TFSA growth within the limits and the tax it saves versus a taxable account.
Projected TFSA value
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Total contributed
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Tax-free growth
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Tax saved
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Your breakdown
Updates live as you type
Item
Amount
Worked example
Contribute the full R36,000 a year for 14 years at a 9% return, starting from zero. You might expect to put in 14 times R36,000, which is R504,000, but the R500,000 lifetime limit gets in the way. After 13 years you have contributed R468,000, leaving only R32,000 of lifetime room, so year 14 is capped at R32,000 rather than R36,000. Total contributions come to exactly R500,000. With 9% growth compounding each year, the account reaches about R1,016,633, so the tax-free growth is roughly R516,633, slightly more than everything you put in. Sheltering that R516,633 gain from the 18% maximum effective capital gains rate saves you in the region of R92,994 versus a taxable account.
Step
Amount
Years 1 to 13 at R36,000
R468,000
Year 14, capped to remaining room
R32,000
Total contributed (lifetime cap)
R500,000
Tax-free growth
R516,633
Projected TFSA value
R1,016,633
How it is calculated
A tax-free savings account shelters all interest, dividends and capital gains, so nothing inside it is ever taxed. Two limits govern how much you can put in: R36,000 in any one tax year and R500,000 across your whole life, summed over every TFSA you hold. The calculator applies both caps year by year, so once your running lifetime total nears R500,000 the annual contribution is trimmed to whatever room is left. Any rand contributed above a limit is penalised at 40%, which is why the running total matters more than any single deposit. The tax saving shown compares the sheltered growth against the capital gains tax a taxable account would have paid, using the 18% maximum effective individual rate as a benchmark.
Frequently asked questions
What are the TFSA limits in South Africa?
You may contribute up to R36,000 a tax year and R500,000 over your lifetime to tax-free savings accounts. All growth, interest, dividends and capital gains inside the account are tax-free. Contributions above the limits are taxed at 40% on the excess, so it pays to track your running total across every TFSA you hold.
What happens if I withdraw from my TFSA and want to re-contribute?
Withdrawals from a South African TFSA do not restore your annual or lifetime contribution room. If you withdraw R20,000 today, that R20,000 of lifetime room is permanently used up and cannot be replaced. This is a critical difference from some other countries, so it is best to keep funds inside the TFSA once invested rather than cycling money in and out.
How does a TFSA compare to a retirement annuity for building wealth?
A TFSA offers no upfront tax deduction but all withdrawals are completely tax-free and you can access the money at any age. An RA gives a tax deduction on contributions, which is valuable at high marginal rates, but funds are locked until age 55 and income drawn in retirement is taxable. Many investors use a TFSA for accessible medium-term goals and an RA for the long-term tax-deduction benefit.
Does the R500,000 lifetime limit apply across all TFSAs I hold or per account?
The R500,000 lifetime limit applies across all tax-free savings accounts you hold in total, not per individual account. SARS tracks the cumulative contributions made to every TFSA registered under your tax number. If you hold accounts at two different providers, the combined contributions toward your lifetime cap, so you need to monitor your total across all accounts.