In short: A tax-free investment, usually called a tax-free savings account (TFSA), lets you invest up to R46,000 a year from 1 March 2026 (it was R36,000 before that) and R500,000 over your lifetime. All interest, dividends and growth inside it are tax free, and so are withdrawals. If you go over either limit, SARS adds 40% tax on the excess. The limits apply across all your TFSAs together, not per account. This is general information, not financial advice.
The limits for 2026/27
| Limit | Amount |
|---|---|
| Annual contribution (from 1 March 2026) | R46,000 |
| Lifetime contribution | R500,000 |
| Penalty on excess contributions | 40% of the amount over the limit |
The annual limit has changed over the years: R30,000 in the 2016 and 2017 tax years, R33,000 from 2018 to 2020, R36,000 from 2021 to 2026, and R46,000 from the 2027 tax year (which started on 1 March 2026).
Any part of the annual limit you do not use is lost. It does not carry over to the next tax year.
How the lifetime limit works
The R500,000 counts what you put in, not what the account grows to. Growth does not use up your limit. At R46,000 a year, someone starting from zero reaches R500,000 in about 11 years.
If you have been investing since 2015, add up your contributions. SARS’s own example shows a person who invested the maximum every year from 2016 reaching R421,000 by the 2027 tax year, with only R79,000 left.
Withdrawals do not give your limit back
You can take money out at any time (some fixed-term products have notice periods), and withdrawals are tax free. But a withdrawal does not create new room. If you put in R46,000, take out R20,000 and put R20,000 back in the same tax year, SARS counts R66,000 in contributions, and the extra R20,000 is taxed at 40%.
Transfers between providers
You can move a TFSA from one provider to another without it counting as a new contribution, but it must be a direct transfer between providers. If you withdraw the money and deposit it yourself, it counts as a withdrawal and a new contribution.
A TFSA cannot be used as a transactional account, so debit orders, stop orders and ATM withdrawals are not possible.
What you can invest in
Tax-free investments are offered by banks, asset managers, insurers and investment platforms. Options include:
- Bank savings accounts and fixed deposits: low risk, but growth mostly tracks interest rates.
- Unit trusts: money market, balanced or equity funds.
- Exchange-traded funds (ETFs): low-cost funds that track an index, available on platforms such as EasyEquities.
Certain endowment policies and linked investment products can also qualify. For long-term money, the tax saving is worth most on growth assets like equity funds, because that is where the biggest returns usually build up.
Who a TFSA suits
- People saving for goals five years or more away.
- Anyone who has used up their retirement annuity deduction or wants access to the money before retirement. See retirement annuity vs TFSA.
- Parents saving for children. A child can have their own TFSA, but contributions use up the child’s own lifetime limit.
It is less suited to an emergency fund you will dip into often, because each withdrawal permanently uses up limit.
Common mistakes
- Holding TFSAs at two providers and going over R46,000 in total.
- Withdrawing and re-depositing in the same year.
- Paying high fees that cancel out the tax benefit. Compare total costs.
- Keeping long-term money in cash when it could be in growth assets.
What to confirm before you invest
- How much you have already contributed this tax year and in total since 2015.
- The provider’s fees and minimum contribution.
- Whether the product has notice periods or penalties for early withdrawal.
New to investing? Start with our beginner’s guide to investing in South Africa.
Last checked: 16 October 2026. Limits are as published by SARS for the 2026/27 tax year (1 March 2026 to 28 February 2027). This article is general information and not financial advice. Speak to a registered financial adviser before you invest.