest within the account does not count against the annual or lifetime limit. For example, if you invest R33,000 for the year and receive interest of R2,310, which you have chosen to capitalise, the total amount in the account will be R35,310. The following year, you will still be able to invest your full R33,000 for the year into a tax free savings account, as well as receiving interest on the balance that has already accumulated in the account.
  • However, where a person withdraws the returns and reinvests the same amount, that amount is regarded as a new contribution and impacts on both the annual and lifetime limits.
  • Parents can invest on behalf of their minor children. These investments will count against the minor child’s own annual or lifetime limits.
  • Deposits made into a GBS Tax Free Savings Account opened in the name of a minor, cannot be withdrawn until the minor reaches the age of 18.
  • Debit or stop orders will not be possible from these accounts.
  • Tax free investment accounts cannot be used as transactional accounts. You must give the GBS notice of any withdrawal at least 7 business days in advance, and this notice must specify a withdrawal amount and date.
  • The GBS will charge you a withdrawal fee of R300 per withdrawal.
  • The GBS will waive this withdrawal fee when the account has had cumulative contributions exceeding R60,000, and provided there have been less than 4 prior withdrawals in the current tax year.
  • The GBS Tax Free Savings Account pays interest monthly, and you can elect to have the interest capitalised within the account (to take advantage of future tax-free interest on these compounded returns), or you can have the interest paid out monthly to a different account.
  • The GBS Tax Free Savings Account has a variable, prime-linked interest rate equal to prime minus 3.5% (- so right now, that means 7.00%, tax free, based on the prime rate at time of publication).