As a South African living abroad, things can get complicated quickly when it comes to cross-border inheritance claims. If you’ve got family members still living in South Africa, especially parents, it’s likely that you’re going to have to figure out exactly how to transfer your inheritance money out of South Africa, so it’s worthwhile being prepared with all the facts so that you can cross that bridge easily when you get there.
Transferring money from South Africa: What you need to know about exchange control changes
Thanks to amendments to the Currency and Exchanges Manual for Authorised Dealers published by the South African Reserve Bank (SARB), it is now much easier for individuals to move money out of South Africa.
The concept of formal emigration through the South African Reserve Bank (in order to change one’s status from resident to non-resident for exchange control purposes) has been phased out. In addition, South Africa’s antiquated, overly restrictive exchange controls have been thoroughly overhauled. This means that all new emigration applications from 1 March 2021 onwards will be processed instead by the South African Revenue Service in terms of a new verification-based system that examines whether the individual has ceased to be a resident for tax purposes.
Before 1 March 2021, exchange control-treated residents and non-residents differently for the purposes of moving money out of the country, making it difficult for residents to transfer money out of South Africa. Now, all the complicated rules have been updated by a positive list framework in terms of which all cross-border transactions are permissible, except those that are subject to capital flow measures or transactions that pose a high risk of being illegitimate (such as money laundering or financing terrorism).
What does this mean for an expat living abroad with an inheritance claim in South Africa?
Now that there is no longer a difference in the way residents and non-residents are treated for the purposes of transferring money out of South Africa, Authorised Dealers (i.e., local commercial banks) may enable the transfer of funds abroad, provided proof of your inheritance can be provided.
What is the process of claiming your South African inheritance while living overseas?
If you’re an expat living overseas and you inherit in South Africa, there have been a few changes in how you can transfer that inheritance offshore. The exact process you’ll follow to get your money will depend on the amount inherited, your residency status, and whether you have a South African identity document.
- If you are living abroad and have not yet completed tax or financial emigration and you have a valid green bar-coded South African ID or a Smart identity document card you can use your Single Discretionary Allowance of R1 million or Foreign Investment Allowance of R10 million to transfer your money out of South Africa. If you do not have a South African ID, you will have to obtain approval from the SARB before the transfer of your inheritance money overseas. For the transfer of funds in excess of R10 million, special approval from SARB is required and you will have to obtain tax clearance from SARS.
- Previously, without access to your SA ID, you would need to complete the process of financial emigration in order to access your funds.
- If you have completed tax or financial emigration, you may receive an inheritance (or life insurance policy payout) of up to R10 million.
- For amounts greater than R10 million, special approval from SARB is required, and you will have to obtain tax clearance from SARS
This means that inheritance money – whether cash bequests or cash proceeds of legacies and distributions from resident estates – payable to non-resident private individuals can now be remitted abroad, as long as the Liquidation and Distribution Account bearing a Master of the High Court reference number has been provided to the Authorised Dealer handling the transfer.
- Where the total assets of the resident deceased estate do not exceed R250 000, such inheritance money payable to non-resident private individuals may be remitted abroad, but the bank handling the transfer will need to be provided with the Last Will and Testament and Letter of Executorship or Authority.
What documents will I need to provide to the authorised dealer handling the transfer of my inheritance money from South Africa?
- Death certificate
- The Last Will and Testament of the deceased
- Liquidation and Distribution Account
- Letter of Executorship
Got any further questions about cross-border inheritances, and how to move your money out of South Africa? Leave us your contact details, and we’ll be in touch to see how we can help.