Three taxes hit a normal investment account in South Africa. Dividends tax takes 20% before a dividend reaches you. Interest above a small exemption is taxed at your marginal rate. Capital gains tax (CGT) takes a slice when you sell. A tax-free savings account exists to switch all three off, up to a limit.

The figures below are for the 2027 year of assessment, 1 March 2026 to 28 February 2027, as published by SARS after the February 2026 Budget. They are the rules, not a suggestion about what you should buy.

Disclaimer: I am not a financial advisor. This information is for educational purposes only and should not be considered as financial advice. Always do your own research and consider seeking advice from a qualified financial professional before making any investment decisions.

The three taxes, in one table

What you earned	What SARS takes	Where it does not apply
Local dividend	20% withheld before you are paid	Inside a TFSA or a retirement fund
Local interest	Marginal rate, after an exemption	Inside a TFSA or a retirement fund
Capital gain on a sale	40% of the gain above the annual exclusion, then your marginal rate	Inside a TFSA or a retirement fund

The maximum effective capital gains tax rate SARS publishes for an individual is 18%. That is not 18% of the whole gain. It is 40% of the gain, taxed at the top marginal rate of 45%. Most people pay less than 18%.

Dividends tax

Dividends from South African companies are generally exempt from income tax. Instead, the company or the regulated intermediary withholds dividends tax at 20% and pays it to SARS. On a R10,000 dividend you receive R8,000. For a resident individual that 20% is usually the end of it. You do not add the dividend to your return and pay again.

Foreign dividends, where you own less than 10% of the foreign company, are taxed at a maximum effective rate of 20%. You cannot deduct costs incurred to earn them.

Equity ETFs, including a world equity ETF or a Top 40 ETF, pass dividends through. The 20% is usually already gone by the time the distribution lands in your account. The price chart does not show that drag. Your tax certificate does.

Property ETFs are not dividends

A South African REIT distribution is not a dividend. It is included in your taxable income and taxed at your marginal rate. Dividends tax is not withheld on it, and the interest exemption does not cover it. If you hold a property ETF, read the tax certificate before you assume the 20% rule applied.

Interest, and the exemption

Interest from a South African source is exempt up to R23,800 a year if you are under 65, and R34,500 if you are 65 or older. SARS left both amounts unchanged in the 2026 Budget. The exemption is per person, not per account. A savings account, a fixed deposit, and a money market fund all count toward the same limit. Interest inside a tax-free savings account does not.

Above the exemption, interest is added to your other income and taxed at your marginal rate. The 2026/27 brackets, from the SARS individual tax tables, are:

Taxable income	Rate
R1 – R245,100	18%
R245,101 – R383,100	R44,118 + 26% above R245,100
R383,101 – R530,200	R79,998 + 31% above R383,100
R530,201 – R695,800	R125,599 + 36% above R530,200
R695,801 – R887,000	R185,215 + 39% above R695,800
R887,001 – R1,878,600	R259,783 + 41% above R887,000
R1,878,601 and above	R666,339 + 45% above R1,878,600

The primary rebate is R17,820. You pay no income tax if you are under 65 and your taxable income is R99,000 or less. At 65 the threshold is R153,250. At 75 it is R171,300.

A worked example

You are under 65. Your salary puts you on R400,000 of taxable income, so your marginal rate is 31%. You also earn R30,000 of local interest.

• Exemption: R23,800.
• Taxable interest: R6,200.
• Tax at 31%: R1,922.
• The same R30,000 inside a TFSA: R0.

R1,922 is not a reason to avoid a money market fund. It is a reason to know which account the interest sits in. An emergency fund belongs where you can reach it, even if some of the interest is taxable. A TFSA is a poor emergency fund if withdrawing means you cannot put the contribution back.

Capital gains tax (CGT)

You are taxed when you dispose of an asset: a sale, a donation, emigration, or death. The steps for an individual are mechanical.

• Gain = selling price minus what you paid, including allowable costs.
• Subtract the annual exclusion. For 2026/27 that is R50,000 of gain or loss, up from R40,000. It is the first increase since 2017.
• Include 40% of what remains in your taxable income.
• That slice is taxed at your marginal rate.

SARS also raised two other exclusions from 2 March 2026. The primary-residence exclusion is R3 million, up from R2 million. The exclusion in the year of death is R440,000, up from R300,000. The primary-residence rule has conditions. This is not a property-tax guide. If you are selling your home, read the SARS capital gains tax page or ask a tax practitioner.

A worked example

You bought an ETF for R100,000 and sold it for R180,000. The gain is R80,000. You have no other capital gains this year, and you are on the 31% bracket.

• Annual exclusion: R50,000.
• Gain left: R30,000.
• Inclusion at 40%: R12,000 added to taxable income.
• Tax at 31%: R3,720.
• Effective tax on the R80,000 gain: 4.7%.

If you had already used the R50,000 exclusion on another sale, the full R80,000 is a capital gain. Inclusion is R32,000. Tax at 31% is R9,920, an effective 12.4%. The exclusion is easy to waste on a small trade.

A loss is not a refund. It offsets other capital gains in the same year, and unused capital losses carry forward. It does not reduce your salary.

Estimate what to set aside

Dividends tax is usually already taken before the cash reaches you. The amount to save is the extra tax on interest and capital gains, which arrives on assessment. These are the 2026/27 rates from this page. For freelance profit, use the self-employed tax calculator.

Why a TFSA and an RA exist

Inside a tax-free savings account there is no dividends tax, no tax on interest, and no capital gains tax. Withdrawals are tax-free. From 1 March 2026 the annual contribution limit is R46,000, up from R36,000. The lifetime limit is still R500,000. Both limits apply across every TFSA you hold. SARS charges a 40% penalty tax on contributions above either limit. Growth does not count toward the limit. A withdrawal does not reset it.

A retirement annuity, pension fund, or provident fund is also free of those three taxes while the money is inside. The trade is access. You cannot treat it as a savings account. Contributions are deductible at 27.5% of the greater of remuneration or taxable income, capped at R430,000 a year for 2026/27, up from R350,000. That cap had not moved since 2016. Excess contributions carry forward. They are not lost.

The boring order, for money you will not need soon, is still the one in the index fund guide: use the tax wrappers first, then a normal account. The wrapper does not make a bad investment good. It stops a decent one from leaking.

What people get wrong

Assuming every distribution is a dividend

Equity ETFs, yes, usually. REIT distributions, no. Interest from a bond ETF or a money market fund, no. The tax certificate is the document. The fund name is not.

Parking the emergency fund in a TFSA to dodge R1,000 of tax

The interest exemption already covers R23,800 of local interest. At a 7% yield that is roughly R340,000 of cash before a person under 65 pays any interest tax. Using TFSA room for cash can be sensible. Using it so aggressively that you pay a 40% penalty, or that you cannot replace the contribution after an emergency, is not.

Reading 18% as the capital gains tax rate

18% is the maximum effective rate, and only on the gain above the annual exclusion, after the 40% inclusion, at the 45% bracket. On the example above the effective rate was under 5%.

Tax law has edges this page does not cover: trusts, companies, emigration, and crypto. If the amount is large, or the asset is not a normal ETF or bank account, get a tax practitioner to look at the return. The SARS Budget 2026 FAQ is the checklist I used for the figures on this page.