How to pay less tax this February 💲

3 min readFeb 10, 2022


Yup, it’s that time of the year again. On 28 February, the 2021/2022 tax year ends and the next one begins.

If you have some spare money to invest, there are two easy ways to pay less tax: you can contribute more to a retirement fund, or you can start a tax-free investment (also called a tax-free savings account). Or you can do both!

Confused? Don’t worry, we’re here to help.

Option 1: Top up your retirement fund

Retirement funds go by quite a few names: retirement annuity (RA), provident fund, pension fund… All of them essentially do the same thing: they provide a safe haven for your savings and allow those savings to grow so that you have a sum of money to draw on when you retire.

Saving for your retirement is important, and SARS encourages you to do so by giving you an incentive: each year, you can reduce your taxable income by contributing up to 27,5% of that income to a qualifying retirement fund, or R350K, whichever is greater. Reducing your taxable income means you pay less tax.

If you’re part of a company pension fund, have a look at your latest payslip to see how much you’ve contributed this tax year, and speak to your HR manager to find out how you can make an additional voluntary contribution. If you contribute to an RA, you can make an extra lump sum payment before the end of February to get yourself to the tax-free limit and take advantage of the SARS incentive.

Option 2: Start a tax-free investment

Opening a tax-free investment (TFI) is another way to save and pay less tax at the same time. This is how it works: you can contribute up to R36K per tax year, to a maximum of R500K in your lifetime, and when you decide to withdraw your money one day, there is no tax on the growth of the investment. (Most other investments usually attract some form of ‘growth’ tax, like dividends tax or capital gains tax etc.)

Unlike a retirement fund, which you can only start withdrawing from when you reach the age of 55, you can withdraw the money from a TFI at any time. The longer you leave your capital invested, however, the greater the growth of the fund will be, and the bigger your tax saving.

Which should I choose?

Each solution offers a different kind of tax saving. If you want to reduce your taxable income this tax year, the best course of action is to top up your retirement fund. On the other hand, if you have some spare money to invest, a TFI can be very tax-efficient if you’re prepared to play the long game and give the investment enough time to grow.

There’s also no reason why you can’t do both: pay a little extra into your retirement fund and use the balance to open a TFI. If you’re unsure what to do, set up a meeting with a financial advisor, who will help you choose the right investments to suit your lifestyle and your financial goals.

Happy saving!




Thoughts, observations and insights. About money, life and 22seven. Visit