How to cut your Sars payments

Structure of TFSA allows for flexible and efficient investment options.

- Devon Card

With only three months left of the current tax year, the focus naturally shifts to maximizing tax benefits and boosting savings for optimal investment returns. If you're not yet contributing to a tax-free savings account, now is the time to consider it.

Here are key reasons why opening one could benefit your financial future.

Take advantage of its tax benefits

Although contributions to a tax-free savings account (TFSA) are not tax-deductible, investors still enjoy significant tax advantages.

All growth and income within a TFSA are completely exempt from tax, including capital gains tax (CGT), dividends withholding tax and tax on interest earned.

The only tax liability you may face is estate duty, depending on the dutiable value of your estate.

The extent of tax savings in a TFSA depends on the assets you choose to invest in.

For example, if you focus on bonds and cash, the primary benefit will be tax-free interest. Conversely, if your portfolio is equity-heavy, your tax relief comes from not paying dividends withholding tax.