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Expat Money Matters: Can I really move my money out of South Africa?

By May 26, 2022November 29th, 2022FinGlobal

Expat Money Matters: Can I really move my money out of South Africa?

May 26, 2022

If you’re already living overseas, you’re probably making plans to complete your financial transition. If you’re still plotting your international relocation, it helps to know exactly how you’re going to get your money out of South Africa, and what the rules are around exchange control. The exchange control rules on money transfers have been relaxed over a period of time, but there are still a number of administrative hoops to jump through before you can move your money overseas, so it pays to do your homework. Knowing what to expect can help you minimise your stress and avoid paying unnecessarily high exchange control rates or fees.

Move your money

Let’s take a look at what you’re in for when you decide to move your money out of South Africa

Is it difficult to move your funds out of South Africa? That depends. The process and paperwork involved depends largely on how much money you’d like to move out of South Africa.

Generally speaking, there are two annual allowances through which South Africans are able to move money offshore.

The foreign investment allowance (FIA) – available to all South African adult citizens or permanent residents older than 18.

  • The annual limit is R10 million per calendar year per person, and this limit resets at the beginning of the year. Technically you could move R10 million in December one year, and R10 million in January the following year, and achieve a R20 million transfer in two short months.
  • Using this allowance requires you to be in good standing with the South African Revenue Service and you will need to obtain tax clearance before you can make any money moves.
  • This tax clearance is associated with the Foreign Investment Allowance and differs from a normal ‘good standing’ tax clearance.

The single discretionary allowance (SDA) – available to all South Africans over the age of 18.

  • You can use this allowance to shift abroad R1 million per annum without prior tax clearance. You can move this money for any purpose (hence “discretionary” allowance), through an Authorised Dealer (i.e., a local commercial bank who has been authorised by the South African Reserve Bank to deal in foreign currency).

The minimum requirement for transferring funds is that you must be in possession of a green bar-coded ID document or the new smart ID card.

What do you do if you need to move more money than the annual allowances permit?

It is possible to make a special application to do so, but it is necessary to seek specialist advice on how best to do it.

How do you get approval for making international money transfers?

Where approval is required it must be given by the South African Reserve Bank or by an Authorised Dealer. The Authorised Dealers are not permitted to handle your transactions under your foreign investment allowance without prior tax clearance.

Choosing FinGlobal as your cross-border financial services partner means you get:

  • Objective advice on the best way to get your money out of South Africa
  • The most competitive exchange rate for moving your money
  • Expert assistance with tax clearance and exchange control approval
  • We engage with SARS and the South African Reserve Bank on your behalf
  • Superior service levels and payment only on completion of our services

Will you need to pay tax on the money that you want to transfer abroad?

Foreign transfers do not attract any tax liabilities in themselves. Normal tax rules apply to the transaction, such as a donation. Tax would be incurred where funds are donated to a third party living abroad.

Transferring money abroad once you’ve completed tax emigration

If, however, you decide to cut ties with South Africa and complete the process of tax emigration, there are a few more things to consider.

What is tax emigration?

  • It is the process by which you end your obligation to pay tax on your worldwide income.
  • By informing SARS that you no longer meet the requirements for tax residence, your status is updated from ‘resident’ to ‘non-resident’ for income tax purposes.

Once you become a non-resident for tax purposes you will then be able to transfer abroad:

  • The proceeds of assets declared in your emigration application subject to you obtaining a tax clearance
  • The proceeds of your retirement annuity, even before age 55 (once you’ve been non-resident for three years) subject to you obtaining a tax clearance
  • South African source inheritance or proceeds from a third party life policy (death claim)
  • Income such as rent, dividends, director’s fees, salary for services rendered in South Africa and income from discretionary or vesting trusts subject to you obtaining a tax clearance ‘good standing’ on an annual basis

FinGlobal: cross-border financial specialists for South Africans abroad

Whether it’s a straightforward international money transfer, or you need a trusted partner to handle your tax emigration from South Africa, FinGlobal has been helping South Africans with their money moves since 2009. Our team of tax practitioners, financial planners and foreign exchange specialists is perfectly positioned to assist you in consolidating, unlocking and transferring your funds globally.

No matter what you need to achieve, FinGlobal is ready to make it happen for you. Simply leave us your contact details and we’ll be in touch to start your free, no-obligation financial requirements assessment.

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