Latest news with #Tax-Free
IOL News
2 hours ago
- Business
- IOL News
How to maximise your tax-free savings account for long-term wealth
Discover how to effectively utilise your Tax-Free Savings Account (TFSA) to reduce your tax burden and enhance your long-term financial strategy. Image: Freepik Many South Africans are looking to reduce their tax burden and improve overall tax efficiency, and one of the most effective tools available is the Tax-Free Savings Account (TFSA). With an annual contribution limit of R36,000 and no tax on interest, dividends, or capital gains, the TFSA offers significant long-term benefits – although it's important to ensure that you align your TFSA with your broader investment strategy. Here's how to get the most from your tax-free savings. Use your tax-free allowance wisely: The TFSA has become a key component of long-term financial planning because all income and growth earned within the structure, including interest, dividends, and capital gains, are tax-free. Note, however, that contributions are made with after-tax income, and no tax deduction is available on contributions such as in the case of retirement fund contributions. While it, therefore, makes sense to first maximise your retirement fund contributions, the TFSA remains an exceptional long-term investment vehicle. Think long-term from the start: The tax benefit in the early years of a TFSA is fairly small, with the compounding tax savings only becoming meaningful after about a decade. With this in mind, a TFSA is best suited to long-term investing and is not ideal for an emergency fund. It can, however, be used to supplement retirement savings or to meet other long-term goals, such as funding a child's tertiary education. Structure your contributions to suit your cash flow: Legislation permits annual TFSA contributions of up to R36,000 with a lifetime limit of R500,000, with most providers allowing flexible contribution options for investors depending on their personal circumstances. For instance, if your income is variable, you can set up a modest debit order and top it up when additional income becomes available, thereby allowing you to consistently build wealth without placing strain on your budget. Understand the implications of withdrawals: While it is possible to withdraw from your TFSA at any time, it's important to understand the consequences because withdrawals can reduce your lifetime contribution capacity. For example, if you've contributed R300,000 towards your TFSA and withdraw R50,000, you may only contribute another R200,000 in the future, regardless of whether you replace the R50,000 later. Importantly, withdrawals not only reduce your tax-free limit but can also interrupt the compounding growth within the investment. Match your investment to your time horizon: When selecting the underlying investment for your TFSA, consider how long you intend to stay invested. If you're investing for your child's education 15 to 20 years from now, or to supplement retirement income, your investment horizon may be long enough to justify growth assets. Having said that, it's important to balance return expectations with your risk tolerance. Also, remember that individuals under 65 already enjoy a tax exemption of R23,800 per year on interest earned (R34,500 if over 65), so using your TFSA to invest in low-yielding interest-bearing assets might not be the most efficient use of your tax-free allowance. Choose an efficient investment platform: There are numerous TFSA providers in South Africa, ranging from banks to investment platforms. While fixed-term accounts and money market funds are available, those with a long investment horizon should consider a more aggressive unit trust portfolio to harness better growth over time. Ideally, select a platform that provides consolidated reporting across your retirement and discretionary investments, so that your TFSA integrates seamlessly into your overall strategy. Avoid over-contributions and penalties: It's important to ensure that you stay within your R36,000 annual limit, as any contributions above this will attract a penalty tax of 40% from Sars, regardless of your personal income tax bracket. If you have more than one TFSA, be sure to track contributions carefully to avoid exceeding the threshold and incurring avoidable penalties. Stay compliant with Sars: Even though no tax is payable within a TFSA, you are still required to disclose the investment on your tax return. Your provider will issue a tax certificate, and it's important to include all TFSA-related information when filing with Sars. Maintaining transparency ensures compliance and helps avoid any administrative issues. A TFSA can be a powerful tool for building long-term wealth, provided it is used strategically, managed consistently, and integrated into your broader financial plan. * Odendaal is an associate financial planner at Crue Invest. PERSONAL FINANCE
The Herald Scotland
a day ago
- Business
- The Herald Scotland
HMRC gives out £632m Tax-Free Childcare to families
HM Revenue and Customs (HMRC) is encouraging those yet to sign up for Tax-Free Childcare, to do it now and give their summer plans a financial boost. Latest figures from HMRC show in March 2025, 54,020 families in London used the scheme to save on their annual childcare bills, an increase of 8,100 families compared to the previous March. Parents! 👪 Could you be missing out on up to £2,000 a year to help with childcare costs? Find out what you're entitled to here. 👇 — HM Revenue & Customs (@HMRCgovuk) May 23, 2025 Working families who sign up to Tax-Free Childcare can boost their annual budget by up to £2,000 per child up to the age of 11 or up to £4,000 up to the age of 16 for a disabled child. Parents can use the scheme to help towards the cost of approved childcare whether that's nursery for younger children, or for older children – wraparound or after school care clubs during term time or holiday clubs for the long summer holidays ahead. Myrtle Lloyd, HMRC's director general for customer services, says: 'Summer can be an expensive time if you have children. Whatever you're planning, Tax-Free Childcare can give your plans a welcome financial boost. Go to to start saving today.' How does tax-free childcare work? For every £8 deposited in a Tax-Free Childcare account, the government tops it by £2, which means parents can receive up to £500 (or £1,000 if their child is disabled) every three months towards paying for their childcare costs. Once families have opened a Tax-Free Childcare account, they can deposit money and use it straight away or keep it in the account to use it whenever it's needed. Any unused money in the account can be withdrawn at any time. Martin Lewis discussed it on his podcast last month, where he said: "Tax free childcare is where you can put money into an account held at and for every 80p you put in the state adds 20p on top, up to a maximum free money of £500 pounds coming from the state per quarter - with double for disabilities. And this is tax free childcare for children under the age of 11." Recommended reading Families could be eligible for Tax-Free Childcare if they: Have a child or children aged 11 or under. They stop being eligible on 1 September after their 11th birthday. If their child has a disability, they receive up to £4,000 a year until 1 September after their 16th birthday The parent and their partner (if they have one) earn, or expect to earn, at least the National Minimum Wage or Living Wage for 16 hours a week, on average Each earn no more than £100,000 per annum Do not receive Universal Credit or childcare vouchers Visit to check eligibility and register for Tax-Free Childcare. Tax-Free Childcare can be used alongside the free childcare hours subject to eligibility.
Daily Record
4 days ago
- Business
- Daily Record
Parents urged to claim £2,000 tax-free top-up to help with summer childcare costs
HMRC tax-free scheme can help parents pay for childcare costs over the school holidays. How to apply for Tax-Free Childcare and 30 hours childcare Nearly 826,000 working families saved up to £2,000 per child with Tax-Free Childcare in the 2024 to 2025 tax year. The money helps families pay for their childcare, as part of the UK Government's Plan for Change to put more money in people's pockets. HM Revenue and Customs (HMRC) is encouraging those yet to sign up for Tax-Free Childcare, to do it now and give their summer plans a financial boost. Latest figures from HMRC show in March 2025, 579,560 families in the UK used the scheme to save on their annual childcare bills, an increase of 81,770 families compared to the previous March. Working families who sign up to Tax-Free Childcare can boost their annual budget by up to £2,000 per child up to the age of 11 or up to £4,000 up to the age of 16 for a disabled child. Parents can use the scheme to help towards the cost of approved childcare whether that's nursery for younger children, or for older children - wraparound or after school care clubs during term time or holiday clubs for the long summer holidays ahead. Myrtle Lloyd, HMRC's Director General for Customer Services, said: 'Summer can be an expensive time if you have children. Whatever you're planning, Tax-Free Childcare can give your plans a welcome financial boost. Go to to start saving today.' For every £8 deposited in a Tax-Free Childcare account, the UK Government tops it by £2, which means parents can receive up to £500 (or £1,000 if their child is disabled) every three months towards paying for their childcare costs. Once families have opened a Tax-Free Childcare account, they can deposit money and use it straight away or keep it in the account to use it whenever it's needed. Any unused money in the account can be withdrawn at any time. HMRC said it takes just 20 minutes to apply online for a Tax-Free Childcare account. Once an account is opened, parents can deposit money and use it straight away or keep it in the account to use it whenever it's needed. Any unused money in the account can be withdrawn at any time. Eligibility for Tax-Free Childcare Families could be eligible for Tax-Free Childcare if they: Have a child or children aged 11 or under. They stop being eligible on September 1 after their 11th birthday. If their child has a disability, they may get up to £4,000 a year until September 1 after their 16th birthday Earn, or expect to earn, at least the National Minimum Wage or Living Wage for 16 hours a week, on average Each earn no more than £100,000 per annum Do not receive Universal Credit or childcare vouchers A full list of the eligibility criteria is available on here. Financial support for parents in Scotland Social Security Scotland delivers five family payments which can help pay for extra school term expenses alongside everyday family costs like food, clothing and days out. Scottish Child Payment is a weekly payment of £27.15 for eligible families with children up to the age of 16 - the payment is worth £108.60 every month and is only available north of the border. Combined with Child Benefit payments from HMRC, parents could be due up to £212.20 each month in additional support. Child Benefit is a separate UK-wide payment worth £26.05 for the eldest or only child and is also paid every four weeks, amounting to £104.20. The three Best Start Grant payments and Best Start Foods, also part of social security support, are designed to help families at key stages in their children's early years, including during pregnancy. There is no cap on the number of children in one family who can receive these payments. One-off payments for families Best Start Grant Pregnancy and Baby Payment - one-off payment of up to £767.50 available after 24 weeks of pregnancy until a baby turns 6 months. Best Start Grant Early Learning Payment - one-off payment of £319.80 to help with the costs of early learning when a child is between two, and three years and six months. Best Start Grant School Age Payment - one-off payment of £319.80 to help with the costs of starting school available between June 1 and the last day in February in the year when a child is first old enough to start primary one. Best Start Foods - up to £43.20 every four weeks from pregnancy up to when a child turns three to help buy healthy food, milk and first infant formula. Scottish Child Payment Scottish Child Payment helps towards the costs of supporting your family and is a weekly payment of £27.15 that you can get for every child you look after who is under the age of 16. Payments are made every four weeks and worth £108.60 per child. Parents, carers and guardians can get more information on the dedicated Children and Family section on here or by calling Social Security Scotland free on 0800 182 2222. Families can learn more about the childcare offers available to them and what could fit their family by visiting Childcare Choices on here. Families in Scotland may be able to access help during the ongoing cost of living crisis through the Cost of Living Support Scotland website here.
Yahoo
22-02-2025
- Business
- Yahoo
1 Canadian Stock to Buy and Hold Forever in a TFSA
Written by Amy Legate-Wolfe at The Motley Fool Canada When it comes to selecting a stock to buy and hold forever in your Tax-Free Savings Account (TFSA), Barrick Gold (TSX:ABX) stands out as a golden opportunity. So today, we're not going to beat around the bush. Instead, let's delve into why this Canadian mining giant deserves a permanent spot in your TFSA. Founded in 1983 and headquartered in Toronto, Barrick Gold has grown into one of the world's leading gold and copper producers. Now boasting 16 operating sites across 13 countries, it holds a diverse portfolio and a commitment to sustainable mining practices. This has allowed Barrick to solidify its position in the global mining industry. In the fourth quarter of 2024, Barrick reported net earnings of $996 million, or $0.57 per share, a significant increase from $479 million, or $0.27 per share, in the same period the previous year. Adjusted earnings per share came in at $0.46, surpassing analysts' expectations of $0.41. This impressive performance was driven by higher gold prices and increased production. Over the past year, Barrick's financial performance has been nothing short of stellar. The Canadian stock achieved a 69% increase in net earnings, reaching $2.1 billion – plus a 51% rise in adjusted net earnings to $2.2 billion for 2024. Operating cash flow also saw a 20% uptick, climbing to $4.5 billion. Meanwhile, free cash flow more than doubled to $1.3 billion. Looking ahead, Barrick has authorized a new $1 billion share buyback program, reflecting confidence in its future prospects. The Canadian stock anticipates gold production between 3.2 million and 3.5 million ounces in 2025. With all-in sustaining costs projected between $1,460 and $1,560 per ounce. Additionally, capital expenditures are forecasted to be between $3.1 billion and $3.6 billion, with copper production expected to range between 200,000 and 230,000 tonnes, driven by higher output at the Lumwana mine. Barrick continues to reward shareholders with consistent dividends. The Canadian stock declared a quarterly dividend of $0.10 per share for the fourth quarter of 2024, bringing the total annual dividend paid to shareholders to $696 million. This commitment to returning value to shareholders makes Barrick an attractive option for income-focused investors. Investing in Barrick Gold within your TFSA offers several advantages. The potential for capital appreciation, combined with tax-free growth, allows your investment to compound over time without the drag of taxes. Moreover, the steady dividend income can be reinvested to further enhance your returns – all within the tax-sheltered environment of a TFSA. Gold has long been considered a safe-haven asset, providing a hedge against economic uncertainty and inflation. Barrick's strong position in the gold mining industry ensures that your investment is backed by tangible assets with intrinsic value, offering stability in volatile markets. Barrick is dedicated to responsible mining practices, focusing on environmental stewardship, social responsibility, and robust governance. This commitment not only enhances the company's reputation but also reduces operational risks, contributing to long-term value creation for shareholders. And analysts are on board, maintaining a positive outlook on Barrick's future, with an average price target of $21.80, suggesting a potential upside of approximately 27.9% from current levels. This optimism reflects confidence in Barrick's strategic initiatives and growth prospects. Incorporating Barrick Gold into your TFSA offers a blend of growth potential, income generation, and portfolio diversification. With its strong financial performance, promising outlook, and commitment to sustainability, Barrick Gold shines as a stock worthy of a permanent place in your TFSA. The post 1 Canadian Stock to Buy and Hold Forever in a TFSA appeared first on The Motley Fool Canada. Before you buy stock in Barrick Gold, consider this: The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Barrick Gold wasn't one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years. Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the 'eBay of Latin America' at the time of our recommendation, you'd have $21,058.57!* Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 38 percentage points since 2013*. See the Top Stocks * Returns as of 2/20/25 More reading 10 Stocks Every Canadian Should Own in 2024 [PREMIUM PICKS] It's Time to Buy: 1 Canadian Stock That Hasn't Been This Cheap in Years Where to Invest Your $7,000 TFSA Contribution 3 No-Brainer TSX Stocks to Buy With $300 5 Years From Now, You'll Probably Wish You Grabbed These Stocks Subscribe to Motley Fool Canada on YouTube Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. 2025
Yahoo
06-02-2025
- Business
- Yahoo
Where to Invest Your $7,000 TFSA Contribution for Long-Term Gains
Written by Kay Ng at The Motley Fool Canada With the Tax-Free Savings Account (TFSA) contribution limit for 2025 set at $7,000, Canadians have a fantastic opportunity to invest for long-term growth without paying taxes on the gains. But with a range of eligible investments — from cash and Guaranteed Investment Certificates (GICs) to stocks, mutual funds, and exchange-traded funds (ETFs) — where should you place your contribution for the best results? The answer lies in strategically choosing investments that offer strong potential for long-term returns while fitting your risk profile. One of the easiest and most efficient ways to grow your TFSA is by investing in ETFs, which offer instant diversification. A great example of a low-cost, diversified ETF is iShares Core Equity ETF Portfolio (TSX:XEQT). This fund provides 100% equity exposure across global markets, with approximately 45% in U.S. stocks, 25% in Europe, Asia, and Australia, and another 25% in Canadian stocks. The remaining 5% is invested in emerging markets. In the last five years, XEQT has posted an impressive annual return of about 11.6%, making it an excellent choice for long-term investors, especially on any pullbacks. The ETF also has a low management expense ratio (MER) of 0.20%, ensuring more of your money stays invested. Plus, with a recent quarterly cash distribution yielding 3.16%, you get a nice stream of passive income alongside growth. Artificial intelligence (AI) is one of the most exciting sectors for long-term growth, though it comes with higher volatility. If you're not keen on picking individual AI stocks but still want to tap into this rapidly growing area, consider an AI-focused ETF like CI Global Artificial Intelligence ETF (TSX:CIAI). This actively managed ETF is helmed by a team of experts and holds high-quality companies in the AI space, including top names like NVIDIA, Broadcom, and Microsoft. Launched in May 2024, the ETF has already returned around 33% since its inception, highlighting the immense growth potential of AI-focused investments. With a MER of 0.42%, it's a more efficient way to gain exposure to the AI revolution without having to worry about picking individual stocks. However, keep in mind that the volatility of the tech sector can lead to more significant price fluctuations, so this is better suited for investors with a higher risk tolerance. If you prefer investments that provide both growth and income, dividend stocks might be a good fit. Many established companies pay a steady stream of dividends to shareholders, which can be reinvested for compounded growth. A strong candidate for dividend income is Bank of Nova Scotia (TSX:BNS), which offers a solid yield of around 5.9%. While its stock has lagged behind some of its peers, it remains a reliable dividend payer with a sustainable payout ratio of 60% of adjusted earnings. Analysts believe Bank of Nova Scotia shares are undervalued by approximately 11%, which presents an opportunity for both capital appreciation and consistent dividend income. With the potential to deliver total returns of about 10% per year over the next three years, this stock is a solid choice for investors seeking a blend of income and growth. While there are many options for your TFSA contribution, ETFs, AI-focused funds, and dividend stocks are good considerations for long-term gains. Before making a decision, it's essential to assess your risk tolerance and investment horizon. Whether you opt for diversified ETFs, take advantage of the explosive growth in AI, or focus on steady dividend income, your $7,000 TFSA contribution can be a powerful tool for building wealth over time. The post Where to Invest Your $7,000 TFSA Contribution for Long-Term Gains appeared first on The Motley Fool Canada. Before you buy stock in Bank of Nova Scotia, consider this: The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Bank of Nova Scotia wasn't one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years. Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the 'eBay of Latin America' at the time of our recommendation, you'd have $18,750.10!* Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 35 percentage points since 2013*. See the Top Stocks * Returns as of 1/22/25 More reading 10 Stocks Every Canadian Should Own in 2024 [PREMIUM PICKS] It's Time to Buy: 1 Canadian Stock That Hasn't Been This Cheap in Years Where to Invest Your $7,000 TFSA Contribution 3 No-Brainer TSX Stocks to Buy With $300 5 Years From Now, You'll Probably Wish You Grabbed These Stocks Subscribe to Motley Fool Canada on YouTube Fool contributor Kay Ng has positions in Bank Of Nova Scotia and Microsoft. The Motley Fool recommends Bank Of Nova Scotia, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. 2025 Sign in to access your portfolio
