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Press Offices > Banks & Building Societies

First National Bank
Press Office Feature : FNB makes tax-free saving quick and easy

Company: First National Bank
Author:Margaux Stevens
Email:[email protected]
Posted:23 Feb 2015

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Our top tip for saving is to pay yourself first

FNB makes it possible for South Africans to benefit from the new Tax Free Savings incentive, launched by the South African National Treasury.

In addition to a regular cash savings option that is tax free, FNB enables clients to also tap into the growth potential of the stock market.

Both FNB Tax Free Savings Accounts make it quick and easy for new and existing customers to benefit from the tax break and to build a nest egg for emergencies.

“FNB supports this initiative by the government to give South Africans this tax break on savings, and applauds its intention to make South Africans more financially secure,” said Lezanne Human, CEO of FNB Savings, Investments & Fiduciary.

“With almost three out of ten of the banked population not saving at all*, it is important to encourage and incentivise South Africans to get into the habit of savings, to avoid the need to tap into their retirement fund or get into expensive debt should they need access to money in an emergency”.

“In addition, everyone can benefit from the new tax incentive, including those customers who have maximised their current tax exemptions.”

From 1 March 2015, South Africans can save R30 000 a year, and R500 000 over their lifetime in the new Tax Free Savings Account.

No tax is paid on interest earned, dividends received or capital gains. With household debt making up 78,3% of disposable income**, South Africans are financially vulnerable and dependent on expensive debt.

The intention is to reduce South Africans’ reliance on expensive, short-term debt if they need money in an emergency.

The new FNB Tax-Free Savings Accounts caters for customer needs across the income spectrum. “FNB research has shown that there is more of a savings need in the lower end of the market and a need to create tax efficiencies in the upper end”, continues Human.

Customers will therefore have a choice between two options based on the term they are saving for as well as the risk they are willing to take:

The Tax Free Cash Deposit Account guarantees capital, has no fees and offers great interest rates. The minimum investment is R1 000 and customers have access to their cash in an emergency, making this a good choice for short or medium term investments.

The Tax Free Shares Account is a longer-term exchange trade fund (ETF) investment that offers growth potential and allows customers to invest in the top 100 companies on the JSE. Fees are based on the customer’s portfolio size.

“We hope South Africans take advantage of this offering and take control of their financial destiny to reduce their reliance on expensive debt in case of an emergency."

"There is no excuse to delay saving, especially since these accounts can be opened online from the convenience of your home” said Human.

“Our top tip for saving is to pay yourself first, before life gets in the way of your good savings intentions.”

* FinScope South Africa 2014 Consumer Survey
** South African Reserve Bank Quarterly Bulletin Q4, 2014

1. More about the Tax Free Cash Deposit Account
Save with peace of mind and pay no tax on interest earned.

What the Tax Free Cash Deposit offers:
• Earn interest of 5.25% per year above R20 000, and at lower rates below R20 000
• All interest earned is tax free
• Save from as little as R1 000
• There is no risk as capital is guaranteed
• All quartered returns are guaranteed
• Pay no fees
• Get access to your money with 32 days’ notice at no charge

This means customers can:
• Save for the short or medium-term with peace of mind as there are no negative capital movements
• Save knowing that their savings won’t erode over time due to fees
• Get access to their money for unforeseen expenses
• Contribute flexibly, either monthly or as a once-off lump sum
• Set up a scheduled transfer to maximise tax savings
• Open any of these accounts from the comfort of their home or office via the Online Banking Profile

2. More about the Tax Free Shares Account
Invest in the Top 100 companies on the JSE and pay no tax on your dividends or from the sale of your shares.

What the Tax Free Shares Account offers:
• All returns and dividends are tax free
• Investment is in the Top 100 companies on the JSE
• Provides customers with a diversified portfolio
• Investments from as little as R300 per month or a R1 000 once-off lump sum
• The easiest way to gain access to the JSE
• Low monthly fees of 0.4% (plus vat) per year

What this means for customers:
• Tax savings on all returns and dividends earned means more long term capital growth
• Realise returns aligned to the performance of the RMB Top40 and RMB MidCap ETFs
• By being invested in the RMB Top40 and RMB MidCap ETFs, FNB has put customers in a strong position by spreading your risk
• Flexibility of being able to contribute monthly or as a once-off lump sum depending on your needs (*limits apply)
• Customers can start investing in shares from the comfort of their FNB Online Banking profile

What will it cost?

Market value of portfolio

Monthly fee

R0 – R250 000

0.40% per year plus VAT

R250 001 – R1 000 000

0.35% per year plus VAT

Fees are subject to an annual review.

(Please bear in mind the annual and lifetime limits on the Tax Free Savings.)

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