Understanding foreign exchange allowances
Every calendar year, South African residents over 18 can send money abroad using a Single Discretionary Allowance (SDA) and an Approval of International Transfer(AIT).
The SDA allows you to send up to R1 million abroad annually without special approvals or paperwork. This flexible allowance can be used for travel expenses, gifts to friends or family, offshore investments, and paying for services abroad, among other things. If you are taking a holiday, for example, you can readily use your SDA to cover travel expenses.
If you need to send more than R1 million abroad, you will need to apply for an AIT, which allows you to transfer an additional R10 million per calendar year. This isn’t as straightforward as the SDA, as it requires approval from the South African Revenue Service (SARS).
To apply for an AIT, you will need:
- A valid South African tax number
- A Tax Compliance Status (TCS) pin from SARS
- Supporting documents related to the transfer
So, if you’re looking to go on a European holiday, you can use your SDA, but if you’re purchasing a $300,000 holiday home offshore, you must apply for an AIT. Together, the SDA and AIT allow you to move up to R11 million offshore per annum. These allowances renew on the 1st of January every year.
Can you send an unlimited amount of funds abroad?
The short answer is yes – although you will need approval to do so. In instances where you find yourself needing to transfer more than R11 million, you must get a letter of compliance from SARS and receive special approval from SARB. Each application is reviewed individually, and for this reason, it’s recommended that you work with experts to help maximise your chances of success.
Exchange Control Regulations for businesses
Exchange Control Regulations must also be met by companies involved in foreign currency transactions. Governed by the SARB, these regulations impact businesses by requiring approval for certain cross-border transactions, including foreign investments, dividends, and payments for imported goods and services.
Notable facts about Exchange Controls:
- They apply to all transactions, no matter the size
- Each transaction requires approval
- Only Authorised Dealers can process foreign currency transfers
- Every outbound transfer must meet the permissible conditions
- All foreign payments must be reported to SARB
Forex specialists vs traditional banks
While it may seem easier to turn to your bank for all your international money transfer needs, traditional banks often have a myriad of shortcomings. They – more often than not – won’t offer competitive or transparent exchange rates, nor will they provide expert guidance on Exchange Control Regulations. Working with an expert forex provider like Future Forex can save you money and simplify the compliance process, ensuring you get the most out of every transfer.
Understanding the South African Exchange Control Regulations doesn’t have to be a daunting exercise. With proper knowledge and expert assistance, you can navigate the process confidently.
Unsure where to start? The Future Forex team is here to assist with complimentary AIT and SARB applications while ensuring you get the best exchange rate for your international money transfer. Contact us today for expert guidance and an all-in-one forex solution.
