*This content is brought to you by Sable International, specialists in securing secondary residency and citizenship for South Africans. Sable can help relocate yourself and your family, along with your business to the UK.
By Andrew Rissik*
The new year is a perfect time for South Africans to start planning how they will make use of their discretionary allowances to transfer large sums of money overseas without a tax clearance certificate. If you’re married, or have children over 18, you can move much more than R1 million without a tax clearance certificate in a calendar year.
Understanding your annual discretionary allowance
The single discretionary allowance (SDA) allows a South African (18 years or older) to send R1 million out of South Africa annually. Since various SDA subcategories were eliminated in April 2015 you can now use your allowance for any legal purpose abroad.
This is what SDA allows you to do:
- Invest or advance R1 million to foreigners and South Africans living abroad, without obtaining a tax clearance certificate
- Spend some of the R1 million per person on overseas travel, provided that the aggregate spend does not exceed R1 million per year
But how do you transfer R2 million over this period?
It’s quite simple really.
All you need to keep in mind is that every year you are given a discretionary allowance of R1 million. Your partner, if they are a South African citizen, receives the same amount. This means that over 2017 you can together send R2 million. You can choose to send this in one lump sum, or you can choose to stagger the payments over the year.
Not having to obtain a tax clearance certificate means you can transfer these funds with very little admin. The large amount that is permissible under current regulations makes it easier for you to make a serious offshore investment, rather than having to do it in dribs and drabs. But that’s a decision that you can make depending on your circumstances.
Send more than R2 million each year
Parents with children who are over 18 years old can move R1 million offshore under each child’s name without needing to get tax clearance. All you need to do is make sure your child applies, and receives, a South African tax number.
We can do their tax number application to SARS for a nominal fee of R380. Exercising this option can make a huge difference to the amount of money you can send offshore without tax clearance in a calendar year.
You can also apply for further investment allowances that require tax clearance certificates. For more information on these, and other ways of getting your money where you want it to be, pop us an email and we’ll walk you through the various allowances available to you.
Use these allowances while they’re still available
Many analysts are predicting some severe cash outflows from emerging markets following Donald Trump’s victory in the US election earlier this year.
Trump has outlined stimulus packages that could send bond yields higher in the United States. In these cases, volatile emerging currencies, like the Rand, are most at risk.
Add to this the fact that South Africa has had a history of exchange controls and a reversal in our currently liberal offshore allowances could be on the cards.
It’s only in the last decade that these rules were significantly relaxed. Should the government decide that too much money is flowing out of South Africa, it may decide to bring capital controls back into effect.
If you’re thinking about getting money offshore, it’s best to do so while you still can with ease.
We can help you make use of all your discretionary allowances. Give us a call on +27 (0) 21 657 2153 or send us an email [email protected].
- Andrew Rissik is the director of Forex and International Projects at Sable International.