Question:
What is maximum amount that one can transfer out of South Africa? Is it a once-off total amount? Is it calculated yearly or over a person's lifetime? Will payments for international policies and studies (e.g. a child's university costs abroad) reduce this amount or are there exclusions?

I'll appreciate any additional information in this regard.

Answer:
Giving one’s finances an international flavour is something that has, over the years, intrigued and attracted many investors. What is important is that this is done within the ambit of the law to avoid any negative consequences. In addition to this, there has been a steady move to encourage matriculants and even university graduates to explore opportunities (be it study or travel) beyond our borders with the unenviable responsibility of a parent to fund these expeditions with the humble rand.

When it comes to exchange controls, the South African Reserve Bank governs this and is pretty clear regarding the allowances given to South Africans for spending and/or investing abroad.

Firstly, when considering offshore investing, one has the opportunity to invest in local structures and gain international exposure via an asset swap or through choosing to physically invest offshore in a different currency by moving your funds out of South Africa.

Should you choose to physically transfer this money offshore you should take careful note of the exchange controls that govern this. Although the information regarding these allowances may seem complex, there are some basic guidelines to consider. Private individuals (natural persons) may invest a total amount of R2-million outside of the CMA (Common Monetary Area) provided they are taxpayers in good standing and over the age of 18 years. Prior to transfer, you need to obtain clearance from the South African Revenue Services (SARS) by means of a 'Tax Clearance Certificate' as well as from the South African Reserve Bank (SARB). This allowance is once off and is known as an individual foreign capital allowance.

Secondly and in addition to the above, payments of a personal nature may also be allowed without the requirement of a Tax Clearance Certificate. Residents (natural persons) who are over the age of 18 years may be permitted to avail of a single allowance within an overall limit of R500 000 per individual per calendar year. This may be apportioned as follows:

• monetary gifts and loans

• donations to missionaries

• maintenance transfers

• travel allowances

This is not designed to prohibit or limit the payments per se but rather ensure the foreign exchange is used for the purpose stated and not for capital transfers (i.e. foreign capital allowance). Each of the apportioned titles have further sub-requirements that need to be met/adhered to and accumulate towards the overall limit of R500 000 as mentioned above.

Regardless of whether looking to invest or support a child abroad, one will need to work through an 'Authorised Dealer' (such as a bank) to facilitate the necessary transfers. If you are looking to invest abroad, it would be prudent to consult with a Certified Financial Planner to construct a meaningful plan incorporating a suitable strategy that explores the impact (whether positively or negatively) of holding some international exposure in your portfolio.

If you would like acsis to put you in touch with an independent financial planner, click here!

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