Foreign Exchange Allowances for South African Residents

South African residents who want to send money abroad, whether for travel, investment, education or supporting family overseas, operate within a system known as exchange control. This page explains the general structure of that system and the two main allowances most individuals rely on. As with customs limits, the specific amounts involved are reviewed from time to time, so always confirm the current figures with your bank or with the South African Reserve Bank before making plans around them.

Why exchange control exists

Exchange control is the mechanism South Africa uses to manage the flow of money across its borders. It is administered by the South African Reserve Bank, generally referred to as SARB, but in practice most individuals never deal with SARB directly. Instead, they use an authorised dealer, which in almost all cases is a commercial bank that has been granted authority to process foreign exchange transactions on SARB's behalf.

The Single Discretionary Allowance

The first allowance most South Africans encounter is often called the Single Discretionary Allowance, commonly abbreviated as the SDA. This allowance is available to any South African resident over the age of eighteen who has a South African tax reference number, and it can generally be used for a wide range of purposes without the need to explain or motivate the transfer in detail. Typical uses include:

• Funding travel abroad, including accommodation and spending money.
• Paying for study, courses or exams taken outside South Africa.
• Sending gifts or financial support to family members living abroad.
• Making smaller personal investments or transfers offshore.

Because this allowance is discretionary, the bank processing the transfer does not usually require detailed supporting documents for the purpose of the transfer itself, although standard identification and compliance checks still apply.

The Foreign Investment Allowance

For larger transfers, typically related to buying property abroad, investing in foreign businesses or moving larger sums into offshore investment accounts, residents can apply to use a second, larger allowance generally known as the Foreign Investment Allowance, or FIA. Unlike the discretionary allowance, using the FIA usually requires the resident to first obtain a tax compliance status confirmation from SARS, which verifies that the person's tax affairs are in order before the larger transfer is approved by the bank.

How the two allowances relate

In broad terms, the discretionary allowance is meant for everyday and moderate personal use, while the investment allowance is meant for substantial capital transfers. A resident can generally use both allowances within the same year, since they are assessed separately, but the investment allowance involves more paperwork because of the SARS tax clearance step.

What the bank will generally ask for

Exact requirements vary by bank, but when using either allowance you should expect to provide standard information such as proof of identity, proof of South African tax residency, and, depending on the amount and purpose, documentation explaining what the funds will be used for. For the investment allowance specifically, the SARS tax compliance status process is a required step before the transfer can proceed.

Minors, companies and other special cases

Different or additional rules can apply to minors, to trusts, and to companies wanting to move money offshore, since these are not treated in exactly the same way as an individual adult resident using a personal allowance. If your situation involves a minor, a trust, a business entity or emigration of your financial affairs, it is worth discussing the specifics directly with your bank's foreign exchange department or with a professional who specialises in exchange control, since the standard discretionary and investment allowances described here may not apply in the same way.

Before you transfer money abroad

• Confirm the current allowance amounts and any recent policy changes with your bank, since these are reviewed periodically by SARB.
• Make sure your tax affairs are up to date well before you need to use the investment allowance, since obtaining tax compliance status can take time.
• Ask your bank which allowance applies to your specific purpose, since some transactions may not fit neatly into either category.
• Keep records of your transfers, particularly for larger amounts, in case you need to refer back to them for future transactions or tax purposes.

Exchange control rules are a normal part of managing money across borders from South Africa, and understanding the general structure of the discretionary and investment allowances makes it easier to plan ahead and have a more straightforward conversation with your bank when the time comes.