Investing is a powerful way to grow wealth—but if you’re not managing your taxes properly, a significant portion of your returns can be lost to SARS. That’s why tax-smart investing is not just a strategy—it’s a necessity.
In South Africa, there are several legal and effective ways to minimise tax on your investments and keep more of your money working for you. Whether you’re just starting out or managing a growing portfolio, this guide will help you understand the most important tax considerations—and how to structure your investments for maximum efficiency.
What it is:
A TFSA allows you to invest in cash, ETFs, unit trusts, or bonds—without paying tax on the interest, dividends, or capital gains earned.
Limits (2025):
R36,000 per year
R500,000 lifetime maximum
Why it matters:
A TFSA is perfect for long-term goals, especially for first-time investors or those saving for education, emergencies, or early retirement.
Pro tip:
Use TFSAs for assets with high growth potential (like ETFs), so you maximise the tax-free benefit over time.
What it is:
A Retirement Annuity is a tax-deductible investment product that lets you save for retirement while reducing your taxable income.
Deduction limits:
You can deduct up to 27.5% of your taxable income, capped at R350,000 per year.
Benefits:
Immediate tax savings
Protected from creditors
Deferred tax on growth until withdrawal
Pro tip:
Make top-up contributions to your RA before tax year-end (28 February) to boost your refund or lower what you owe SARS.
When you sell an investment (like shares or property) at a profit, you may pay Capital Gains Tax.
How it works (2025):
First R40,000 of gains per year is exempt
Only 40% of your capital gain is included in your taxable income
Effective CGT rate: 18% for individuals
How to reduce CGT:
Hold assets for longer (no CGT is triggered until sale)
Use your annual exemption wisely
Split ownership of investments between spouses, where applicable
Dividends:
Subject to 20% withholding tax (DWT), deducted before you receive the payout.
Interest income:
Exempt up to R23,800/year (under age 65) or R34,500 (over 65)
Beyond that, it’s added to your taxable income
Tip:
Interest-bearing accounts and funds are more tax-efficient for retirees or those with lower income.
Investing offshore (e.g. in US or European markets) may expose you to foreign withholding tax, and you’ll still need to declare these earnings to SARS.
How to stay tax-smart:
Choose funds that have Double Tax Agreements (DTAs) with SA
Keep detailed records of foreign income and capital gains
Use SARS eFiling to declare foreign investments correctly
If you own a small business or work freelance:
Invest through a trust or holding company for strategic tax planning
Use corporate investment vehicles to separate personal and business finances
Talk to a financial planner about passive income strategies within your business
South Africa’s tax landscape can be complex—and getting it wrong can lead to penalties, audits, or lost opportunities.
Avoid this by:
Partnering with a registered tax practitioner or CFP®
Reviewing your investments before year-end (28 Feb)
Attending webinars and workshops focused on tax planning for investors
A smart investor doesn’t just chase returns—they structure their portfolio to be tax-efficient, year after year.
The earlier you integrate tax strategy into your investing, the faster your wealth grows—and the more peace of mind you’ll have when SARS comes knocking.