Although the South African Reserve Bank (SARB) has relaxed exchange control rules significantly in the past few years in order to make cross-border transactions less onerous, there are still limits in place when it comes to transferring money overseas out of South Africa.
Tax residents can make use of both the Single Discretionary Allowance (SDA) and the Foreign Investment Allowance (FIA) to move up to R11 million offshore per calendar year, per individual. The SDA does not require prior tax clearance, while using the FIA does require approval from the South African Revenue Service (SARS). Individuals who cease their tax residency can only make use of the Foreign Investment Allowance to move up to R10 million out of the country, pending SARS approval of their international transfer.
Confused about the international money transfer limits and how they apply to you? Let’s break it down.
What are my exchange control limits when transferring money out of South Africa?
As mentioned, South African tax residents have two allowances available to them:
1. The Single Discretionary Allowance
- Available to all South African tax residents who are compliant with SARS
- Move up to R1 million offshore per individual over the age of 18
- Individuals under the age of 18 have a limit of R200 000 per person
- Can be used for any legal purpose, such as travel, education, investment.
- This limit resets once every calendar year
2. The Foreign Investment Allowance
- Also known as the Foreign Capital Allowance
- Available to both tax residents and non-residents
- Can be used by residents to invest abroad
- Can be used by emigrants to transfer their money out of South Africa
- Requires clearance from SARS (more details below)
- Can be used to transfer up to R10 million per year per person
- Transferring money out of South Africa – the Single Discretionary Allowance vs the Foreign Capital Allowance.
- How much money can I take out of South Africa when I emigrate and thereafter?
What happens if I need to transfer more than the Single Discretionary Allowance and Foreign Capital Allowance?
If you intend to transfer more than R10 million, you need to submit a special application to the South African Reserve Bank. This application will be closely scrutinised by the revenue authority and in the process they will ascertain your tax compliance status, examine the source of your funds and conduct a risk assessment in terms of the anti-money laundering and counter-terrorism financing principles, as dictated in the Financial Intelligence Centre Act of 2001. Basically, you’re going to be closely examined in order to verify that your funds are free from any connection to illicit activities and have been legitimately generated.
When transferring money out of South Africa, what are the limits?
- As long as you are a South African resident for tax purposes you can use both allowances to transfer a combined R11 million offshore annually.
- Once you cease tax residency you will be allowed to transfer up to R1 million overseas as a travel allowance in the same year that you became a non-resident, without needing tax clearance beforehand. This allowance is a once-off dispensation that cannot be used again.
- As soon as you become a non-resident for tax purposes, you are no longer eligible to use the Single Discretionary Allowance, and all offshore transfers must take place by using the new SARS Approval – International Transfer process, detailed below.
How do I use my Single Discretionary Allowance?
Using this allowance is pretty straightforward for South African tax residents and does not require you to get a Tax Compliance Status (TCS) PIN from SARS beforehand. All you need to use your Single Discretionary Allowance is your valid South African green bar-coded identity book, or Smart ID card. The Authorised Dealer handling your international transfer needs proof of your identity for compliance with FinSurv Reporting requirements.
How do I use my Foreign Investment Allowance?
Using the Foreign Investment Allowance to move up to R10 million offshore requires tax clearance from SARS. This process used to be known as Tax Compliance Status (TCS) PIN – Foreign Investment Allowance, but it has since been updated to the SARS Approval – International Transfer process. Although this allowance is available to both tax residents and non-residents, there are a few extra paperwork requirements for non-residents in order to make an international transfer out of South Africa.
What is the tax free gift limit to family members in South Africa?
It is possible to give up to R100 000 as a gift per family member without incurring donations tax. Gifts between spouses are also exempt from tax. Gifts can only be paid by a South African resident to an individual currently living overseas, either a non-resident or a South African resident temporarily abroad. However, the gift allowance falls under the Single Discretionary Allowance, and is not a separate allowance category.
What is the maximum amount of foreign currency allowed in South Africa?
According to the Exchange Control Regulation of the South African Reserve Bank (SARB), the maximum amount of currency is an amount exceeding R25,000 or any foreign currency that exceeds R25,000 when converted to Rands. Travellers are required to gain written permission from the SARB before entering or departing South Africa with currency amounts exceeding these limits.
FinGlobal: your cross-border financial specialists
Choosing a partner to handle your financial moves out of South Africa is a critical decision. Choosing FinGlobal means choosing a licensed financial services provider and SARB approved foreign exchange intermediary. We offers a full suite of financial services for all South Africans, including tax clearance, tax emigration and foreign exchange services. We also provide highly competitive exchange rates and expert advice, without any upfront payment required.
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