National Treasury has put limits on the amount you can save in a tax-free savings account.
Annual Limit - R36 000 per tax year
An individual can invest a lump sum or a series of regular investments, or a combination of both, but the total contributions he / she may make in any tax year (which runs from 1 March to 28/29 February every year), may not exceed the annual contribution limit of R36 000.
Lifetime Limit - R500 000
There is also a total lifetime contribution that may not exceed R500 000. Sticking to your annual contribution limit will mean you'll only reach your lifetime contribution limit after 16 years so the sooner you start the better.
If you exceed the annual and lifetime limits, there are penalties (SARS will charge you a 40% tax on all contributions that exceed these amounts). On SatrixNOW we’ll keep track of all the contributions you make into your EasyEquities tax-free savings account and ensuring they don't exceed the annual limit.
If however, you hold more than one approved tax-free savings account it is extremely important that you make sure your annual payments across all approved tax-free savings accounts do not exceed the annual contribution limit or the penalties described above will be incurred.
If I don’t invest up to the R36 000 annual TFSA limit per tax-year does the limit rollover? No, unfortunately not. There is no rollover with limits By way of example - if you contributed only R10 000 in year one, you cannot contribute R56 000 in year two to make up the deficit from the previous year.
It is extremely important to understand that withdrawals are NOT taken into account when your annual or lifetime limits are determined.
If you deposit R 36 000 and withdraw R 15 000 in the same tax-year, although your net contributions for the year are only R21 000 ( 36 000 - 15 000) you are not permitted to deposit any more funds into the TFSA in that particular tax year as you would have already used up your R 36 000 annual contribution with your initial deposit.
Similarly, if over the duration of 10 years you deposit R300 000, but withdraw R150 000 during that same period, although your net contribution into the TFSA over the lifetime of the account till that point is only R150 000 (R300 000 deposited MINUS R150 000 withdrawn), you can only deposit a further R200 000 into the TFSA and NOT the R350 000 you might think.
So as you cannot 'replace' or 'top-up' funds that you withdraw from a TFSA account, you need to think very carefully about it before doing so.