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South Africans can use their yearly allowances to transfer money out of the country. There are two types of allowances, each with various requirements. Here’s how to use them to move money out of South Africa legally and cost-effectively.
Use your allowances before the end of 2019
South African citizens get two yearly allowances for transferring money abroad.
Both allowances renew every year, so if you transfer funds internationally before 31 December 2019, you’ll be able to transfer an additional R11 million next year, in 2020.
Use your allowances now to give you peace of mind that come next year, you can transfer more money or save your next yearly allowance for when the exchange rate works for you.
You’ll need to act quickly to avoid disappointment – SARS processing times can increase at the end of the year, resulting in delays that could prevent you from using your 2019 allowance.
In our experience, if you have not submitted your tax clearance application by the first week of December, the chances of getting approval are quite slim. SARS go on skeleton staff from 16 December for the holiday season, and processing times can take longer during this time.
How much can I transfer out of South Africa each year?
South African citizens, regardless of their residency, have two yearly allowances for transferring money out of South Africa:
- R1m single discretionary allowance (SDA)
- R10m foreign investment allowance (FIA)
The SDA allows you to transfer up to R1m without getting a Tax Clearance Certificate. If you want to move more than R1m, you’ll need obtain a TCC from SARS to use your R10m FIA.
Differences between SDA and FIA
The single discretionary allowance of R1m per year can be used for travel, foreign investment, study and alimony payments.
The foreign investment allowance for larger amounts up to R10m will need a TCC from SARS. Many South Africans looking to make sound offshore investments or mitigate their currency risk choose to use this allowance each calendar year.
Can I transfer more than my allowances?
After you’ve used your R11m allowance for the year, you’ll have to make a special tax clearance application to SARS and a further special application to the SARB to allow you to transfer more. This is quite a complex procedure and you often must give extensive reasons for your transfer.
Your annual allowances renew in January each year, so if you need to move more than R11m, it’s very important to make your transfer before the end of the year. From January, you can then make use of the allowances again.
How to double (or triple) your discretionary allowance
Each South African has a discretionary allowance of R1m for transferring money out the country. If you have a partner, you can together transfer up to R2m, and if you have children over 18 years old, you can transfer an additional million per child.
Methods of transferring money out of South Africa
There are several ways to transfer money out of the country, from bank transfers to various money transfer services to forex brokers.
When dealing with larger foreign currency transfers, an experienced forex broker can provide specialised knowledge of the markets, forex risk management, competitive exchange rates, market orders, hedging facilities and personalised service to provide you with the best transfer options and help you get the most for your money.
For over 20 years we’ve been helping individuals and businesses make international transfers out of South Africa. Our world-class service standards and expert consultants ensure that you get the most out of your Rands. Send us a mail at [email protected] or give one of our brokers a call on +27 (0) 21 657 2153 to get started.
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