The elections have come and gone, and just recently we had the news that our economy posted the worst growth figures in a decade. There is a sense of doom and gloom at the moment, right? President Ramaphosa seems to be trying to keep it together while he finds more money for Eskom and as a result of all the ongoing uncertainty, the Rand is trading at R18 to the Pound and R15 to the US Dollar.

 

Many South Africans are considering their options, and one of those considerations is what to do with their hard-earned money?

Are you asking yourself these questions lately?

  • Do I keep my money in a bank account and earn some interest?
  • Do I invest in the local equity markets and hold on for the long haul?
  • Do I shift some of my money offshore and take a punt that the Rand will slide out even further over the next few years?

If you are considering moving money outside of South Africa, you probably want to sit up and take notice of this information. It’s safe to say that the average South African probably has a sense that they can move money out of the country, but when pressed on how much they can move, they might fumble around for an answer.

 

There are two ways to move money offshore:

 

1. 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’ 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.

 

2. Foreign Investment Allowance

The second way to get money out of South Africa each year is via your foreign investment allowance. This is a little trickier than your single discretionary allowance because you need to get specific tax clearance for your foreign investment on your SARS eFiling.

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 from (a salary, inheritance, investments, distribution from a trust etc) as well as provide all the supporting documentation which are 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.

If you’re tax compliant and honest in your dealings, you can take R11 million out of South

Africa each year.

 

Until next time.

The Moneyshop Team