It is a new year with new opportunities and challenges. Setting goals and making resolutions is what we do as individuals at the start of a new calendar year.
From a South African exchange control perspective, South African resident individuals’ annual allowance is renewed. Individuals aged 18 years or older may transfer up to R11 million each calendar year offshore for any legal purpose, i.e., travel, study, investment offshore, monetary gifts or maintenance.
You may transfer up to R1 million as a single discretionary allowance (for which no approval is required) offshore and up to R10 million as a foreign investment allowance (for which you must have a valid tax compliance status pin letter). You are also permitted to use your single discretionary allowance as a travel allowance.
However, individuals who cease to be tax residents of South Africa may no longer avail of any unutilised portion of the single discretionary allowance available to residents annually. Individuals who ceased to be tax residents of South Africa must formalise their non-tax residency status with the South African Revenue Service (“SARS”) by submitting a cease-to-be-resident declaration. Once formalised, all individuals who cease to be residents of South Africa must request SARS for a tax compliance status pin letter for “emigration” before they are permitted to transfer any funds offshore. Individuals who cease to be residents of South Africa may avail of their annual foreign investment allowance (up to R10 million per calendar year) upon presenting a value tax compliance status pin letter for “foreign investment allowance”.
Important for non-tax residents that have been non-tax residents for at least three consecutive years during 2023 is that you will be allowed by your Authorised Dealer to payment of lump sum retirement benefits, subject to having a valid tax compliance status pin letter from SARS and documentation from the retirement fund indicating or confirming the final amount paid out.
Another noteworthy development is that, since 23 February 2022, South African residents may donate, lend and/or dispose of authorised foreign assets to other South African residents without specific approval of the Financial Surveillance Department of the South African Reserve Bank, subject to local tax disclosure and compliance by both parties.