SARS interest/dividends exemption

[abudabi]

Interest and Dividends

Interest from a South African source earned by any natural person is exempt, per annum, up to an amount of: R23 800

Scenario:
I have transactional accounts with tymebank and nedbank.
For the financial year, I received interest as follows: Tymebank : R1000 & Nedbank : R800 (cumulatively for the year)
I have a 100k in a tymebank goalsave at 9% which gave R9000 interest for the year (assume full year and no notice)

So.. total interest received for the year is thus R10 800. Does that mean I can still pump more cash into "normal" investments (to the tune of R13 000 worth of generated interest) before I need to consider a TFSA? Raason I'm asking this is because there are other options that will give better returns than a TFSA but obviously don't want to get taxed on it.

Thanks

 

[Speedster]

Interest and Dividends

Scenario:
I have transactional accounts with tymebank and nedbank.
For the financial year, I received interest as follows: Tymebank : R1000 & Nedbank : R800 (cumulatively for the year)
I have a 100k in a tymebank goalsave at 9% which gave R9000 interest for the year (assume full year and no notice)

So.. total interest received for the year is thus R10 800. Does that mean I can still pump more cash into "normal" investments (to the tune of R13 000 worth of generated interest) before I need to consider a TFSA? Raason I'm asking this is because there are other options that will give better returns than a TFSA but obviously don't want to get taxed on it.

Thanks

In terms of tax free interest, yes. Your first R23800 interest is tax free each year. As long as the other investments provide genuine interest, you're good. If the return on the other investments is dividends, profit share etc then it'll be taxed from the get go.

 

[newby_investor]

If you're investing your TFSA allocation in interest-bearing things, then either you've misunderstood the point, or you're old, approaching retirement and don't want to take risks.

Put the high-risk, high-growth stuff in your TFSA. I only have off-shore equity and property exposure in mine. Leave it there for 30-40 years to let it grow as much as possible and make maximum use of the no-tax thing.

If you've got enough interest-bearing investments that you are running into the tax threshold then you need to put some of that money in equities or property.

Don't be too afraid of tax. Minimise your tax bill, yes, but don't avoid paying taxes so much that you actually avoid growing your investments. If you're paying more tax, it means you're making more money.

 

[zerocool2009]

To be safe, Speeder is correct with the R23800, but investments outside RA's and LISP's also have an interest leg (which aint taxed per month) if it is interest bearing funds.

This includes :
Money Market accounts
Notice accounts
Interest bearing funds
Saving accounts

You will get a ITB(3) certificate for every investment / savings account. Add all the interest up, and use that as the year's interest earned, as simple and easy as that

 

[abudabi]

If you're investing your TFSA allocation in interest-bearing things, then either you've misunderstood the point, or you're old, approaching retirement and don't want to take risks.

Put the high-risk, high-growth stuff in your TFSA. I only have off-shore equity and property exposure in mine. Leave it there for 30-40 years to let it grow as much as possible and make maximum use of the no-tax thing.

If you've got enough interest-bearing investments that you are running into the tax threshold then you need to put some of that money in equities or property.

Don't be too afraid of tax. Minimise your tax bill, yes, but don't avoid paying taxes so much that you actually avoid growing your investments. If you're paying more tax, it means you're making more money.

Cool.. but all the TFSA stuff I'm seeing returns max 7-8% or so. Other interest bearing accounts items return more than that hence my question.

What other tax free investment vehicles are there that offeres dbl digit returns?

 

[Speedster]

Cool.. but all the TFSA stuff I'm seeing returns max 7-8% or so. Other interest bearing accounts items return more than that hence my question.

What other tax free investment vehicles are there that offeres dbl digit returns?

Mcsi world has given great returns since inception about 5 years ago. You open an account at easy Equities (you can even use my reference number ) and then buy the ETF's (or equities) of your choice

 

[zerocool2009]

Cool.. but all the TFSA stuff I'm seeing returns max 7-8% or so. Other interest bearing accounts items return more than that hence my question.

What other tax free investment vehicles are there that offeres dbl digit returns?

The biggest tips I can give you related to TFSA's:

1) Stay away from BANK's
2) Make sure no monthly fee charge
3) Make sure if you want to move (you can just move the non cash value) -> meaning, dont sell and buy again

 

[newby_investor]

Cool.. but all the TFSA stuff I'm seeing returns max 7-8% or so. Other interest bearing accounts items return more than that hence my question.

What other tax free investment vehicles are there that offeres dbl digit returns?

Your crystal ball is likely as good as mine, friend.

In this game you have to be in it for the long term.