I’m living abroad with no intention of coming back – am I eligible for a Tax-Free Savings Account (TFSA) in South Africa?

If you’ve packed your bags and you’re now earning a stable income abroad, you might be wondering whether it’s worth investing in a Tax-Free Savings Account (TFSA) in South Africa. After all, the numbers look great on the calculator — a few thousand rand a month, compounding over decades, could add up to millions down the line. But here’s the catch: if you’re living offshore and no longer a tax resident in South Africa, the benefits of a TFSA may not work the way you think they do.

Let’s unpack the essentials so you can decide if a South African tax-free savings account still fits into your long-term investment strategy.

Key takeaways about Tax-Free Savings Accounts in South Africa

1. Only South African tax residents can legally open and contribute to a TFSA in South Africa.
2. Once you complete tax emigration, you’re no longer eligible to make new contributions.
3. Even if you could contribute, your new country may tax the growth or returns, cancelling out the “tax-free” advantage.

Who qualifies for a Tax-Free Savings Account (TFSA) in South Africa?

You need to be a South African tax resident with a valid South African ID and local bank account to open a tax-free savings account. The South African Revenue Service (SARS) monitors contributions and enforces the annual and lifetime limits.

For 2025, the TFSA contribution limit is still R36,000 per year (R3,000 per month), with a lifetime contribution limit of R500,000. Any amount over these limits is taxed at 40%, so keeping within the rules is essential.

Once you’ve formally ceased tax residency with SARS — by completing the tax emigration process — you’re no longer eligible to contribute to a South African TFSA. That’s because you’ll be classified as a non-resident for tax purposes, and the product is designed only for local taxpayers.

Can South Africans living abroad keep their tax-free savings account?

If you opened your TFSA investment account while still a tax resident, you can keep it open after leaving South Africa. You just can’t add new money once you’re a non-resident.

Your existing investments will continue to grow, and SARS won’t tax the interest, dividends, or capital gains. However, you may face taxation in your new country of residence. Many foreign tax authorities don’t recognise the TFSA tax exemption, so they may treat your returns as taxable foreign income.

For example, if you’re living in the UK, Australia, or Canada, your TFSA could be treated as a foreign investment account or offshore fund, meaning any growth might be taxed locally. That wipes out the “tax-free” benefit the TFSA offers in South Africa.

Is it worth contributing to a South African tax-free savings account from abroad?

In theory, it’s possible to transfer money from abroad into South Africa and fund a local investment account — and if you’re still a South African tax resident, you can legally continue contributing to your TFSA in South Africa while living overseas.

If you’re temporarily working or studying abroad and plan to return home, maintaining your South African tax-free savings account can make sense. Your contributions remain compliant, and your investment will keep growing free from South African income tax, dividends tax, and capital gains tax.

However, if you’ve formally ceased tax residency, the situation changes. Once you’ve completed tax emigration, you’re no longer eligible to contribute to a TFSA, even if you retain your South African citizenship.

Here’s why you shouldn’t use this as a workaround if you’re no longer tax resident:

• You’ll need to convert foreign currency into Rands, which means paying conversion fees and facing fluctuating exchange rates.
• Non-resident contributions are not compliant with SARS rules, which could lead to tax penalties or account closure.
• Any withdrawals or future transfers out of South Africa will attract foreign exchange costs and possibly tax implications in your country of residence.

So, while the idea of keeping something back home sounds comforting, it’s often not financially efficient once you’ve settled abroad as a non-resident. For those still temporarily overseas, though, a TFSA in South Africa can remain a smart, long-term, rand-based savings vehicle — just ensure you keep your tax residency status clear and compliant with SARS.

Read more: Global wealth building – making sense of offshore investment from South Africa amidst strict tax rules.

What are the better offshore investment options for expats?

If your goal is long-term growth and you have no intention of remaining a tax resident in South Africa, it may be smarter to explore tax-free investments or investment accounts available in your new country.

Most countries have their own versions of tax-friendly investment vehicles, such as:

• ISAs (Individual Savings Accounts) in the UK
• 401(k) or Roth IRA accounts in the US
• Superannuation funds in Australia

These options are tax-efficient under local laws, unlike a South African TFSA, which only benefits you as long as you’re a tax resident in South Africa. If you’re keen to stay invested in the South African market, you can always consider offshore investment platforms that give you exposure to South Africa exchange-traded funds (ETFs) or unit trusts without the administrative complications of maintaining a South African tax-free savings account.

Read more: Are your offshore investments taxable as a South African expat?

What happens to your TFSA returns if you move abroad permanently?

As long as you remain a South African tax resident, your TFSA continues to enjoy tax-free growth — no capital gains tax, dividend withholding tax, or interest tax applies.

Once you’re no longer resident, the account still exists, but the “tax-free” label only applies locally. If your new country taxes global income, you’ll likely have to declare your TFSA earnings there, reducing its overall benefit.

That’s why many South Africans abroad prefer to pause contributions and focus on international investments that offer tax efficiency where they actually live.

The bottom line on TFSAs in SA: think global, not nostalgic

If you’ve completed tax emigration and have no intention of returning to South Africa, a TFSA South Africa isn’t the best home for your savings. The tax benefits only apply within South Africa, and you risk paying tax on those same returns abroad.

Rather than remitting money to fund a local tax-free investment, consider diversifying your portfolio through global ETFs, unit trusts, or offshore investment accounts that align with your new country’s tax laws.

That way, you’ll still enjoy tax-free growth, just not in the same jurisdiction — and you won’t waste time or money managing cross-border accounts that don’t serve your long-term financial goals.

Read more: Emigrating from South Africa? How offshore investments could help you escape the Rand.

FAQs on Tax-Free Savings Accounts for South Africans abroad

1. Can non-residents open a Tax-Free Savings Account (TFSA) in South Africa?
   No. Only South African tax residents with a valid ID and local bank account can open and contribute to a tax-free savings account in South Africa. Once you complete tax emigration, you’re no longer eligible to contribute.
2. What happens to my TFSA if I move abroad permanently?
   You can keep your existing TFSA South Africa open, and it will continue to grow tax-free locally. However, your new country of residence may tax the returns, reducing the benefit of the account.
3. Can I contribute to a TFSA from overseas?
   Legally, you must be a South African tax resident to contribute. Sending foreign earnings to South Africa to fund your TFSA once you’re non-resident is not compliant with SARS rules.
4. What are the TFSA contribution limits?
   The annual contribution limit TFSA is R36,000, and the lifetime TFSA contribution limit is R500,000. Exceeding these limits incurs a 40% tax penalty.
5. Are TFSA returns taxed abroad?
   Most countries do not recognise the tax-free status of South African TFSAs. Depending on local laws, your dividends, interest, and capital gains may be taxed in your new country.
6. What are alternatives to a South African TFSA for expats?
   Consider offshore investment accounts, international ETFs, or tax-advantaged accounts in your new country. These options often offer better tax efficiency and avoid unnecessary cross-border fees.

FinGlobal: cross-border financial specialists for South Africans

Whether you’re living abroad temporarily and still a South African tax resident, or you’ve emigrated permanently and no longer plan to return, your financial strategy should match your residency status. At FinGlobal, we’ll help you understand your tax obligations so that you can optimise your investments and ensure compliance with SARS regulations wherever you live.

If you’re planning to stay abroad for good, we can guide you through the tax emigration process to become a non-resident for tax purposes, making you eligible to access and transfer your retirement savings out of South Africa safely and legally. If you’re still a South African tax resident abroad, we’ll help you make informed decisions about your tax-free savings account and other investment options.

Wherever you are in the world, FinGlobal makes it easy to manage your cross-border money matters with confidence. Leave your contact details below, and we’ll help you take the next step.