TL;DR
South African investors are subject to three main tax events: Capital Gains Tax (CGT) when selling an investment at a profit, Dividends Withholding Tax (DWT) on dividends received, and income tax on interest income. Tax-Free Savings Accounts (TFSAs) eliminate all three for investments held within them, up to the annual (R36,000) and lifetime (R500,000) contribution limits. This guide is a plain-language reference — not financial or tax advice. Consult a tax practitioner for your specific situation.
Capital Gains Tax (CGT)
When you sell an investment for more than you paid, the profit is a capital gain. In South Africa, capital gains are partially included in your taxable income:
Individuals: 40% of the capital gain is included in taxable income (the "inclusion rate") Annual exclusion: The first R40,000 of capital gains per year is excluded from tax Effective maximum CGT rate: For individuals in the top tax bracket (45%), the effective CGT rate is 45% × 40% = 18%
For most retail investors in earlier tax brackets, the effective CGT rate is lower. You only pay CGT when you sell — unrealised gains (paper profits on assets you still hold) are not taxed.
Dividends Withholding Tax (DWT)
Dividends paid by South African companies are subject to a 20% Dividends Withholding Tax, deducted at source by the company before payment reaches you. You do not need to calculate or pay this separately — it is handled automatically. Dividends received from foreign shares may have different withholding rates depending on the country.
Interest income tax
Interest earned on investments — including bonds, money market funds, and savings accounts — is added to your taxable income. An annual interest exemption applies: R23,800 for individuals under 65, and R34,500 for individuals 65 and older (as of 2024 — verify current exemption with SARS).
The Tax-Free Savings Account (TFSA)
A TFSA is the most tax-efficient investment structure available to South African retail investors. Within a TFSA:
Capital gains are not taxed Dividends are not taxed Interest income is not taxed
Annual contribution limit: R36,000 per tax year. Lifetime contribution limit: R500,000. Exceeding either limit incurs a 40% penalty tax on the excess.
For most retail investors starting with monthly contributions, maximising the TFSA annual limit (R3,000/month) is the priority before investing in a non-TFSA account.
Frequently Asked Questions
Do I pay tax on Kora Markets Play winnings? Kora Markets Play uses virtual currency only. There are no real money payouts and no tax events. Kora Markets Invest, which involves real money, is subject to normal South African tax treatment as above.
Does SARS know about my investment accounts? SARS receives third-party data from financial institutions, including investment platforms, under the third-party data submission rules. Assuming your investment income is not reported is not accurate — SARS increasingly has access to this data automatically. Declare all investment income.
Can I have more than one TFSA? Yes, but your combined contributions across all TFSAs cannot exceed R36,000 per year or R500,000 lifetime. Having two TFSAs at different providers is allowed, but you are responsible for tracking your total contributions.
When do I pay CGT — when I sell or when the tax year ends? CGT is triggered when you sell an investment. You report it in your tax return for the tax year in which the sale occurred (South African tax year runs from 1 March to 28 February). You do not pay CGT on unrealised gains.
Disclaimer: This guide is for general educational purposes only and does not constitute tax or financial advice. Tax rules change regularly — verify current rates and limits with SARS at sars.gov.za or consult a registered tax practitioner.
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