With reference to the South African Reserve Bank’s website, exchange controls aim to, amongst others, prevent the loss of foreign currency resources through the transfer abroad of real or financial capital assets held in South Africa. Exchange control regulations are applied within the Common Monetary Area (“CMA”) consisting of South Africa, Namibia, Lesotho and eSwatini (previously known as Swaziland).
With this in mind, here are three guidelines for individuals to consider:
1. Single Discretionary Allowance (“SDA”):
South African exchange control residents 18 years and older each has ZAR 1 million as a single discretionary allowance (“SDA”) to externalise for legal purposes abroad, including passive investments, without the requirement to provide supporting documents to transfer the funds (except for travel purposes). If for travel purposes, then an airplane ticket needs to be submitted to the resident’s Authorised Dealer within the bank.
Exchange control residents under the age of 18 years have a travel allowance of R200,000 per calendar year.
Local payments of airfares are not part of one’s travel allowance, but payments of accommodation (e.g. hotels, cruises and tours) are part of it.
For all SDA transfers, regardless of age, the resident must submit a valid green, bar-coded South African identity document or smart ID card to his / her Authorised Dealer when transferring the funds abroad.
2. Foreign Investment Allowance (“FIA”)
Exchange control residents of 18 years and older with a Tax Clearance Status of “Good standing” issued by the South African Revenue Service may invest up to ZAR 10 million outside the CMA per calendar year. This is in addition to each resident’s SDA. Therefore, if you are an exchange control resident, and you do not travel abroad within a specific calendar year, then you may transfer up to ZAR 11 million outside the CMA for investment purposes.
If you wish to externalise more than the SDA and FIA per calendar year, then you must submit an application via your Authorised Dealer to the Financial Surveillance Department of the SARB for approval which includes the motivation for doing so.
Effective from 23 February 2022, exchange control residents may donate, lend or sell legitimate foreign assets held to exchange control, subject to local tax disclosure and compliance. In addition, foreign assets inherited from a South African estate may be retained offshore by the heir without having to apply for exemption from the SARB.
3. What about Krugerrand coins and hard cash?
An exchange control resident may, with his / her Authorised Dealer’s approval, export Krugerrand coins or the equivalent in fractional Krugerrand coins of up to R30,000 as gifts to non-residents, subject to completion of SARS’ Customs declaration.
Residents and visitors alike may only import or export SARB notes or banknotes (“cash”) to the value of ZAR 25,000 when travelling to or from South Africa. Visitors to South Africa may bring the equivalent of up to ZAR 25,000 in foreign currency in cash with them to convert to ZAR. Should they wish to convert ZAR to foreign currency after visiting and when leaving South Africa, they should retain confirmation of the conversion of to up to ZAR 25,000 in support of this exchange.
For any exchange control related queries, please contact Suzanne Smit suzanne@fidelisvox.co.za or Marteen Michau marteen@fidelisvox.co.za.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)