A tax-free investment account is a good way of saving money without ever having to worry about your returns being taxed.

It is an ideal product to consider, particularly if you are saving towards goals related to children and for retirement-conscious individuals who want to minimise tax implications, said Mellony Ramalho, African Bank's group executive.

"If you already have a tax-free account, remember you can once again deposit the full annual tax-free savings amount tax free again this year," she said.

When one invests in a tax-free investment account one does not have to pay income tax, dividends tax or capital gains tax on the returns from these investments. You can have multiple tax-free accounts as long as your contributions don't exceed R33 000 in the tax year.

If you don't invest the maximum amount for that year, any portion of your unused annual limit will be forfeited and cannot be carried over.

This is not a transactional account and no debit or stop orders and ATM transactions will be possible from these accounts.

Any portion of the unused annual limit is forfeited.

It is not carried forward to the new tax year, Ramalho explained.

For example, if taxpayer X invests R28 000 in the year in a tax-free investment account, the unused portion of R5 000 is not rolled over to year two.

In year two, the taxpayer can only invest R33 000, as per the annual limits.

If a person exceeds the limits, there is a maximum penalty of 40% on the excess amount invested above the R33 000.

Parents can invest on behalf of their minor child.

The minor child will use his or her own annual or lifetime limits.

You may nominate one or more beneficiaries. When you die, your investment can be paid to your beneficiaries immediately and there are no executor fees.

The value of the investment will, however, be included in the estate for the calculation of estate duty.