We live in exciting times. Thanks to an increasingly-connected digital working environment, South Africans are now better equipped than ever before to pursue exciting career opportunities all over the world; spreading their wings to embrace a new future abroad. If you’re one of many such South Africans now living abroad, you might find yourself wondering how to get your money off home soil and back safely in your pocket. Answering this question involves taking a look at how foreign exchange will work in this situation. In terms of foreign exchange regulations, there are two allowances that permit individuals to move money out of South Africa:
- Annual foreign investment allowance: This is available to all South African adult citizens or permanent resident holders older than 18. This allowance is capped at R10 million per calendar year per person, and you will need to be in good standing with the South African Revenue Service (SARS), which requires a tax clearance certificate.
- Annual discretionary allowance: This allowance amount cannot exceed R1 million per calendar year, per adult and requires no tax clearance certificate, but you will need your green barcoded ID book.
This means it’s possible for South Africans to move money abroad to the tune of R11 million per calendar year, per adult individual for any legitimate purpose by combining both foreign exchange allowances. While utilising the discretionary allowance on its own will not attract the need for a tax clearance certificate or prior approval, utilising the foreign exchange investment allowance (FIA) has a number of procedural and documentary requirements that will need to be met.
It is worth noting that this FIA can be used by citizens still physically resident in South Africa to move money offshore, as well as by citizens currently in the process of financial emigration.
What is the procedure for making use of the Foreign Investment Allowance?
According to the Currency and Exchanges Manual for Authorised Dealers, a South African resident has a number of requirements to meet in order to make use of this allowance. This procedure may only be facilitated by (yes, you guessed it!) an Authorised Dealer that has been given the proper authority to act on behalf of the South African Reserve Bank in foreign exchange transactions. If you’re already abroad and you’re thinking about moving your money out of South Africa, you’re unlikely to find an Authorised Dealer nearby. This means you’ll be choosing between large commercial banks, or foreign exchange companies based in South Africa.
Practically speaking, individuals will need to first apply to SARS for the necessary tax clearance certificate. This application will need to be submitted to SARS via eFiling in accordance with tax legislation, and as an applicant, you’ll need to be able to indicate and verify the source(s) of the funds that you wish to transfer abroad. For example, if the funds transferred abroad were derived from the sale of fixed property, you’ll need to provide proof of this transaction with your application.
Some factors to consider when utilising this foreign exchange investment allowance:
- You will need a “Tax Clearance Certificate – Foreign Investment Allowance” that is duly completed and electronically issued by the South African Revenue Service (SARS) before funds can be transferred in terms of your FIA.
- You must be older than 18 years of age and in good standing with SARS.
- No more than the amount reflected in your tax clearance certificate may be transferred abroad, and this certificate is only valid for 12 months.
- The format and content of the certificate is expressly prescribed by legislation and no deviation will be considered or accepted under any circumstances.
- The SARS Tax Compliance Status System will issue a tax compliance status (TCS) letter to you, containing your tax number and PIN – this PIN must be used by your Authorised Dealer to verify your tax compliance status via eFiling before a transfer can take place.
- Once the tax compliance status application has been approved, you will then need to request SARS to issue a TCC as proof that the TCS application was approved, which can then be presented to the relevant Authorised Dealer.
Fortunately you won’t have to navigate foreign exchange complexities alone
Conducting your foreign exchange transactions through an experienced, trusted intermediary like FinGlobal is worthwhile, when you think about the fact that breaching foreign exchange control regulations could potentially put you in an awkward position with the SARB. This is a position no one wants to be in especially as certain cases can amount to a criminal offense, which makes it critical to take seriously exchange control requirements, to avoid financial penalties.
Using a foreign exchange intermediary that is already approved by the SARB gives you the best chance of an outcome that is properly compliant, by helping you through the process to ensure all the right boxes are ticked and your all your ducks are neatly lined up in terms of paperwork and supporting documentation. With a reputable foreign exchange service provider handling everything for you, moving your money out of South Africa is as stress-free as humanly possible.
That’s because we’ve made it our business to deliver to you:
- Excellent exchange rates with low fees payable only after your foreign exchange transaction has been successfully concluded.
- Transparency in terms of fees and costs – our fees are guaranteed and fixed for specific services and processes, and you’ll always know what it’s going to cost before you make any decisions. No hidden surprises.
- Unbeatable personalised service with free exchange control advice.
- Secure and compliant online processing to provide you with signature-ready documentation – you sign, we make it happen (including opening a South African bank account if you don’t already have one.)
- The peace of mind that comes from knowing your money is in the safe hands of a cross-border financial services institution that is strictly regulated by the relevant authorities in South Africa.
So whether you’re looking to move your money abroad to continue building your new life away from South Africa, or you’re still living on home soil but looking to diversify your portfolio, FinGlobal is ready to help you with your Foreign Investment Allowance transactions, from start to finish. Get in touch today to start your obligation-free individual requirements assessment!