Exchange control myths: what residents need to know

With so many South Africans travelling abroad, there is often confusion surrounding what they can and cannot do when using their local banking facilities abroad.

- Michelle Phillips & Richan Schwellnus

Whether travelling abroad for leisure or exploring potential emigration opportunities, complying with South Africa's banking and exchange control regulations, as enforced by the South African Reserve Bank (Sarb), is critical.

To avoid nasty surprises such as frozen bank accounts, or being stranded abroad, here's a breakdown of some of the most prevalent misconceptions:

1. The end of the single discretionary allowance (SDA)

Myth: The R1 million single discretionary allowance has been abolished.

Fact: While the former R200 000 annual allowance for residents under 18 has disappeared, the SDA for resident adults (18 years and older) remains in place. Every South African resident adult is still permitted to transfer up to R1 million abroad per calendar year under the SDA.

For larger transfers, individuals may also access an additional foreign capital allowance (FCA), coupled with approval for international transfer tax compliance status PIN, allowing transfers up to R10 million.

Anything beyond this threshold requires pre-approval from Sarb for international transfers.

2. Holiday expenditures