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Financial emigration: The two routes of moving money offshore

By August 12, 2015October 10th, 2023Financial emigration

Financial emigration: The two routes of moving money offshore

August 12, 2015

You’ve decided to pack up and leave South Africa behind.

Tough choice, but you know it’s the right one – you’ve gone over this a million times in your mind. Getting all the admin sorted, well, that’s a whole different ball game. It’s not just a matter of choosing which institution will give you the best service and rates, where to reinvest or ‘move’ your money, but also a matter of knowing what you’re actually allowed to do in the first place with financial emigration.

It was easy back in South Africa. There you knew which institutions were reliable, what to do to be compliant and most importantly; what your rights were. But now you are in desperate need of sound financial advice.

Step aside, Google, the experts are here to help.

There are two routes you can take. Choosing which one will depend on how much money you want to transfer, as well as the source of the money you want to transfer.

If you have no special requirements or your move abroad is temporary, then you don’t need to worry too much. South African exchange control regulations dictate how much you can transfer and which rules apply to different types of income. These controls don’t apply within the Common Monetary Area (CMA), which includes South Africa, Namibia, Lesotho and Swaziland.

Discretionary allowance

South Africans over 18 enjoy a single discretionary allowance (DA) of R1M per year – no tax clearance is necessary for this and the money you move can be used for any legal purposes. Your South African ID number will be recorded when you make this transfer.

Foreign investment allowance

In addition to this discretionary allowance, an individual is allowed a foreign investment allowance (FIA) up to R10M offshore, outside the CMA (and this amount cannot be reinvested in the CMA to create a transfer loop). A tax clearance certificate is necessary for any transfers that fall within the FIA.
Both the DA and FIA require an active SARS tax record.

If you want to transfer additional amounts, and/or the source of your income is from retirement annuities (before age 55), inheritance or from additional passive income or proceeds from the sale of assets, then it may be best to consider financial emigration.

You may not be aware, but changes in tax regulations make it possible for you to cash in your retirement annuities before age 55 and transfer the proceeds abroad. If you are expecting an inheritance it could also benefit you to emigrate financially before the event.

Financial emigration

Financial emigration does not take away your citizenship or affect your rights as South African, it simply ties up your finances in South Africa and allows you the freedom to manage your money the way you want. If you go this route, all your current South African finances will be consolidated into a single blocked rand account which will be managed by the institution that assisted you with your financial emigration.

Of course, whichever route you take, you’ll need to ensure that it’s the right one for you and that you follow the right processes.

As an authorised financial services provider with specialisation in financial emigration services, is best equipped to assist you with your queries – plus you won’t owe us anything until our services to you have been concluded. This is just one way we see to it that all our customer are happy customers. Get started now and we’ll call you.

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