Sygnia Tax Free Savings Account

Minimum contributions:

Debit order of R500 p/m.

Maximum contributions:

Lifetime contribution of R500 000

Annual contribution in a tax year of R36 000

Debit order of R3 000 p/m.

The contribution limits apply to individual investors with respect to their total investments in all tax-free savings accounts. You may stop contributing at any time with no penalty.

Advantages

• Grow your savings without any taxation.
• Enjoy unrestricted access to your money. (It’s worth noting, though, that a long-term horizon is recommended to fully realise the benefit of compounding your tax-free return.)
• No initial fees, exit penalties or administration fees.
• Stop contributing at any time, without penalties.
• Choose from a range of funds to suit your investment needs – your fund choices do not have to comply with Regulation 28.
• You can open a tax-free investment for minors.

Conditions

• Only individual investors in South Africa are eligible (no trusts, companies, etc.).
• A regular income cannot be paid out – interest and dividends earned are automatically reinvested.
• No protection against creditor claims.
• A maximum of R36 000 per annum and R500 000 over your lifetime can be contributed.

You can invest up to R36 000 tax-free every tax year (1 March to end February of the next year) and up to R500 000 over your lifetime. These limits are legally set and apply across all tax-free products you invest in (not per product). If you exceed them, you’ll pay a penalty tax of 40% on the additional amount invested.

All amounts you invest will count towards your annual and lifetime limits regardless of any withdrawals you make. In other words, if you invest R36 000 this tax year and then withdraw some or all of your savings, any further investment during the tax year you will be taxed at 40%.

The following administration fee applies depending on the investment funds that you have chosen:

* 0.35% (excl. VAT) is levied on the proportionate value of Sygnia unit trust and ETF funds below R2million.
** 0.15% (excl. VAT) is levied on the proportionate value of Sygnia unit trust and ETF funds above R2million.
*** 0.00% (excl. VAT) is levied on the proportionate value of Sygnia unit trust and ETF funds above R10million.

A separate safe custody fee of 0.03% (ex. VAT) per annum applicable to ETFs will be charged.

Note: We consider all your investments when assessing the R2 million and R10 million threshold, including your investments in External unit trusts, ETF’s and ETN’s. For fees relating to the underlying investment managers, please refer to the Sygnia Alchemy Funds document available on request or online at www.sygnia.co.za.

Investment management fees
These vary widely across the Sygnia fund range. For a detailed breakdown of fund-specific fees, please refer to the funds page.

Financial advisor fees
These are negotiable with your financial advisor within the following parameters:

Initial fee: On all products except for the Sygnia Tax Free Savings Account the maximum initial fee is 3%. On the TFSA it is a maximum of 1.5%.
Annual fee: Maximum of 1% per annum (excl. VAT).

If an initial fee in excess of 1.50% is deducted, the annual fee is limited to 0.50% per annum.

• Copy of South African green barcoded ID/ South African Smart ID Card, birth certificate (if minor) or valid passport (if a foreign national).
• Proof of residential address not older than 3 months.
• Proof of bank details not older than 3 months.
• Proof of deposit/transfer into the relevant Sygnia bank account.

The Sygnia Tax Free Savings Account (TFSA) allows you to save for both short- and long-term goals without paying tax on the growth or income you earn. TFSA funds qualify as a tax-free investment under section 12T of the Income Tax Act, 1962. South Africans qualify for the associated tax benefits – no tax on dividends, income or capital gains – while still enjoying all the benefits of a particular investment vehicle. Contributions to tax-free investments are limited to R36 000 per tax year, with a lifetime limit of R500 000. Amounts invested in excess of these permissible thresholds are taxable at 40%.

AAny South African adult resident can open a TFSA, including parents/guardians for their children.

If you choose not to invest the full R36 000 annual limit, any unused portion of the limit cannot be rolled over to the next year. So if you only invest R25 000 during the tax year, the remaining R11 000 of your annual limit cannot be carried forward to the next tax year and will be forfeited.

Yes, but be sure to keep your total annual contributions across your accounts within the R36 000 limit per tax year (and the R500 000 lifetime limit).

You can dip into your TFSA whenever you want, but note that there is a 32-business-day clearance period for debit orders and once-off collections.

The executor of your estate will close the TFSA and distribute the funds according to your will (or, if there is no will, in accordance with the laws of intestate succession).