Blue Chip Issue 89
Blue Chip Journal – The official publication of FPI. Blue Chip is a quarterly journal for the financial planning industry and is the official publication of the Financial Planning Institute of Southern Africa NPC (FPI), effective from the January 2020 edition. Blue Chip publishes contributions from FPI and other leading industry figures, covering all aspects of the financial planning industry.
Blue Chip Journal – The official publication of FPI. Blue Chip is a quarterly journal for the financial planning industry and is the official publication of the Financial Planning Institute of Southern Africa NPC (FPI), effective from the January 2020 edition. Blue Chip publishes contributions from FPI and other leading industry figures, covering all aspects of the financial planning industry.
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BLUE<br />
CHIP<br />
ROUND TABLE SERIES | Offshore investing<br />
Offshore investing:<br />
where, how and<br />
how much?<br />
In an exclusive <strong>Blue</strong> <strong>Chip</strong> discussion, South Africa’s leading<br />
investment professionals focus on offshore investing<br />
and why it is important to engage with a<br />
financial advisor. Part Two deals with the<br />
practicalities of taking money offshore, the<br />
exchange rate and the importance of timing.<br />
THE PRACTICALITIES OF TAKING MONEY OFFSHORE<br />
Andrew Finlayson (AF): In terms of the actual practicalities of<br />
taking money overseas, what are the different ways in which<br />
a client can physically take money out of the country?<br />
Lara Lotter (LL): The reality is that one is not limited to the<br />
amount that can be externalised outside of South Africa. The<br />
differences lie in the different requirements for different amounts,<br />
and for any level, being able to show the source of the funds.<br />
Single discretionary allowance of R1-million<br />
If you have a green barcoded ID book and a valid tax number,<br />
you can remit up to R1-million in a calendar year without<br />
having to obtain any clearance from the revenue office.<br />
One simply has to report where the money comes from.<br />
Additional investment transfer clearance process<br />
This process, formerly referred to as the foreign investment<br />
allowance, governs the amount after your single discretionary<br />
allowance (R1-million) up to a maximum of R10-million. The<br />
main requirement for this process is simply reporting the<br />
source of the funds to SARS (eg is it inheritance proceeds, a<br />
unit trust portfolio, a local matured endowment portfolio) with<br />
the supporting documentation. There are a few additional<br />
requirements such as declaring your global assets and liabilities,<br />
a certificate of good standing, and of course, providing<br />
your efiling profile so that the submission can take place.<br />
Letter of compliance application process<br />
The letter of compliance application process is for amounts<br />
over a total of R11-million (R1-million plus R10-million<br />
above). This is a tax clearance which must also go through<br />
the South African Reserve Bank, so there are two reporting<br />
entities that need to see the source of the funds. And some<br />
of the information is more rigorous; for example, if the<br />
source of funds is a unit trust portfolio, for the additional<br />
investment transfer clearance process (above), you would<br />
have to provide statements for three months, whereas for the<br />
letter of compliance application process, you would have to<br />
provide statements for six months. If you fulfil the regulatory<br />
requirements, there are no limits.<br />
AF: Practically, how has that affected your business and people<br />
looking to take money overseas?<br />
LL: In April 2023, the foreign investment allowance tax clearance<br />
and the IT21(a) tax clearance were merged forming the approval<br />
50 www.bluechipdigital.co.za