Financial planning considerations when investing offshore

SOUTH Africa is considered a small emerging market in global terms, with the local stock market accounting for approximately 0.40% of the total global equity market capitalisation. This relatively small footprint underscores the importance of geographical diversification for local investors.

- ROBYN LAUBSCHER

All transfers of funds abroad originating from South Africa are subject to exchange control regulations administered by the Financial Surveillance Department of the South African Reserve Bank (SARB). While these regulations aim to manage capital flows, they also provide permissible avenues for individuals and companies to transfer funds abroad.

Allowances available to investors

Single discretionary allowance (SDA) South African resident individuals over the age of 18 are granted an annual single discretionary allowance of R1 million per calendar year by the SARB, which can be used to externalise funds for any legal purpose and does not require foreign tax clearance from Sars. Children under the age of 18 are granted an annual allowance of R200 000 each.

Individual foreign capital allowance (FCA)

In addition to the SDA, South African resident individuals can access a foreign capital allowance of up to R10 million per calendar year. The FCA requires foreign tax clearance from SARS, which is valid for 12 months.

Special approval applications