Money on the global move
If you are wanting to send move your money outside of South Africa, this is called investing abroad. This process has very strict rules that you must follow or you will be breaking the law.
In South Africa, the government allows you to send money overseas through two payment systems called allowances. However, you will only be allowed to use these systems if you are a SA resident who is older than 18 years old and has an official identity document.
The Single Discretionary Allowance
Through this system, you are allowed to send an amount up to R1 million overseas per year.
The Foreign Capital Allowance
Through this system, you are allowed to send an amount up to R10 million overseas per year. You will need to get approval from SARS and the Reserve Bank before you can send money through this system. All the documents required can be found on the SARS website, or by visiting a SARS branch office.
However, several rand denominated, South African investment avenues offer you exposure to foreign markets without going through the often onerous process of getting the clearances as mentioned above.
If you are hoping to move actual cold, hard cash there are also rules about this process:
- South Africa allows you to enter or leave the country with bank notes that are valued to a maximum of R25 000 per person.
- If you are travelling to or from Lesotho, Namibia and Swaziland, you can take in or bring out any amount of notes.
Tax law on global earnings
If you are a South African currently earning money from somewhere else in the world, be aware that the South African tax laws around this will change from 1 March 2020.
Before 1 March 2019, if you are a registered South African tax payer, employed by a South African employer, but were working in another country – then you were not liable to pay tax in South Africa. However, you would need to prove that you are physically out of the country for at least 183 days within a year, and during time, you need to prove that for at least sixty days in a row you were in another country.
Once you have proven this, and as long as you are formally employed overseas, then you could claim a tax exemption - Note that you do still need to tell SARS about the money that you are earning, even if you are not being taxed on it.
From the current tax year (2020), the new law will only exempt you from paying tax on the first R1 million that you are earning overseas. You still have to prove to SARS that you were out of the country for more than 183 days of the year, for one continuous period of at least 60 days, otherwise the exemption will not apply.
Different rules could apply to persons working abroad for a foreign employer
Firstly, there are double tax agreements that apply, and if you only return to South Africa for holidays of less than 90 days a year, you may succeed in convincing SARS that you are no longer a resident.
A double tax agreement means that you will pay tax in one country only. However SARS will look at many factors to determine residency – both objective and subjective. An example of a subjective query is whether your family still resides in South Africa, and whether your appointment is for a fixed term contract only. SARS also looks at the country where you are working, and what taxes may, or may not be payable there.
Technically there is no such thing as financial emigration
Financial emigration only happens when the taxpayer physically emigrates. Depending on circumstances, this may prove to be a viable option, keeping in mind that SARS will question the validity of the emigration, both objectively and subjectively. An example would be whether your family will remain in SA. If they remain only until the taxpayer can make arrangements their new home country, or until all financial matters in South Africa have been taken care of, SARS should accept the explanation. Of course the ultimate test is whether the person has been given citizenship in the adopting country.
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This article is not intended to provide financial advice. Speak to your financial advisor to understand how any investments may impact on you, given your specific circumstances