How much tax will I pay if I invest in a fixed deposit?
Here is the bad news. Interest earned on your savings or fixed deposit account is taxable.
Good news. You will only be taxed on interest if your interest earned in any one tax year exceeds R23.8k. This tax exemption increases to R34.5k per annum if you are 65 or older.
The amount of tax you pay on your local interest earned depends on which income tax bracket you fall into. At the end of the tax year, you receive an IT3b statement from your bank detailing how much local interest you have earned. This interest is seen as personal income for tax purposes. Amounts over R23.8k (if younger than 65) or R34.5k (if 65 or older) will be added to your income. The applicable tax bracket will then be used to calculate tax payable.
Here is a quick and easy tax calculator to help you understand how much tax you will be paying.