FinancialAdvisor
New Member
No, it doesn't. Only an actual contribution from the client is seen as using the annual allowance. Basically the 12 month fixed period began again. Nothing to worry about.
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advice on TFSA
- Thread starter maqsmaqs
- Start date
No, it doesn't. Only an actual contribution from the client is seen as using the annual allowance. Basically the 12 month fixed period began again. Nothing to worry about.
Wrote an article about the importance of TFSAs
https://platinumwealth.co.za/insights/investing/the-importance-of-a-tfsa-tax-free-savings-account/
https://platinumwealth.co.za/insights/investing/the-importance-of-a-tfsa-tax-free-savings-account/
Not_original
Expert Member
This is a bit of a necro but I have a question. Say you have reached the 500k total limit of contributions, in time it had grown to be about R900k. Upon withdrawing is that entire R800k also exempt from tax or is CGT payable on it? Does the annual max contribution increase with inflation?
backstreetboy
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Yes and no it only increases when Tito Mboweni say it does.
Not_original
Expert Member
Awesome thanks
Mista_Mobsta
Expert Member
This should give you a good grounding in TFSA: TFSA SARS
I am working in South Africa on a critical skills visa and I pay tax as a non-South Africa tax resident (only taxable on SA income). I want to buy ETFs into a TFSA account on EasyEquities. Does anyone know whether I am eligible to open a TFSA account in South Africa?
Speedster
Honorary Master
If you are considered non-resident for tax purposes, what would you gain from a TFSA? Would a normal investment account be taxable?
newby_investor
Executive Member
My wife is in a similar position. You need at minimum an ID number, which you won't have at this stage.
I forget whether it's available to permanent residents or just citizens, but Easy Equities have pretty good documentation so you can check there.
Yes, a normal account would be taxable and not the TFSA one. One drawback I see is the possibility of losing a long-term investment goal since this is not my 'permanent residence'.
They do have requirements for their normal ZAR account which seems I am eligible for but I do not see something similar for TFSA. If you have a link to their documentation stating requirements for TFSA, please do share
newby_investor
Executive Member
Actually after you asked, I went searching and couldn't find.
I also looked through SARS website but didn't have any luck. You may have to contact their support people directly.
TStringList
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Is it still worth investing in a TFSA if you're planning on leaving SA in the next 3-5 years?
At worst, it's harmless. At best, it might save you some CGT or interest tax depending on how much money you have.
TFSA is meant to supplement pension savings and is a long term investment targeting retirement but provides a more reasonable 'breakglass' option in case of extreme emergency, you would probably be best served purchasing the currency of the country you plan to leave to if you will be gone in under 10 years
newby_investor
Executive Member
Based on what you said, would purchasing ETFs in my TFSA (tracking international indexes) be a good option for my rainy day fund? I'm in the same boat where I don't plan on staying in SA in the long-term but I need a place for my rainy day fund. A lot of people have recommended TymeBank but this is only available for SA citizens and PR holders, which I'm neither. Interest rates in the bigger banks suck at the moment.
newby_investor
Executive Member
If you're not a citizen or PR, I'm not sure whether you'll be able to open a TFSA either.
Maybe you will, but I am not sure.
I finally managed to open a TFSA account with EasyEquities but I'm yet to transfer funds into it. I also found this old article mentioning "Foreigners can make use of this opportunity if they are residing in South Africa and have a valid passport, proof of residence and a local bank account."
It seems like I can use a TFSA account. I want to have a mix of bank deposit and ETFs in my TFSA for my rainy day fund, and offshore-based assets like you suggested for the excess. Not sure if this is a good idea.
newby_investor
Executive Member
IMO there's not a lot of reason to keep rainy-day funds in a TFSA. You ideally want to make maximum use of the no-tax on the growth of your assets there.
Rainy-day funds that you may need to withdraw immediately if there's an emergency should be kept in a place that is more easily liquid. So the ideal place for many people is a bond if you have one, or a money-market account with your usual bank. Tyme can fit the purpose but all the big banks have savings options.
If those weren't available for whatever reason, but an Easy Equities account was, then what I'd do is invest in NFTRCI on the normal ZAR account (i.e. not the TFSA). That's just an ETF which invests in the major banks fixed deposits and you get the interest from that. So it's effectively a money-market account in an ETF disguise.
I keep my TFSA for money that I intend to grow for long-term (in my case supplementing my work pension). I keep it in offshore funds, (especially if I weren't planning on staying in South Africa for a long time). Unlike a pension / retirement annuity, funds can be withdrawn at any time, but I have not done so and don't intend to unless it's a real emergency.
(Usual disclaimers, I'm not licenced to give financial advice, this is just some info about what my approach is and what I'd do if I were in your shoes.)