At the time of writing this blog post (16-09-2018) the Rand was trading at just on R15 to the US Dollar (ouch!). The only time the Rand has been weaker in the last 10 years was at the beginning of 2016 when it shot over the R16 mark. Are you thinking about getting some money out of the country? Had you moved some money into US Dollars back in 2010 at R6 a greenback, you would have more than doubled your money today. Now we aren’t suggesting that you withdraw your life savings, pack it up in a duffle bag and ask your nephew, who is leaving to study medicine in the States, to smuggle it in for you. Having said that, getting some money offshore should form part of your overall investment strategy and in this blog post we are going to touch on how you can get your money out of the country legally.
There are two ways to move money offshore:
A Single Discretionary Allowance
Once every calendar year every South African resident who is older than 18 can transfer 1 million Rand or less out of the country via the single discretionary allowance.
According to the South African Reserve Banks’s website, the single discretionary allowance may be used for any legal purpose abroad (including investment purposes) at the sole discretion of the resident (that would be you) without any documentary evidence having to be produced – except for travel purposes in which case you need to provide proof of a ticket.
If you want to get more than R1 million out of the country each year, the process is going to be a little more difficult and will require a little more paperwork.
Foreign Investment Allowance
The second way to get money out of South Africa each year is via your foreign investment allowance.
In this instance you need to get specific tax clearance for foreign investment on your SARS efiling account. You will be asked to submit a list of your assets and liabilities for the last 3 years as well as provide a description on where you got the money (like salary, inheritance, investments, distribution from a trust) as well as providing all the supporting documentation which is listed on the SARS website.
The paperwork around this process is a lot more arduous, but for good reason. You can transfer as much as R10 million a year out of the country if you get tax clearance.
Once you have filed the tax clearance submission, SARS might come back with a few questions for clarity.
How much is your annual foreign investment allowance? A cool R10 million.
If you’re tax compliant and honest in your dealings you can take R11 million Rand out of South Africa each year.
Until next time.
The Wise About Life team