Methodology & Sources
This calculator applies South Africa's Tax-Free Savings Account (TFSA) rules from Section 12T of the Income Tax Act 58 of 1962. The annual contribution cap is R36,000 and the lifetime cap is R500,000 — unchanged since 1 March 2020. Any contribution above either cap is taxed at 40% under s12T(7). Growth (interest, dividends, capital gains) inside the TFSA is fully tax-free.
The projection uses mid-year compounding to approximate even monthly contributions: balance = balance × (1 + r) + contribution × (1 + r/2). When a year's contribution would breach the lifetime cap, it is clipped to the remaining allowance.
Last verified: May 2026.
Frequently Asked Questions
What is the TFSA contribution limit for 2026?
R36,000 per year and R500,000 in your lifetime, set by Section 12T of the Income Tax Act and unchanged since 1 March 2020. At the maximum R36,000 a year, you'll hit the lifetime cap in 13 years and 11 months.
What happens if I contribute more than R36,000?
Excess contributions are taxed at 40%. SARS Section 12T(7) imposes the penalty on any amount above either the annual or lifetime cap. The penalty applies even if you withdraw the excess in the same tax year — withdrawals do not restore your allowance.
Can I withdraw from my TFSA?
Yes, anytime, with no tax. But any withdrawal is permanent for cap purposes — the contribution slot is used up. If you contributed R36,000 and withdrew R30,000, your remaining annual room is R0 (not R30,000), and the withdrawal still counts against your lifetime R500,000.
TFSA vs Retirement Annuity (RA) — which first?
Both are valuable. RAs give an upfront tax deduction (up to 27.5% of taxable income) but are locked until 55+ and partly taxable on payout. TFSAs have no deduction but everything is tax-free forever. Most planners recommend: contribute to RA up to your tax-deduction sweet spot → max the TFSA → return to RA. The TFSA shines for medium-term goals (10–20 years) and as a tax-free emergency fund.
What investments can I hold in a TFSA?
Cash, unit trusts, ETFs, REITs, government bonds, and approved fixed-deposit products. Direct-share TFSAs (e.g. EasyEquities) and fund-based TFSAs (e.g. Allan Gray, Ninety One) are both common. The R36k cap is the same regardless of the underlying investment.