Transferring money out of South Africa: Your annual allowances explained
South Africans are allowed two types of investment allowances per annum. We explain how it works.
Exchange control regulations explained
In South Africa, the South African Reserve Bank (SARB) restricts the inflow and outflow of money by using exchange control regulations. The SARB dictates how much and under what circumstances you may transfer money into and out of South Africa.
These regulations apply to all South African residents, who have not financially emigrated, including those living abroad who are considered South African residents temporarily abroad for exchange control purposes.
All foreign currency transactions are declared to the SARB, whether you’re travelling, emigrating, investing, returning to South Africa or importing and exporting goods or services.
Transferring your money out of South Africa
To send money out of South Africa, you can either use your discretionary allowance of R1 million or your foreign investment allowance of R10 million.
These allowances only apply to South Africans who:
- Are 18 years and older
- Live in South Africa
- Live abroad but have not financially emigrated
You also have the option of combining these two allowances which allows you to send up to R11 million a year abroad. Your discretionary allowance and foreign investment allowance renew in January every year and can be used any time until 31 December in each calendar year. You need to have an income tax number in order to use your R10 million foreign investment allowance.
When to use your discretionary allowance
Your single discretionary allowance of R1 million per year can be used for travel, foreign investment, study and alimony payments. It is quick and simple to use, and no tax clearance is required, provided you have a green barcoded SA ID book or the new ID card.
How to send R2 million or more
All South African citizens have a discretionary allowance of R1 million. This means if your spouse is a South African citizen, they are entitled to the same allowance. Together, you can send R2 million per calendar year either as a lump sum or as separate payments during the year.
If you have children who are over 18 years of age, you can transfer an additional R1 million offshore under each child’s name. All you need to do is make sure your child has a green barcoded ID or new SA ID card.
When to use your R10 million foreign investment allowance
If you are a South African, or South African citizen living abroad who has not yet financially emigrated, you can transfer up to R10 million per year, in addition to your R1 million allowance. You can use your R10 million foreign investment allowance to invest into offshore investment portfolios, property, bank accounts or other investments.
To use this allowance, you’ll need to obtain tax clearance from SARS for foreign investment. SARS has done away with the issuing of tax compliance certificates and you now have to apply for a TCS PIN under the new Tax Compliance System. This can be done via the eFiling system online or by contacting your nearest SARS branch. We at Sable FX can assist with this as well.
No limit to how much you can transfer
It’s possible to exceed your annual investment allowance of R11 million, if you need to. To do this, you’ll need a Letter of Compliance from SARS. Once you receive this letter, you’ll need to send it to the SARB for approval. Once your request has been approved, you will be able to complete your offshore transfer. Sable FX can also assist with tax clearance and SARB applications.
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