Exchange controls are regulations issued under the Currency and Exchanges Act that limit the amount of money individuals and entities can send out the country.
Governments use exchange controls to prevent unlawful transactions, large outflows of the local currency and to stabilise the economy.
The South African government has had exchange controls in place for many years but has gradually been relaxing them since 1997.
The regulations are made and overseen by the Governor of the South African Reserve Bank (SARB) and banks are appointed as authorised dealers in foreign exchange. You have to use these banks to buy and sell foreign currency and they are obliged to ensure that your transactions adhere to the regulations.
The regulations treat South African residents and non-residents differently.
South African residents who have a South African bank account and a South African identity book or card can send money out of the country in one of the following three ways:
1. R1 million annual single discretionary allowance
As a South African resident over the age of 18, you are allowed to transfer up to R1 million overseas each calendar year to use at your discretion when you travel, as an investment, to support family, for gifts or tuition using your single discretionary allowance (SDA).
Children under the age of 18 do not have their own allowance - the R200 000 a year allowance for residents under the age of 18 that was once in place has fallen away.
Any spending on your credit card will count towards this limit and credit card transactions are further limited to a maximum of R50 000.
The R1 million discretionary allowance does not carry over each year – what you do not use in any year, you lose.
You do not need to get tax clearance from the South African Revenue Service (SARS) before you can send this money offshore.
The Financial Surveillance Department of the South African Reserve Bank maintains records of all foreign exchange transactions and authorised dealers are required to check with the department if your allowance has been used.
You have to complete a Balance of Payments form or declaration.
2. R10 million approved international transfer
You can send up to R10 million each calendar year to invest offshore using what is known as the Approved International Transfer (AIT). This allowance used to be called the foreign investment allowance.
In order to use this exchange control allowance you need to get tax clearance from SARS and the AIT PIN from SARS. The PIN allows the exchange control dealer to view your tax compliance status and is valid for a year from the date of issue.
In order to obtain an AIT PIN, you will need to:
Be tax compliant,
Provide SARS with a list of your assets and liabilities over the past three years, and
Provide proof to SARS of where you sourced the funds.
You will also need SARB approval to use this allowance.
Before you can apply for tax clearance, you need to be tax compliant. This means you must have filed all your tax returns and any outstanding taxes and penalties must be paid. You can check your tax compliance status on the SARS eFiling website.
Your application for AIT approval may also be declined if you are a shareholder of a company or are the founder of a trust that is not tax-compliant.
The company tax return requires disclosure of shareholders and trust returns can also be cross-checked to individuals.
You will also be asked to disclose your assets and liabilities, at cost and market value. Failing to list these correctly can also result in your application being declined.
3. Special clearance
If you have exhausted both your R1 million discretionary allowance and your R10 million approved international allowance in any calendar year and you still want to transfer more money offshore, you can apply for special clearance from the SARB to transfer further amounts.
You will also need AIT approval.
Remember: If you were a South African resident but you are now living abroad, you 
may still be regarded as a resident of South Africa if you left the country without applying for formal emigration from the SARB before March 2021 or ceasing your tax residency from SARS after March 2021.
This includes residents who left South Africa as minors and who do not have a South African identity document. They can apply to the SARB to be regarded as non-residents for a single transfer.
Minors were defined as being under the age of 21 until 2007, and since then under the age of 18.
If you are not a resident of South Africa, you may still be subject to exchange controls for certain transfers.
1. Inheritances
If you inherit money from a South African tax resident, but you are not a resident, you 
can inherit and transfer the money abroad without restriction.
You will need to prove that you are non-resident because you have never lived in South Africa, or if you previously lived here you need to prove that you formally emigrated before 2021 or that you ceased your tax residency after April 2021.
2. Income and capital earned in South Africa
If you are not a resident of South Africa, you can transmit income earned here abroad using the R10 million allowance after obtaining an approved international transfer (AIT) pin from SARS. Non-residents do not have access to the R1 million single discretionary allowance.
3. Special clearance
If you are a South African who has ceased tax residency and you want to send income or capital that exceeds R10 million and that is not an inheritance abroad, you can apply to the SARB for special permission to transfer any amount in excess of R10 million. You will need to get the AIT pin from SARS.
 TIP
To transfer money from South Africa as a South African who has ceased tax residency you will need a South African ‘emigrant’ bank account. Have your income or capital gains paid into this account and then transfer it abroad. If you use a resident’s South African bank account the transfer may not be activated. |
