Sending your hard-earned money out of South Africa can feel like navigating a maze of rules and regulations. A common worry for many is whether the South African Revenue Service (SARS) has the power to step in and block these transfers. It’s a valid concern, especially when your financial future is at stake.
The short answer is no; SARS doesn’t directly block or process your transfers. However, you can’t legally move significant sums of money abroad without satisfying their tax requirements first. Think of SARS as a gatekeeper ensuring your tax affairs are in order before your bank (the Authorised Dealer) can execute the transfer. This guide will walk you through how it all works.
South African money transfers: SARS ensures tax compliance before funds leave
Before your funds can make their journey overseas, SARS requires proof that your tax affairs are in order. Think of this not as a hurdle, but as a crucial, non-negotiable step to ensure everything is compliant and transparent. The specific requirements depend on whether you are currently a South African tax resident or if you’ve formally ceased your tax residency. Let’s walk through what this means for you.
If you are a South African tax resident:
You are entitled to use your Single Discretionary Allowance (SDA) of up to R1 million per calendar year to send money abroad without prior SARS approval or tax clearance, provided your tax affairs are up to date.
This allowance can cover transfers for purposes such as travel, gifts, or offshore savings.
However, if you wish to send more than R1 million, you’ll need to apply for a Tax Compliance Status (TCS) – Approval for International Transfer (AIT) from SARS. This process confirms that:
- All your income tax and capital gains tax returns are up to date.
- Your source of funds is verified.
- You are compliant with all SARS reporting requirements.
If you are a non-resident for tax purposes:
Once you have formally ceased South African tax residency, you can still transfer funds abroad, but you’ll need to follow the AIT process for all amounts — even those below R1 million — since non-residents are no longer eligible to use the R1 million discretionary allowance.
SARS will require:
- Proof of your non-resident status,
- Source of funds documentation (e.g., sale of assets, investments, or inheritances), and
- Confirmation that all South African tax obligations up to the date of ceasing residency have been met.
In both cases, your bank (as an Authorised Dealer) cannot release funds internationally without SARS’s green light in the form of a valid TCS PIN when required.
Tax Compliance Status (TCS) for International Transfers
SARS has streamlined its processes over the years. The old “Foreign Investment Allowance” and “Emigration” procedures have been replaced by the Approval for International Transfer (AIT) process. This is where SARS’s role becomes most apparent.
When you want to transfer funds from a capital source abroad—such as the proceeds from a property sale, your savings, or retirement funds—you must apply for Tax Compliance Status (TCS) under the AIT option.
During this application, SARS will review:
- Your schedule of assets and liabilities (a detailed list of what you own in South Africa and abroad).
- The source of the funds (where the money came from).
- Proof of your tax residency and, if applicable, documentation confirming you have ceased to be a tax resident.
Once SARS is satisfied that you’ve met all your tax obligations, they issue a TCS PIN. This unique code is the key you give your bank to unlock the transfer and release the money internationally.
Read more: SARS Tax Compliance Status PIN: what is it and how do I get it?
A shared responsibility with the SARB
While SARS handles the tax side of things, it’s the South African Reserve Bank (SARB) that governs the country’s exchange control policies. The SARB sets the limits on how much money you can send out and for what purposes.
Here’s an easy way to understand the difference:
- The SARB cares that money is leaving South Africa lawfully under exchange control regulations.
- SARS cares why the money is leaving and whether all tax obligations tied to it have been met.
The two bodies work in tandem to ensure that international transfers are both legal and tax-compliant.
Understanding how international transfers are monitored
SARS plays a crucial role beyond simply issuing a Tax Compliance Status (TCS) PIN. It actively monitors international financial transactions using advanced data-sharing mechanisms. These systems facilitate connections with banks, as well as global tax authorities through agreements like the Common Reporting Standard (CRS), and other international organisations.
This comprehensive approach enables SARS to gain insights into various aspects of financial flow, including:
- Significant transfers originating from South Africa: This helps track the movement of capital.
- Reconciliation of declared foreign income with offshore deposits: Ensuring consistency between reported earnings and actual holdings.
- Identification of potential non-compliance: Detecting instances where foreign assets or income might not have been fully disclosed, which helps maintain the integrity of the tax system.
Should any inconsistencies arise, SARS is empowered to initiate further inquiries to understand the situation better. Maintaining accurate and up-to-date tax affairs is therefore key to ensuring a smooth process.
FinGlobal: Your Partner in Financial Emigration
Navigating SARS and SARB requirements can be tricky, especially with rules that change frequently. For South Africans living abroad, this process is crucial when moving South African retirement savings, inheritance, or property proceeds. Keeping your SARS records current and accurate is essential, even after you’ve left the country.
That’s where having an expert on your side makes all the difference. At FinGlobal we specialise in all aspects of cross-border finance for South African expats.
We can assist with your Financial Emigration Plan™, ensuring you move your money safely, cost-effectively, and in a tax-compliant manner. To find out more about our hassle-free, reliable services, get in touch with us today
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