August 23, 2021
Your annual allowances explained
When it comes to externalising your hard earned Rands and buying foreign currency, there are a few exchange control regulations that you should be aware of.
We’ve put together an overview of the important facts relating to your annual allowances (granted by the SARB), as well as some insights to help you make the most of them.
1. Single Discretionary Allowance (SDA)
South African citizens are permitted to use their annual single discretionary allowance (SDA) of R1 million for any legal purpose, such as foreign payments to purchase property, invest offshore, make card purchases and pay for travel expenses outside of South Africa and the CMA. The SDA is granted to individuals every calendar year (expiring on 31 December) and does not require foreign tax clearance from SARS.
2. Foreign Investment Allowance (FIA)
In addition to your SDA, individuals can also make use of a foreign investment allowance (FIA) of up to R10 million per calendar year. The same rules and regulations apply, the only difference being that your FDA requires a foreign tax clearance certificate (FTCC) from SARS. This entails an application with SARS, requiring “proof of source and availability” of funds. Once your application has been approved, your FTCC is valid for 12 months from date of issue and you can draw down on its as often as you like.
3. Special Approval Applications
Furthermore, it is possible to externalise amounts greater than the combined value of your SDA and FDA allowances (R11 million per calendar year), by making a special approval application to the SARB. In order to submit your application to the SARB, you must first request a “Letter of Compliance” from SARS. It should be noted that there is no limit to the value that can be applied for, no restriction on the number of applications that can be made in this regard and there is no longer any exit levy or penalty payable in respect of such transactions.
Utilising these allowances to externalise Rands for foreign investment has been a very attractive option for South African citizens looking to diversify risk from their domestic portfolios through assets that are denominated in foreign currency.
Currency Partners is proud that some of the biggest names in Financial Services and Property have chosen us as their preferred specialist provider of foreign exchange services for their clients.
We handle all the complexities of obtaining your Foreign Tax Clearance Certificate from SARS, as well as any exchange control matters and applications as a complimentary benefit of our service. Furthermore, by giving you access to the best pricing and service available in the market, we add value to your individual requirements and make your money go further. Keeping an eye on the markets, so you don’t have to, we make sure that you never miss out on a favourable exchange rate. And with our ‘better price promise’ you can always be assured of saving with Currency Partners.
To speak to an expert, please contact us on email@example.com or +27 21 203 0081. Alternatively, you can get the ball rolling by completing our short online registration here – it’s free and places you under no obligation afterwards.
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