Exchange controls are still alive and well in South Africa, but that doesn’t mean there aren’t ways to transfer some of your money offshore, whether to invest it, spend it on travelling, or just to diversify your risk. Here are 5 things you should know about foreign exchange controls, and what it means for you in terms of sending money out of South Africa.
1. There are two different types of allowances permitted by the South African Reserve Bank:
2. You can take up to R1 million per calendar year out of South Africa as a discretionary allowance
A South African resident over the age of 18 may take out up to R1 million per calendar year. These funds may be used for any legal purpose abroad (including for investment purposes), and includes your travel allowance, study allowance and gift allowance. If you are using the funds for travel abroad (excluding travel to Lesotho, Swaziland or Namibia), then you need to provide evidence in terms of a flight ticket or other transport arrangements, otherwise you don’t need to provide any documentary evidence regarding what the funds are to be used for.
3. You can take up to R10 million per calendar year out of South Africa as a foreign investment allowance
Provided you don’t have any outstanding tax payments due, as a South African tax payer over the age of 18 years, you can invest up to R10 million per calendar year abroad. This investment can be in property (buying a holiday house or second home), shares, unit trusts, or any other approved types of investments. The investment must must be in your name.
Note it is possible to invest more than R10 million abroad in a calendar year subject to approval by the Financial Surveillance Department of the South African Reserve Bank.
4. A tax clearance certificate is only required for amounts over R1 million
A tax clearance certificate obtained from SARS is only required if you wish to use the foreign investment allowance. You do not have to obtain one if you just wish to utilise the single discretionary allowance of up to R1 million per year.
5. The allowance limits do not apply to investments or travel to Swaziland, Lesotho or Namibia.
Swaziland, Lesotho and Namibia all form part of the Common Monetary Area (CMA). The exchange rates of all these countries are pegged to the Rand. There is no restriction on purchasing investments or other assets in these countries, and no restriction in terms of a travel allowance either.
While exchange controls can seem like a barrier to complete freedom over your financial assets, with a bit of planning and awareness of the rules and regulations, there are still ways to transfer your funds out of South Africa. To get the most out of the funds you transfer, take advantage of the better rates and lower fees that Charter Forex can offer you. For more information on how foreign exchange transfers out of South Africa can be done through Charter Forex, visit our website: Paying funds out of South Africa, or Contact Us for expert advice tailored to your situation.
For more information about exchange controls, visit the South African Reserve Bank website.