The Smooth Easy Process Of Transferring Rands Out Of South Africa
January may not be the month most expats consider moving their funds across borders, unless you’ve been waiting for the new year to utilise your annual transfer limit.
If you’ve NOT been waiting for it, we’re hoping the new year treats you well and you are relaxed and rejuvenated for the new year… but let’s not leave it there. Thing is, a calendar year flies by in the wink of an eye – and it’s important to keep in mind which timeframes are required for encashing certain policies or fulfilling the financial emigration process.
Rand Rescue takes you through some of the requirements, timeframes and prerequisites set out by SARS and SARB for getting your rands to your new home.
How long does it take to transfer money across borders?
There really is no easy answer for this question as it would all depend on where your financial assets are tied up, what their liquidity are (how easy they are to release or turn into currency), what rules apply to these assets and what the requirements are for their encashment, validation and transfer as stipulated by the tax regulators and banking regulators of the sending and receiving country.
For a simple forex conversion, you can see your funds converted almost immediately, whereas pension and provident fund encashments will be determined by the rules of the managing institution (FSP) and the value of the funds. For retirement annuities it’s a whole different ballgame as the South African Reserve Bank currently only allows for encashment of such funds once a former resident has applied for financial emigration. In this case, the transfer could take anything between 10 and 24 weeks – that is between 2,3 and 5,5 months for your money to reach you.
What are the annual transfer limits from South Africa?
At present, South Africans living abroad can utilise a single discretionary allowance of R1 million and an additional foreign capital allowance of R10 million per calendar year.
The two allowances have different prerequisites. For the discretionary allowance South African expats need to present proof of identification, whereas the use of the foreign capital allowance requires tax clearance from SARS.
It is important to note that the use of your South African debit or credit cards are ALSO subject to these conditions. Though many banking institutions allow their clients to use the cards abroad while travelling, you should be aware that such cards are only permitted for use during temporary travels, and their usage are (by South African law) restricted to use during the calendar year within which you embarked on your travels. You should ALSO be aware that these allowances include the cost (or value) of gifts sent internationally in lieu of cash. So any parcels crossing borders are subject to the same monetary scrutiny as the money in your wallet or bank account.
For temporary travels, South Africans are allowed a maximum of R25 000 rands (notes) for their travels outside the Common Monetary Area (CMA) whereas students are allowed asset transfer across borders to the value of R200 000 subject to SARS Customs Declaration. Offshore share incentives or schemes are subject to the annual transfer limits, and by SARB regulations loans acquired offshore for foreign assets are only permitted should such foreign loans be acquired via authorised foreign assets as collateral.
So why the rush?
Well, the biggest problem is undoubtedly the lag in processing and administrative capacity required by South African regulators, financial institutions and banks.
Although the process is generally straight-forward, some funds, annuities or policies may require backtracking of your tax dealings and transactions to determine your allowances, the value of your assets and how the transfers are to be managed.
The reason most people leave their assets like annuities untouched in South Africa is mostly due to their lack of knowledge in cross-border finances – if you do not know your way around or try to manage it on your own, the process could drag on for months and if done wrong you could face fines or botch the process entirely. There is also the matter of taxation on the transfer amount. Unfortunately, you will have to cede a percentage of your funds to SARS before you can transfer the funds abroad.
Luckily most countries where South African expats transfer their funds either have tax incentives OR such great interest rates that reinvestment sees South Africans either earning more either immediately or after a few months of reinvesting their savings in a local currency.
How do I transfer my funds abroad?
Rand Rescue specialises in the transfer of rands abroad. Irrespective of the source of your financial assets, we will offer a comprehensive policy search and assessment free-of-charge which will show you how much you can transfer, how long it will take and how the process works.
With this in mind, why not get a head-start on rescuing your rands and start the process today before the clock runs out.