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TAX FREE SAVINGS GENERAL FAQs

FREQUENTLY ASKED QUESTIONS

  • What is meant by a tax year for individuals?A tax year is different from a calendar year as it starts on the 1st day of March and ends on the last day of February the following year.
  • What is the tax year contribution limit for an individual?Currently you are allowed to contribute a maximum of R30 000 each tax year into any Tax-Free Savings Account(s) that you own. This limit is governed by law and may change over time with inflation.
  • What is the lifetime contribution limit for an individual? Currently you are allowed to contribute a maximum of R500 000 in your lifetime into any Tax-Free Savings Account(s) that you own. This limit is governed by law and may change over time with inflation.
  • Is there a restriction on the number of accounts I can hold?Tax-Free Savings Accounts can be held at one or more qualifying institutions. At RMB Private Bank you are allowed to hold all Tax-Free Savings Account product choices. You can choose the Tax-Free Cash Deposit, Tax-Free Unit Trusts and the Tax-Free Shares Account. However, contribution limits will not be monitored at a customer level if more than one product choice is selected. It is your responsibility to monitor your annual tax year contribution limit as well as the lifetime limit.
  • Will current interest exemptions remain?Yes, current interest exemptions will remain however they will not be increased with inflation.
  • Can the value of my account exceed R500 000?Yes, the limits only apply to your contributions. The value of your account (after growth/earnings) may exceed R500 000.
  • What happens if I contribute more than the prescribed tax year and lifetime limits?If your contributions are more than the prescribed annual limit per tax year and lifetime limit, you will be liable to pay a penalty of 40% on any contribution amount that is over the prescribed limit.
  • When will the penalty for an over contribution to the prescribed limits take effect?The penalty described above will be levied by SARS on assessment for the relevant tax year and will be payable by you.
  • Who will monitor whether I am contributing more or less than the prescribed limits?It is your own responsibility to monitor how much you have contributed per tax year and in your lifetime into your Tax-Free Savings Account(s). FNB will not accept contributions into the Tax-Free Cash Deposit, Tax-Free Unit Trusts and Tax-Free Shares Account if they exceed the annual tax year or lifetime limits per account.
  • How are withdrawals treated on my account?Withdrawals can be made at any time, and are tax free. However, no replacements of withdrawals will be allowed. Withdrawals are not allowed into a 3rd party account and must be paid into your qualifying FNB transactional or cheque account. Where applicable, there may be a withdrawal fee for an early withdrawal.
  • Can I transfer my account?Any direct transfers between financial institutions or individuals (or estates) to another is not allowed until further notice. Funds withdrawn from a Tax-Free Savings Account and transferred into another Tax-Free Savings Account will be deemed as a contribution, and contribution limits will apply.
  • Will I have to pay any tax on my account?No tax will be levied on any of the interest received, dividends earned or the growth of the assets held.
  • What is the treatment of a Tax-Free Savings Account on your death?On your death the account will be added to the estate of the taxpayer for purposes of levying estate duty. While it is held in an estate, returns from the account will continue to be exempt from tax. Amounts within an account cannot be transferred to a beneficiary's Tax-Free Savings Account.
  • Do reinvestments or dividends count as a contribution?Reinvestments of returns or dividends will not count as contributions as long as they are not withdrawn and reinvested.
  • Whose responsibility is it to consolidate the account to SARS?It is your own responsibility to provide SARS with the necessary documentation for assessment.
  • Will my contributions into the account be monitored?Contribution limits into the Tax-Free Savings Account will be capped as per annual tax year and lifetime limits. You may contribute into the Tax-Free Cash Deposit, Tax-Free Unit Trusts and Tax-Free Shares Account. It is your responsibility to ensure that you stay within the limits if you hold more than one tax free product across institutions.
 
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