Not using a tax-free savings account yet? Here's why you need one NOW

With the current tax year ending on 28 February 2022, now is the time to grab the opportunity to save for your future - and take advantage of your annual tax-free investment allowance.

You only have a few weeks left to save R36 000 tax free for this financial year. Don't miss out. Open a Discovery Bank Tax-Free Notice Savings Account today.

Save R500 000 tax-free in your lifetime

Did you know that in South Africa, you can save R500 000 in your lifetime without paying taxes on your investment? Without tax, you get more from a tax-free savings account. So, whether you're saving for a new car, a deposit on a house or a comfortable retirement, a tax-free savings account is a great way to save for your long-term goals.

What is a tax-free savings account?

Tax-free investments were introduced in 2015 to encourage South Africans to save more. You don't have to pay income tax, dividends tax or capital gains tax on the returns from these investments if you're within your tax-free contribution limits.

In the financial year from 1 March 2022 to 28 February 2023, you can save R36 000 in your tax-free savings account. The annual limit may change every year, so keep an eye on the SARS website for updates. It's important to remember that SARS will penalise you if you exceed these limits.

If you save under the annual limit, the unused amount won't roll over to the next tax year. These limits apply across all your tax-free savings and investments and not for each account. So, try to save the full R36 000 before 28 February 2022.

Closing date for switching your tax free

The closing date to transfer your tax-free funds from another institution to Discovery Bank is 20 February 2022. This is to allow us to correctly report the Transfer-in of your tax-free funds on your IT3s certificate for the 2022 tax year.

Grow your money with our Tax-Free Notice Savings Account

Discovery Bank's Tax-Free Notice Savings Account is ideal for saving towards your long-term goals, with the added benefit of not paying tax on any interest you've earned.

You can save from R1 000 and add money to your savings at any time, up to your annual limit. You don't pay any monthly banking fees and you'll earn 4.85% interest on your savings, tax-free. The interest you earn on your tax-free savings is not a contribution, so it doesn't affect your annual or lifetime limit.

Plus, you can also switch your existing tax-free savings at other institutions to Discovery Bank. The closing date to make the switch is 20 February 2022. Start enjoying the benefit of our competitive rates without impacting your contribution limits. Call us on 0800 07 96 97 to arrange your transfer.

Avoid withdrawing your money too soon

To benefit from compound interest, avoid withdrawing your savings. You can't top up or replace any funds you withdraw from your tax-free savings and investments because it already counted towards your annual and lifetime contribution limits.

For example, if you've saved R300 000 and you withdraw R200 000, your lifetime contribution will now be R300 000. This means you're only allowed to save another R200 000 tax free in your lifetime.

How to open a Tax-Free Notice Savings Account

You can open your free Tax-Free Notice Savings Account in as little as five minutes and manage your accounts easily in the Discovery Bank app. Haven't joined Discovery Bank yet? Sign up in under five minutes today.

Watch the video to learn how to open your account in the Discovery Bank app:

Learn more about saving with Discovery Bank.

This article is meant only as information and is not financial advice. For tailored advice, please contact your financial adviser.