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South Africans working and living abroad – the excon considerations

02 October 2017   (0 Comments)
Posted by: Author: Louis Botha
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Author: Louis Botha (CDH)

Despite some people not being aware of it, an important issue to consider in this regard is the exchange control (Excon) laws that apply to such persons. In terms of the Exchange Control Regulations, 1961 (Regulations) read with the Currency and Exchanges Manual for Authorised Dealers (AD Manual), where a South African person who is a resident for Excon purposes works abroad, there are specific rules that apply. Section B.4(G) of the AD Manual, dealing with “residents temporarily abroad”, is of particular importance in this regard.

General provisions pertaining to residents temporarily abroad   

Section B.4(G) sets out the manner in which a resident temporarily abroad may make use of their South African sourced funds abroad for purposes of subsistence and the requirements to be met by such persons where they wish to temporarily export certain personal effects and other assets.

Firstly, such persons may make use of their R1 million single discretionary allowance (SDA) and of the R10 million foreign investment allowance (FIA) per calendar year without returning to South Africa. The SDA comprises an amount of R1 million per calendar year, which any resident who is 18 years or older may use for any legal purpose abroad, without obtaining a tax clearance certificate. For example, the SDA may be used for investment purposes or to send gifts to persons abroad, but may not be used to export gold or jewellery. It should be noted that there are also other rules that apply to the use of the SDA. In order to make use of one’s FIA and transfer an additional amount of R10 million abroad in a calendar year, persons have to meet the requirements contained in sB.2(B) of the AD Manual, which states, among other things, that persons must have a tax clearance certificate issued by SARS. 

Furthermore, residents temporarily abroad may use their local debit and/or credit cards within the SDA limit. However, it is important that persons do not exceed the R1 million limit permitted by the SDA or the R10 million limit, where persons have been granted permission to make use of their FIA. In other words, if persons transfer South African funds abroad by making use of their SDA and they use those funds for various purposes, including the purchase of goods with their credit or debit card, they must ensure that the total amount transferred abroad does not exceed R1 million, as this would constitute a contravention of the Regulations, read with the AD Manual.

Residents temporarily abroad may also receive pension and retirement annuities as mentioned in sB.3(A)(ii) of the AD Manual as well as monetary gifts and loans as mentioned in sB(4)(A)(x), which deals with the rules regarding the use of the SDA. However, no other foreign currency may be availed of without the specific prior written approval of the Financial Surveillance Department of the South African Reserve Bank (FinSurv). 

From a procedural perspective, if persons make use of a general or special power of attorney to facilitate transfers in terms of their SDA or FIA, a certified copy of the person’s valid green barcoded identity document or Smart identity document card must accompany the power of attorney. 

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This article first appeared on cliffedekkerhofmeyr.com.


 

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