25/01/2026
February Isn’t Just a Deadline — It’s a Financial Opportunity for South Africans
As February draws to a close, phrases like “tax year-end,” “financial year-end,” and “tax season” become part of everyday conversation. For South Africans, this period is critical. It marks the final opportunity to finalise tax-deductible contributions and financial decisions before the new tax year begins on 1 March.
The actions you take now will directly shape the tax return you submit in July, when SARS officially opens filing season.
As a financial planner, these are the most common questions I hear at this time of year:
How can I still reduce my tax?
What strategies can I use before 29 February?
What opportunities does SARS provide through legislation?
Two strategies consistently stand out for reducing tax while building long-term wealth.
1 The Power of a Retirement Annuity (RA)
If you don’t belong to a company retirement fund — or if you want to contribute more — a Retirement Annuity (RA) remains one of the most effective tax-saving tools available.
SARS allows individuals to deduct up to 27.5% of taxable income, capped at R350,000 per year, when contributing to an RA.
Example:
Annual income: R1,000,000
RA contribution (27.5%): R275,000
New taxable income: R725,000
Result:
Tax saving: ±R110,092
Effective tax rate reduced from 29.2% to 25.1%
Significant investment made toward retirement
Additional Advantages of a Retirement Annuity
Beyond the immediate tax deduction, RAs offer powerful long-term benefits:
Tax-free investment growth (no tax on interest, dividends, or capital gains)
Creditor protection, offering added security for professionals and business owners
Estate planning benefits, with beneficiary nominations (subject to Section 37C)
Portability, independent of your employer
Flexible contributions, including lump sums, not only monthly debit orders
Long-term discipline, as funds are generally inaccessible before age 55
2 Maximising Long-Term Growth with a Tax-Free Savings Account (TFSA)
A Tax-Free Savings Account (TFSA) is one of the most powerful wealth-building tools available to South Africans. All growth — interest, dividends, and capital gains — is completely tax-free.
TFSA Contribution Rules:
R36,000 per year
R500,000 lifetime limit
Unused annual allowances do not roll over
If you don’t invest before 29 February, that year’s allowance is lost permanently — delaying your progress toward the lifetime limit.
TFSAs are ideal for long-term investing, offering flexibility, accessibility, and unmatched tax efficiency.
Why Acting Early Matters
Many investors only act late in February, creating unnecessary pressure. Investment providers experience high volumes, and delays can cause contributions to reflect after 1 March, pushing them into the next tax year.
That means:
Lost tax deductions
Missed TFSA allowance
Reduced compounding benefits
Engaging your financial planner early ensures contributions are processed on time and allows your money to grow for longer.
February Is More Than a Deadline
Used wisely, this window allows you to:
✔️ Reduce taxable income
✔️ Increase potential tax refunds
✔️ Build tax-efficient long-term wealth
✔️ Strengthen retirement and financial security
With proper planning, SARS effectively helps you save. Small decisions made now can deliver powerful results over time.
If you’re unsure how much contribution room you still have or how to structure these strategies effectively, speak to a qualified financial planner.
Adapted from insights by Loots, Financial Adviser at Alexforbes.
