Are you thinking about moving money offshore from South Africa? Whether you’re planning for investments, gifts, or business, understanding how the South African Revenue Service (SARS) fits into the picture is key to getting it right. The tax authority is there to ensure everything’s above board and that everyone’s playing by the rules regarding the South African exchange control and taxes.
To help you figure it out, let’s break down how international money transfers work in South Africa and how your tax residency and tax compliance status fit into the picture.
Transferring money out of SA – exchange control allowances
As a South African tax resident, you can use two exchange control allowances to send money offshore from South Africa. The South African Reserve Bank (SARB) and SARS oversee these exchange control allowances. The most common one is the Single Discretionary Allowance (SDA). Think of it as your annual “free pass” to send up to R1 million out of South Africa without needing direct approval from SARS, as long as you are up to date on your tax obligations.
But, if you need to send more than the SDA allows, you’ll need to seek approval from SARS through an Approved International Transfer (AIT) application. As a resident for tax purposes, this is where your Foreign Investment Allowance (FIA) comes in. Also known as the Foreign Capital Allowance, this is how you can move large sums of money (up to R10 million) offshore, provided you’re tax compliant, and you can verify the legitimacy of the source of your funds and the purpose of your transfer.
Your tax resident status: why it matters when moving money offshore from South Africa
Your tax residency status has a significant impact on your international money transfers. If you’re a tax resident in South Africa, you’re taxed on your worldwide income, even money you earn abroad. Non-residents only pay tax on income from South Africa. Either way, if there’s money involved, SARS wants to know about it and make sure they’ve been paid their due. Plus, those handy allowances? They’re just for South African residents. If you’re no longer considered a resident for tax purposes in South Africa, you’ll need to use the SARS AIT process to move money offshore, regardless of the amount.
If, however, it’s more than R10 million you’re looking to move offshore, there will be an additional stringent verification checkpoint you’ll have to pass. Here, your authorised dealer (such as a bank or financial services provider) will need to submit an application to the Financial Surveillance Department of the South African Reserve Bank for approval before they can execute the transfer.
Read more: The SA expat’s roadmap for moving funds abroad via SARS AIT Application.
How much money can you take out of South Africa?
- As a tax resident, you can combine your SDA and FIA to move up to R11 million out of South Africa per calendar year. For amounts exceeding R1 million, you’ll need to follow the SARS AIT process. For amounts over R11 million, you’ll need to obtain an additional South African Reserve Bank approval.
- As a tax non-resident, there is no limit to how much money you can move out of South Africa; the paperwork and admin involved varies.
Moving money offshore from South Africa – figuring out your tax resident status
- Resident taxpayer: If you’re in South Africa for more than 183 days in a year or meet the other Income Tax Act criteria, you’re a resident for tax purposes. This means you’re taxed on everything, everywhere. It also means you can use the available exchange control allowances to residents.
- Non-resident for tax purposes: You’re a non-resident if you don’t meet those criteria. You only pay tax on South African source income. This is also referred to as having non-resident tax status in South Africa. It’s important to note that tax emigration is the only way to cease tax residency and achieve non-resident tax status in South Africa. Suppose you’ve previously relocated from South Africa without tax emigration (even if you completed financial/formal emigration through SARB). In that case, you’ll need to clarify your tax residency status with SARS before making any international money transfers from South Africa.
Read more:
- Clarifying resident vs. non-resident tax status for South African expats.
- SARS tax compliance status for transferring funds abroad – what’s changed?
Transferring money from South Africa – using those allowances
You get that R1 million Single Discretionary Allowance each year as a tax resident.
It’s your go-to for sending money abroad for investments without needing SARS to sign off. Remember, this is available only to individuals, not businesses or trusts. The Foreign Investment Allowance is for larger amounts, up to R10 million.
How to move money out of South Africa – the SARS AIT process
You’ll need to apply for an Approved International Transfer through the SARS eFiling system for transfers beyond your SDA. Once your application is approved, it will culminate in a SARS AIT PIN, which means you have tax clearance to perform an international money transfer from South Africa. Non-residents transferring money out of South Africa also use this process.
What paperwork will you need to move money offshore from SA?
To make things smooth and avoid unnecessary delays, it’s a good idea to have these documents ready for your AIT application:
- Tax Compliance Status (TCS) PIN: This proves you’re up-to-date with your taxes. It’s sometimes called a Tax Compliance Status Verification Security PIN, and you can check your tax compliance status with this code online.
- Tax Residency Confirmation Letter: This clarifies your tax status in your new country of residence. For expats, this includes a Non-Resident Confirmation Letter from SARS.
- Statement of Assets and Liabilities: A snapshot of your finances to show SARS that you’re not up to anything dodgy.
- Proof of why you’re transferring the money: Think property purchase documents, investment details, etc. Again, this is for transparency purposes.
Read more:
- What supporting documents does SARS require with the Approval of International Transfers (AIT) application?
- Avoiding common pitfalls when transferring funds abroad from South Africa
When you apply for your AIT PIN, you must state your tax residency status. Non-residents are required by exchange control rules to give SARS proof that they’ve ceased being South African tax residents, with the date it happened. This is the Non-Resident Confirmation Letter from SARS we discussed above.
You’ll also need to confirm:
- Why you’re sending the money
- How much you’re sending
- Where the money’s coming from
- Who’s receiving it
Read more:
- SARS AIT: What to expect when transferring proceeds from South Africa.
- How much money can I take out of South Africa when I emigrate and thereafter?
FinGlobal: we’re here to help move your money out of South Africa.
International money transfers can be tricky, especially when dealing with SARS, AIT applications, TCS PINs, and making sense of all the exchange control regulations. FinGlobal is a Licensed Treasury Outsourced Company with the South African Reserve Bank (SARB). You can rest assured that everything we do complies with exchange control and tax regulations when making international money transfers from South Africa.
No matter what you need to achieve, FinGlobal is there to assist with accessing, consolidating and moving your finances wherever you need them. FinGlobal can help you through the whole process. Contact us today for expert advice and support with your money transfer needs from South Africa.