Stakeholder Member Login
By Brent Jones, Specialist in the Collective Investment Schemes Department of the Financial Sector Conduct Authority (FSCA) and Alicia Pillai, Content Development Specialist in the Consumer Education Department of the Financial Sector Conduct Authority (FSCA). (May 2018).
1) What is tax-free savings?Is when you save a certain amount of money in a savings product like a bank account and the money in the bank account will not be taxed as long as it is within a certain limit. Tax-free savings accounts (TFSA) are savings products on which no income tax, capital gains tax or dividend withholdings tax (DWT) will be charged.
2) What financial products can be considered as TFS vehicles? Most Collective Investment Schemes/Unit Trusts, Exchange Traded Funds (ETF), savings accounts, term deposits and RSA Retail Savings Bonds meet the requirements to be classified as a TSA.However this is not to say that all the above investments are available as TFSA.
3) How does one get involved?TFSA can be access directly or via intermediaries (financial advisor) who can recommend a few TFSAs to you. TFSA are available from the following types of Financial Service Providers (FSPs):
a) CISs;b) An administrative FSP;c) Banks;d) Long-term Insurance Companies;e) Stock Brokers; andf) National Government Departments.
4) 5 Things you should know about tax-free savings? i. Initially the tax free savings limit for a year was set at R30 000. This has been increased to a maximum of R33 000 that can be invested annually, tax free; Remember this does not mean you can save R33 000 in many savings products. It means that the total savings from all your savings products must amount to R33 000. ii. A maximum of R500 000 can be invested over an investors life time, tax free;iii. Contributions in excess of the annual and lifetime maximums will be taxed as 40% of the over contribution, for example if you save R45 000 in total in this financial year (1 March 2018- 28 February 2019), you will be taxed 40% on the difference which is R45 000 –R33 000= R12 000. On the R12 000 you will be taxed 40% will be R12 000-40% (R4800) = R7200. R4800 will go to the South African Revenue Service. iv. No Performance Fees are chargeable to a TFSA. This means that companies who hold the savings products and your money cannot charge you the client performance fees if the money performs well in various investment instruments. v. If you save R33 000 today and 6 months later you withdraw the money. And you save another R33 000 within that year. You will be taxed 40% on the second R33 000.
5) How can I get a Tax-Free savings product?You can contact your financial advisor or one of the FSPs identified as an issuer of TFSA. For a list of authorised financial services providers please call 0800 20 FSCA (3722) or visit www.fsca.co.za.
6) Who can I complain to if I am not happy with my tax free savings product?In the even that you are not 100% satisfied with the product, service or anything in between, the first option would be to lodge your dissatisfaction directly with the FSP you have invested your money with. This will need to be done in writing to the FSP. The FSP will need to respond to you formally.
Following the above, should you not be satisfied with the outcome of the interaction with the FSP the following steps are also available to you:
a) Lodge a formal complaint with the Financial Sector Conduct Authority (FSCA); or b) Lodge a formal complaint with the relevant Ombudsman’s office.
For a list of ombudsman click here https://www.mylifemymoney.co.za/Pages/UsefulLinks.aspx