Please enable JavaScript.
Coggle requires JavaScript to display documents.
TAX-FREE INVESTMENTS (S12T) - Coggle Diagram
TAX-FREE INVESTMENTS (S12T)
🌿 1. What are Tax-Free Investments?
Governed by Section 12T of the Income Tax Act
financial products approved under s12T
e.g. Fixed deposits,Retail Bonds,Mutual Funds, ETFs
Purpose: Encourage savings culture in South Africa
No tax on:
Interest
Dividends
Capital gains
Investment growth is tax-free.
⚠️ 6. Penalties
40% tax on excess contributions payable to SARS
:arrow_up:
:arrow_upper_left:
SARS levies the penalty.
Penalty applies only to the excess amount.
Excess contributions still count towards the lifetime limit.
✅ 3. Exemptions
100% Tax-free local & foreign dividends
0% Capital Gains Tax (CGT) upon asset disposal
100% Tax-free local interest
Investment growth is exempt from normal tax.
❌ 4. Exclusions
Re-contributions of any withdrawn funds count as new contributions
Legal entities (Companies, CCs, Trusts barred from use)
Unused annual limits cannot be rolled over to next year
Non-approved investment products.
Excess contributions do not qualify for the tax-free benefit.
Withdrawals do not increase contribution limits again.
📏 5. Limitations
Lifetime limit: R500 000 max per lifetime
Annual cap: R36 000 max contribution
Growth does not count towards the limits.
Limits apply across all tax-free investment accounts.
👤 2. Who Owns Tax-Free Investments?
Natural persons only (individuals)
Accounts can be opened for minor children
Each individual has their own contribution limits.
Contributions to all TFIs are combined.