Blue Chip Issue 89

BLUE
CHIP
ROUND TABLE SERIES | Offshore investing
Offshore investing:
where, how and
how much?
In an exclusive Blue Chip discussion, South Africa’s leading
investment professionals focus on offshore investing
and why it is important to engage with a
financial advisor. Part Two deals with the
practicalities of taking money offshore, the
exchange rate and the importance of timing.
THE PRACTICALITIES OF TAKING MONEY OFFSHORE
Andrew Finlayson (AF): In terms of the actual practicalities of
taking money overseas, what are the different ways in which
a client can physically take money out of the country?
Lara Lotter (LL): The reality is that one is not limited to the
amount that can be externalised outside of South Africa. The
differences lie in the different requirements for different amounts,
and for any level, being able to show the source of the funds.
Single discretionary allowance of R1-million
If you have a green barcoded ID book and a valid tax number,
you can remit up to R1-million in a calendar year without
having to obtain any clearance from the revenue office.
One simply has to report where the money comes from.
Additional investment transfer clearance process
This process, formerly referred to as the foreign investment
allowance, governs the amount after your single discretionary
allowance (R1-million) up to a maximum of R10-million. The
main requirement for this process is simply reporting the
source of the funds to SARS (eg is it inheritance proceeds, a
unit trust portfolio, a local matured endowment portfolio) with
the supporting documentation. There are a few additional
requirements such as declaring your global assets and liabilities,
a certificate of good standing, and of course, providing
your efiling profile so that the submission can take place.
Letter of compliance application process
The letter of compliance application process is for amounts
over a total of R11-million (R1-million plus R10-million
above). This is a tax clearance which must also go through
the South African Reserve Bank, so there are two reporting
entities that need to see the source of the funds. And some
of the information is more rigorous; for example, if the
source of funds is a unit trust portfolio, for the additional
investment transfer clearance process (above), you would
have to provide statements for three months, whereas for the
letter of compliance application process, you would have to
provide statements for six months. If you fulfil the regulatory
requirements, there are no limits.
AF: Practically, how has that affected your business and people
looking to take money overseas?
LL: In April 2023, the foreign investment allowance tax clearance
and the IT21(a) tax clearance were merged forming the approval
50 www.bluechipdigital.co.za