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Tax-free Investments

Pay 0% tax on interest, dividends and capital gains

If you’re new to investments and looking to start your savings journey, a tax-free unit trust is the ideal investment product to get you started. Tax-free unit trusts were created under the legislation passed in 2015 by the National Treasury, to encourage South Africans to save. Similar to a standard unit trust, tax-free unit trusts allow you to invest in top performing companies and have the potential to generate greater returns than an ordinary bank account over the long run. Unlike a standard unit trust, you don’t pay tax on interest, dividends and capital gains, which means your investment has the potential to grow faster.

You can kick-start your journey by investing a minimum of R500 per month, or a lump sum minimum of R10 000. Always remember that standard and tax-free unit trusts are a medium to long-term investment, so give your money time to grow.

How It Works

A unit trust gives easy, cost-effective access to blue chip companies via shares, property and bonds, which are not usually available to direct investors with relatively smaller amounts to invest. The fund manager is responsible for diversifying your investment to protect it from being too exposed to a potential fall of a single asset.

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Tax-free vs Standard Unit Trusts

Both tax-free and standard unit trusts are a popular choice for investors who want access to blue chip shares and bonds, which are not cost-effectively available to direct investors with relatively small amounts to invest.

Tax-free Unit Trusts

  • By law you can save R33 000 every year or R500 000 over a lifetime in a tax-free vehicle such as a unit trust.
  • All interest, capital gains and dividends you earn will be completely tax-free (only applicable to SA tax residents).
  • You should not invest more than the maximum of R33 000 per tax year and R500 000 over your lifetime across all your tax-free products combined. If you do, you will pay a tax penalty of 40% of any amount over this limit.

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Standard Unit Trusts

  • No maximum limits on how much you can invest – only minimum investment amounts, which vary from fund to fund.
  • Ideal option once you've exhausted the maximum investment amount limits of your tax-free unit trust.
  • Ideal if you invest in money market/interest yielding products only, and you’re not earning more than R23 800 (or R34 500 if you’re older than 65) of income in interest across all these products (in other words, you’re not paying any tax on your investments in any case) since you are below taxable limits.
  • Your income and capital gains are taxable.

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Tax-free Unit Trusts

  • By law you can save R33 000 every year or R500 000 over a lifetime in a tax-free vehicle such as a unit trust.
  • All interest, capital gains and dividends you earn will be completely tax-free (only applicable to SA tax residents).
  • You should not invest more than the maximum of R33 000 per tax year and R500 000 over your lifetime across all your tax-free products combined. If you do, you will pay a tax penalty of 40% of any amount over this limit.

Invest Now

Standard Unit Trusts

  • No maximum limits on how much you can invest – only minimum investment amounts, which vary from fund to fund.
  • Ideal option once you've exhausted the maximum investment amount limits of your tax-free unit trust.
  • Ideal if you invest in money market/interest yielding products only, and you’re not earning more than R23 800 (or R34 500 if you’re older than 65) of income in interest across all these products (in other words, you’re not paying any tax on your investments in any case) since you are below taxable limits.
  • Your income and capital gains are taxable.

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You can now transfer all or part of your tax-free investment between product providers. For more information on tax-free unit trusts or transfers, contact us.
View our list of Tax-free Unit Trusts.

Parents are able to invest tax-free on behalf of their children. But, by doing this, you’ll be using part of the child’s annual and lifetime contribution. It is important to note that if you wish to open a tax-free savings account for your child, the child must have a bank account.

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