Maximise your tax-free investments in the 2024/2025 tax year

While the tax benefits of tax-free investments are indisputable, a tax-free investment should be viewed as part of your overall investment portfolio to ensure that it is achieving its purpose.

Tax-free investments provide tax benefits in that all the growth and income received on the investment are tax-free. This means that you are not liable for any capital gains tax, dividends withholding tax or tax on the interest received. However, keep in mind that your contributions towards your tax-free investment are made with after-tax money, meaning that no tax deduction is available on your contributions .

Although tax-free investments are not necessarily intended as retirement funding vehicles, you can use yours to supplement your retirement savings. However, should you be earning below the tax threshold , they do make very effective investment vehicles to build wealth over the long term. Legislation allows you to invest up to R36,000 per year towards a tax-free investment, with the maximum lifetime contribution being R500,000.

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