The South African Reserve Bank’s Financial Surveillance Department, previously known as the Exchange Control Department, has announced several changes to the department since August 2011, many of which reaffirm the government’s position to move away from stringent controls over foreign exchange flows out of the country.
The changes are consistent with the Minister of Finance Pravin Gordhan’s announcement of the shift from exchange controls to a system of prudential regulation, where improved surveillance will replace unnecessary administrative controls.
“Since financial surveillance is an important pillar of financial stability, the drafting of a document relating to a modernised policy and legislative framework has already commenced. The broad strategy remains prudential management of foreign exposure risk, along with improved management of capital flows and maintaining macroeconomic and financial stability.”
On the 23rd December 2011 as part of its strategy to further relax foreign exchange control rules for individuals, the Financial Surveillance Department announced that SA resident individuals may remit funds abroad for investment purposes within the R1 Million discretionary allowance per calendar year.
The discretionary allowance now entails the following:
- Donations to Missionaries
- Maintenance Transfers
- Monetary Gifts and Loans
- Travel Allowance
- Study Allowance
- Alimony and child support
- Wedding expenses
- Foreign Capital allowance (no tax clearance required)
Anyone applying for the allowance must be over the age of 18 and of good standing. The limit of R1 million per calendar year, without the requirement of a tax clearance certificate is subject to having all the necessary documentation.
The R4 Million Foreign Investment Allowance is still available over and above this with the requirement of a Foreign Tax Clearance Certificate.
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