What is a TFSA and Should You Have One?
By
Revo Capital Team What is a TFSA?
A Tax-Free Savings Account (TFSA) is exactly what it sounds like: a savings or investment account where the growth - whether through interest, dividends, or capital gains - is completely tax-free.
That means no tax on withdrawals, no tax on returns, and no penalties (as long as you stay within your limits). It’s a flexible, powerful way to save for short- or long-term goals without handing a slice to SARS.
How does it work?
Each year, you’re allowed to contribute a set amount to your TFSA — currently R36,000 per year, with a lifetime limit of R500,000.
The best part? You can invest that money, not just leave it in a savings account. Think unit trusts, ETFs, or other investment vehicles — and all growth remains untaxed.
TFSA vs Traditional Savings
Here’s where a TFSA shines:
- No tax on withdrawals
- No tax on capital gains or interest earned
- No restrictions on how or when you access your money
Compare that to a traditional savings account, where your interest is taxable and returns are modest - TFSAs often come out ahead, especially over time.
Why it matters
In a world full of complicated financial products, the TFSA is refreshingly straightforward. It’s one of the easiest ways to grow your money - tax-free. Whether you’re just starting out or saving toward something big, it’s a smart “yes” in your financial plan.