The February tax deadline

As the 2025/2026 tax year draws to its close on 28 February 2026, investors are presented with a unique “double-play” opportunity.

Picture reflecting savings and tax planning.

This month is the final chance to maximise two of the most powerful tax-saving vehicles provided by SARS: the Retirement Annuity (RA) and the Tax-Free Savings Account (TFSA). Understanding how these two work in tandem is the key to a robust, tax-efficient portfolio.

The Retirement Annuity (RA)

The RA is arguably the most effective tool for lowering your current tax bill. Under current legislation, you can deduct contributions to all retirement funds—including your RA—up to 27.5% of the higher of your taxable income or remuneration. This is capped at a generous R350,000 per year.

The benefit of an RA top-up this month is twofold. First, there is the immediate tax refund. If you are in the 45% tax bracket and you contribute an additional R100,000 to your RA before month-end, you could effectively see R45,000 returned to you by SARS upon assessment. Second, there is the internal tax efficiency. While your money is in the RA, it grows entirely free of Capital Gains Tax (CGT), Dividend Withholding Tax, and tax on interest.

Because the annual deduction limit is “use it or lose it” for the current year, any unused portion of that 27.5% ceiling is a missed opportunity for a refund. However, if you do exceed the R350,000 cap, those excess Rands are not lost; they “carry forward” to provide deductions in future tax years.

The Tax-Free Savings Account (TFSA)

While the RA provides a tax break on the way in, the TFSA provides its benefit on the way out. For the 2025/2026 tax year, the annual contribution limit remains R36,000, with a total lifetime limit of R500,000.

Unlike an RA, you do not get a tax deduction for your TFSA contributions today. However, every cent of growth within a TFSA—interest, dividends, and capital gains—is yours to keep, forever. When you eventually withdraw from a TFSA, there is zero tax payable. This makes the TFSA an incredible “supplementary retirement fund” that can be used to manage your tax brackets during your golden years.

The “Use it or Lose it” Clause: This is where February becomes critical. If you do not use your R36,000 allowance by 28 February, you cannot “double up” next year. You simply forfeit that year’s allowance. For this reason, many investors prioritise filling their TFSA first before moving on to their RA top-ups.

Managing the Risks

It is vital to be precise with your TFSA contributions. SARS is notoriously strict regarding the R36,000 annual limit. If you accidentally contribute R37,000, you will be hit with a 40% penalty tax on the excess R1,000. It is also important to remember that withdrawals do not “reset” your allowance. If you contribute R36,000 and then withdraw R10,000 in the same year, you cannot put that R10,000 back in without triggering the penalty.

To ensure these contributions count for the 2026 tax year, do not wait until the final Friday. Most fund managers and banks require payments to reflect in their accounts by 23–25 February to issue the necessary tax certificates. Review your statements this week, calculate your remaining “room” in both your RA and TFSA, and make your Rands work as hard for you as you did for them.

The information contained in this article is of a general nature and intended for information purposes only. It is neither to be construed as financial advice nor to be regarded as a definitive analysis of any financial, legal or other issue. Individuals must not rely on this information to make a financial or investment decision. Before making any decision, we recommend you consult your financial planner/adviser to take into account your particular investment objectives, financial situation and individual needs.