Exchange control requirements for SA residents travelling abroad – Practical considerations for funding and spending while abroad

Key facts at a glance:

• R2 million annual Single Discretionary Allowance (SDA) for South African resident individuals aged 18 years and older
• R400,000 annual travel allowance for minors under the age of 18
• Up to R100,000 in South African Rand banknotes that may be carried per person when entering or leaving the Common Monetary Area (subject to SDA limits)

Single Discretionary Allowance (SDA)

A South African resident individual aged 18 or older may utilise an annual SDA up to R2 million per calendar year. This allowance may be used for a range of permitted purposes including travel, study and offshore investment.

Where funds are transferred to an offshore account, the purpose of the transfer must be disclosed to the resident’s Authorised Dealer, generally the South African bank authorised to process foreign exchange transactions.

Using your travel allowance

This travel component of the SDA can be accessed in several ways.  A traveller may use a South African debit or credit card, transfer funds offshore, or purchase foreign currency banknotes or using a “travel card” before departure.

• Card purchase and cash withdrawals abroad count towards the traveller’s available annual allowance
• Foreign currency banknotes purchased for travel or loaded onto a “travel card” not used should be reconverted back to Rand within 30 days after the travellers return to South Africa.

Travellers should keep track of all foreign spending during the calendar year to ensure they stay within the SDA limit.  When using the SDA for investment purposes, individuals should also be cognizant of any future travel plans that are still to take place during the same calendar year as not to over invest.

Travelling with cash

When traveling with banknotes both to and from South Africa, a traveller may carry up to R100,000 in Rand denominated bank notes per person (increased from R25,000).  This would be applicable to South Africa residents, including foreign nationals (non-residents temporarily residing in SA) and non-resident visitors.

Using debit and credit cards abroad

South African residents may use locally issued debits and credit cards to pay travel expenses while abroad.   The value of these transactions form part of the resident’s annual SDA and is monitored through the banking system.

A separate R100,000 per transaction threshold applies to certain foreign card transactions that are not travel related, including online purchases and payments for digital services or subscriptions supplied by non-residents.

Exceeding the SDA limits

Offshore spending on South African debit and credit cards is monitored by the banks and may be reported through the exchange control system.  If a resident exceeds the annual SDA the transaction may be flagged and the bank may request an explanation and supporting information. 

To avoid unintended breaches, travellers should consider foreign transfers, card spending, can withdrawal and any other SDA usage rather than monitoring travel expenditure in isolation.

Moving abroad and ceasing to be a South African tax resident

A temporary or permanent move abroad may affect both a person’s South African tax residency and the exchange control rules that apply to future transfers.  A person could cease to be a tax resident in terms of South African tax legislation or in terms of a Double Tax Agreement with another country.

A person who ceased to be a Suth African tax resident is required to notify their bankers as this change in status will result in them no longer being a resident of South Africa for exchange control purposes.

The SDA remains available during the calendar year in which a person ceased to be tax resident.  This is a final travel allowance that can be used without any requirement for a SARS tax compliance status PIN.  Any future transfers abroad will require a SARS tax compliance status PIN for Approval of International Transfer (AIT) or a manual letter of compliance.

Given the interaction between the tax and exchange control rules, individuals planning to relocate abroad should ideally consider the position before undertaking significant transfers of capital.

Common Monetary Area (CMA) transactions

South Africa, Lesotho Namibia and eSwatini form part of the CMA.  Any transfer of Rands between these countries do not require prior approval from the SARB Financial Surveillance Department.

A South African resident may transfer funds to another CMA country, but the transaction will need to be reported on the banks’ balance-of-payments system.  Such payments are not part of the SDA.

The takeaway

The exchange control allowances available to South African residents provide considerable flexibility when travelling abroad, particularly the increase in the SDA to R2million.  The key is to plan ahead and understand which transaction count towards the annual SDA and which are dealt with under separate exchange control dispensations.  Residents should also retain clear appropriate records of transactions and foreign expenditure on their cards.

Additional care is required where a person is moving abroad, ceasing South African tax residency, or transferring capital offshore.  With appropriate planning and guidance travellers can make effective use of the available allowances while remaining compliant with South Africa’s exchange control framework.