Want to save money without paying tax? Here's what you need to know

As a nation, we're not doing so well when it comes to savings. Almost 78% of South African household income is spent on debt, and the country has one of the lowest rates of saving in the world.

Why are savings important? Because they offer a safety net for life's unexpected expenses. By having enough savings built up, you don't have to cash in retirement investments or go into debt when these expenses arise.

Saving money plays a major part in long-term financial independence and wellbeing... and we're here to help you get started.

Did you know? You can save up to R500,000 tax-free in your lifetime

The government introduced tax-free investments in 2015 to encourage and incentivise South Africans to save more. You can save up to R500,000 in your lifetime in a tax-free savings account without paying any tax on interest, dividends or capital gains earned.

This tax break gives you an opportunity to grow your savings for long-term goals like a deposit on a home or towards your retirement - and pay zero tax on your investment.

What are the limits?

You have an annual contribution limit of R36,000 per tax year, starting on 1 March and ending on 28 or 29 February of the following year. The annual limit may change from time to time, so keep an eye on the SARS website or the Discovery Bank app for updates.

It's important that you know and stick to your annual and lifetime limit. If you don't use the full R36,000 allowance for the current tax year, the unused portion will not roll over to the next year and you'll lose out.

And if you save over your annual limit, you'll pay a 40% tax penalty on the extra funds. You'll also pay penalties if you exceed your lifetime limit of R500,000, so it's important to keep track of all your tax-free savings accounts if you have more than one.

Discovery Bank makes tax-free saving easy... and rewarding

We 100% support tax-free investments for all South Africans and we're making it a little easier (and a whole lot more rewarding) to make the most of this amazing tax break.

You can open a free Discovery Bank Tax-Free Demand Savings Account in as little as 5 minutes in the Discovery Bank app. Earn 8% interest and pay zero monthly fees.

You'll see all your savings in one place and manage your accounts easily in a simple, user-friendly interface.

Already have tax-free investments but missing out on our market-leading interest rates and our award-winning banking app? Call us on 0800 07 96 97 to transfer your tax-free savings to Discovery Bank today. Learn more about saving with Discovery Bank.

The Future of Banking. Now.

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