Transfer funds out of SA before year end

Let’s take a look at the essentials you need to know so that all your international transfers can be sent off without a hitch and, ideally, before they expire.

What is the Approval for International Transfer (AIT)?

Before we talk allowances, let’s discuss the Approval for International Transfer (AIT). This is a PIN from the South African Revenue Service (SARS) that permits you to transfer funds out of the country.

An AIT combines the “Emigration” TCS PIN and the “Foreign Investment Allowance” TCS PIN that were used before changes made by SARS. Both South African residents and non-residents require it to make international money transfers.

SARS allows South African tax residents to transfer up to R1 million out of the country per calendar. An AIT is needed for any amount higher than this.

Anyone who’s ended their tax residency with SARS and acquired a “Notice of Non-Resident Tax Status” letter but who still plans to transfer funds abroad will need to have an AIT for every transaction.

A closer look at allowances and how to use them

As a South African resident, you’re granted two allowances for transferring money internationally that reset annually on 1 January.

The single discretionary allowance (SDA)

The SDA allows transfers of up to R1 million without the need of an AIT. It’s meant for any legal purchase, including investment. It’s generally used for things like loans, gifts, donations, maintenance and alimony payments. It may also be used for travel expenses but within 60 days before your departure. SDAs may also be used for overseas purchases if you plan to study abroad. In this case, you’ll need to show proof of registration, and transactions made on your debit or credit card will count towards your SDA.

See also: Forex tips: How to pay your study abroad fees from South Africa

The Foreign Investment Allowance (FIA)

The FIA requires tax clearance from SARS. Originally, it had a cap of R4 million for international transfers, but this was raised to R10 million per person as of 1 April 2015. Family units are entitled to a limit of R20 million.

To make use of it, you’ll need to be over the age of 18, have South African residency and have an AIT that’s valid for 12 months. The FIA is meant for funds from “capital sources” like offshore property purchases or investments.

Other information about transfers

The South African Reserve Bank (SARB) will require special dispensation for transfers of amounts greater than R10 million per calendar year. While most of these cases are approved, they’re still judged individually according to the SARB’s strict exchange controls.

And what about inheritances? As a South African resident, the previously mentioned limits apply. As a non-tax resident, if you’re no longer active on the SARS registered database or never had an SA tax number, the SARB allows a special concession that allows the transferral of offshore inheritances of up to R10 million without tax clearance.

When to use your allowances

Since your allowances are tied to the calendar year rather than the tax year, if you plan on sending any funds abroad, the latest you may consider doing so ought to be mid-November. SARS tends to work with fewer staff than usual over the December period, so there’s a chance that receiving a certificate may take longer than you’d like.

Also, if you plan to make a large payment or purchase something like a property, it may be best to split your payment between December and January, giving you the advantage of utilising this and next year’s allowances.

How do allowances work if you’re a non-tax resident?

Once the time comes to tax emigrate, you may apply for an Emigration Tax Compliance Status Certificate. This will confirm you’re in good standing with SARS and allow you to transfer any remaining capital offshore of up to R10 million. However, this is only valid for 12 months and is only issued once.

After the year-long grace period, you’ll need to apply for a Foreign Investment Tax Clearance certificate if there are any funds you still need to transfer abroad. This will prove they were secured from a legitimate source and that your tax affairs are in order. You’ll also need to apply for a new certificate for any future offshore transfers you’ll want to make.

After leaving South Africa and changing your status to become a non-resident, you’ll lose access to the SDA. You’ll also need permission from SARS to transfer any “income source” funds out of the country, such as rental earnings, dividends or pensions.

Don’t worry, though. You’ll still be able to send funds abroad, but all transactions will have to be made as FIA transfers. You’re also going to need a certificate of good standing from SARS every year and to maintain an eFiling profile to ensure you remain compliant.

Need to do an international money transfer? We can assist you. Contact our forex team on +27 (0) 21 657 2153 or saforex@sableinternational.com.