|It is common nowadays for South African persons to diversify their investment portfolio and to invest in foreign jurisdictions. When doing so, South African residents must ensure that they transfer funds abroad in a manner that complies with South Africa’s exchange control rules. In our Tax & Exchange Control Alert of 6 October 2017, we explained how South African resident individuals can make use of their annual single discretionary allowance (SDA) of R1 million, to transfer and take funds abroad without the prior approval of the South African Reserve Bank (SARB) and without first having to obtain a tax clearance certificate.
Where an individual wishes to transfer more than R1 million abroad during a calendar year, such person would have to make use of their foreign investment allowance (FIA), as dealt with in the Currency and Exchanges Manual for Authorised Dealers (AD Manual), which was most recently updated on 18 April 2019.
What is the foreign investment allowance (FIA)?
In terms of the FIA, South African resident individuals can transfer up to R10 million abroad during a calendar year, over and above the R1 million that can be transferred by making use of their SDA.
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“SHUT UP, SHUT UP, SHUT UP!” – These inspirational words came from South Africa’s (maybe not so honourable) Minister of Police, Bhekokwakhe “Bheki” Hamilton Cele.