Exchange Control updates following 2022 Budget Review

During the 2022 Budget Review, the Minister of Finance announced some important changes to Exchange Control Rulings:

1.  Retention of foreign gifts and other authorised foreign assets abroad

Without having to declare to an Authorised Dealer and effective 22 February 2022, exemption from Regulation 6 and 7 is provided as follows: 

a.     Resident individuals may receive and retain abroad monetary and other legitimate gifts and donations received from a non-resident source. 

b.     Resident individuals may retain foreign assets inherited from a South African estate, which date of finalization of the Liquidation and Distribution Account should be on/ after 22 February 2022. 

c.      Residents with authorised foreign assets may lend and/or dispose of such authorised foreign assets to other South African residents, subject to local tax disclosure and compliance. *

The dispensation shall not apply retrospectively, and contraventions before 22 February 2022 should still be regularised with the Financial Surveillance Department of the South African Reserve Bank, through the client’s primary bank.

* It is important to note when externalising funds, resident individuals must still fund an offshore account in their own name before gifting/loaning funds to 3^rd party resident offshore irrespective of the age of the recipient. 

Example 1:  A spouse may now fund their partner’s offshore pension, but funds need to be externalised to an account in their own name before being transferred to the pension account.  This is to ensure accurate Balance of Payment reporting.

Example 2:  A resident individual may avail of their allowances to externalise funds. The resident may now use this offshore asset to fund a minor’s account offshore. 

2.  Capital transfers: Private individuals’ resident in South Africa

a.     Tax compliant South African resident individuals may now invest authorised foreign capital in excess of R10 million foreign capital allowance (Special Approval) per calendar year via foreign domiciled and registered trusts.

How can Currency Partners assist your clients?

Currency Partners can assist clients in navigating the complexities of exchange control regulations. By giving you access to the best pricing and service available in the market, you can make significant savings on the exchange rates with peace of mind that you remain compliant.

To speak to an expert in our specialist Private Clients team, email enquiries@currencypartners.co.za.