Some questions you may have about getting money out of South Africa may include:
- What are the tax implications of sending money out of South Africa as gifts?
- How can I send investment out of South Africa?
- What does a Single Discretionary Allowance mean? Does this cover gifts and investments send to a country outside South Africa?
- What are the tax implications for me receiving dividends from a country outside the Republic?
Let us now look at each of these questions:
What are the tax implications of sending money out of South Africa as gifts?
Gifts will be deemed as donations. But, he normal rules regarding donations and what is exempt will apply. Where exemptions do not apply, donations will attract 20% tax up to an amount of R30 million and 25% to an amount above R30 million. However, individuals will get an annual exemption of R100 000. This R100 000 will form part of the discretionary allowance.
If you are planning to send gifts, you may do so up to R100 000 before you can get taxed on it. We will discus the discretionary allowance later on in this article.
How can I send investment out of South Africa?
There are two ways through which you can send money out of South Africa for investment purposes.
- The single discretionary allowance – R1 million (does not require tax clearance)
- The foreign investment allowance – R10 million (requires prior tax clearance) With this one you can transfer R10 million per year. But you will need to get a tax clearance before making the transfers.
You can use these vehicles to send money for:
- Loaning people outside the country
- Child or spousal support support
- Travel purposes
What does a Single Discretionary Allowance mean? Does this cover gifts and investments send to a country outside South Africa?
Single discretionary allowance means you can send R1 million per calendar year without getting a tax clearance to do so. You can use this to send gifts but remember you are exempted from donations tax up to R100 000.
You can use the discretionary allowance to send gifts and investments out of South Africa. But, if you are using the single discretionary allowance, it means the money you send in a single year cannot exceed R1 million.
What are the tax implications for me receiving dividends from a country outside the Republic?
- Most foreign dividends are exempt if the South African resident holds at least 10% of the equity in the entity paying the dividend. – 100% of the dividends will be exempted.
- Otherwise, dividends are taxable in SA at a rate of 20% for equity less than 10%
- The resident can claim tax credits for foreign taxes levied on the dividends where applicable.