• Your money can grow faster in a tax-free savings account compared to a regular savings account because you don't pay tax on the investment return.
• A tax-free savings account is therefore an effective way to save for your goals, because any interest, dividends or capital gains from your tax-free savings account will be free of tax.

Saving in a tax-free savings account gives you flexibility as you don’t have to commit to any future contributions. You can withdraw from your investment at any time. Withdrawing funds, however, may prevent you from reaching your savings goals, and will use up part of your lifetime limit for tax-free savings.

Contributions to a tax-free savings account are made from post-tax income. A tax-free savings account is therefore an effective way to save for your goals, because any interest, dividends or capital gains from your tax-free savings account will be free of tax.

No tax is payable on withdrawals.

National Treasury has put limits on the amount you can save in a tax-free savings account. The total annual contribution in a tax year may not exceed the annual contribution limit, which is currently R36 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 savings accounts (at Sanlam or other providers).

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

The effect of compound interest, or earning investment return on investment return, is increased in a tax-free savings account due to the tax relief on the investment return. The longer you invest the more benefit you will get.

If you invest more than the annual contribution limit stipulated by National Treasury, SARS will impose a tax penalty of 40% on excess contributions. To avoid penalties, make sure that your annual payments across all approved tax-free savings accounts (at Sanlam or other providers) stay below the limits.

It is compulsory to disclose the investment information when submitting your annual tax return. You will need to submit the IT3(s) statements provided by Sanlam or other providers to SARS when requested. Sanlam will also submit the information to SARS electronically.

The South African tax year runs from 1 March to 28 February of the next year.

Yes, you can apply for a Tax-free Investment on behalf of your child or other family member, but keep in mind that you will be using part of their tax-free allowance, which may limit their ability to save for themselves via this type of product later. Money withdrawn can only be paid out into a bank account which is in the family member’s name. Be careful of donations tax, if applicable.

A tax-free savings account can only be opened for an individual. You can open one for each individual in a family, but cannot open one in the name of a trust or a company.