Below we learn about the Two Million Annual Allowance that South African residents are able to transfer out of South Africa each calendar year. This Two million allowance is also know as the discretionary allowance.
Why is there is an Two Million Annual Allowance?
If you are not already aware South Africa operates a system of exchange control. For residents this means they receive certain allowances, that enable them to transfer a certain amount of funds out of South Africa, over a certain time period and for certain reasons.
One of these allowances is a Two million annual allowance.
Who does the Two Million Annual Allowance apply to?
- Residents over 18 years old qualify for a Single Discretionary Allowance of up to R2 million per calendar year.
- Residents under the age of 18 qualify for an allowance of R200,000.00 per calendar year (for the purpose of traveling only).
- See details here on how the annual travel allowance forms part of this two million rand
Is tax clearance required?
The discretionary allowance does not require any Tax Clearance Certificate for the individual transferring the money.
What is the Two Million typical used for?
As a discretionary allowance it is up to the individual but typical uses include:
- travel.
- maintenance transfers.
- monetary gifts and loans.
- foreign tuition fees.
- weddings and other special occasions.
- investments.
What is the process for transferring abroad all or part of your discretionary allowance?
The first step is registration with us which is free of charge and carries no obligation with it. You then deposit the funds in the bank account of our approved dealer (Investec) and it is then a simple case of agreeing when you wish to effect the transfer. Note that it is not required for you to transfer 2 million rand all in one go, you can simply use as much or as little of your two million annual allowance as you desire.
Please also note that the allowance is per calender year, this means any part of the two million not used does not carry over, but is lost.
What if you want to transfer more than Two Million?
There is a further annual allowance of R10 million rand per adult per calender year that you can also transfer, see here for more details.
How Merchant West Treasury Solutions help
We are FSCA approved and all our transactions go through our authorised dealer (Investec).
Our role is simply to ensure you get the best exchange rate, the best service and with the least aggravation. We are proud that most of our clients come from referrals from existing clients and in our preferred supplier status to some of South Africa’s leading investment houses.
To find out more about how we can help you with the transfer of your two million allowance call us on any of the numbers below or send us an e-mail.
Ph: Cape Town +27 (0) 21 424 2936