Skip to content

Saving

Understanding tax-free savings accounts

The return inside a tax-free investment is not taxed. The contributions are capped, and a withdrawal does not give the cap back.

Reviewed 28 October 2026 by the WiT Money editorial team. This is general information, not a recommendation from a named adviser.

Tax-free investments were introduced so households could save without tax on the interest, dividends and capital gains inside the account. They are available to natural persons, including children. The limits apply per person, across every account that person holds.

From 1 March 2026 the annual contribution limit is R46 000. The lifetime limit is R500 000. SARS confirmed the increase from R36 000 in the 2026 Budget. These figures were checked on the SARS website on 28 October 2026. Unused annual room is forfeited. It does not roll forward.

The penalty

Contribute more than the annual limit, or more than the lifetime limit, and SARS charges 40% of the excess. In the SARS example, R50 000 contributed in a year with a R46 000 limit creates a R4 000 excess and a R1 600 penalty. Your providers cannot see each other's accounts. The total is your job.

Withdrawals

You may withdraw. The withdrawal does not restore contribution room. If you put the money back, it is a new contribution. Growth inside the account is not a contribution. Taking the growth out and paying it back in is.

Cash or investments

A tax-free bank account holds a deposit. A tax-free investment account holds funds that can fall. The tax rule is the same. The risk is not. Do not put the house deposit you need in six months into an equity ETF because the account is tax-free.

Questions readers ask

Should I use the full R46 000?

Only if the money is genuinely spare and you will not need to withdraw it. Hitting the cap and then withdrawing it wastes lifetime room.

Can I open one for my child?

Yes. It uses the child's lifetime limit, not an extra one for you. That can be generous or it can use up a limit the child might have wanted later. It is their limit.

Related

Sources

Page updated 28 October 2026. A source date is the day WiT Money checked that page, not a promise the institution has not changed it since.