A real challenge for lawyers, let alone financial advisors, because the laws, regulations and procedural rules are not fully available to anyone other than the SA Reserve Bank and to a more liberal extent to banks who are authorised dealers in foreign exchange. Fortunately issues affecting investors and travellers are relatively straightforward.
In 1997 the South African government began a program of relaxing exchange controls on local residents. The concept of a "foreign investment allowance" was introduced at a level of R 200 000 once in a lifetime per taxpayer over the age of 18 provided he/she had a clean bill of "health" with the SA Revenue Services [SARS]. That allowance was increased each year until it reached R4 million once in a lifetime per taxpayer. A significant change was introduced recently which allows each qualifying tax payer [over 18 years old] to export R10 million per annum provided they first obtain a tax clearance certificate. In addition SA Residents can use their annual discretionary allowance of R1 million for travel, gifts or foreign investment without any tax clearances.
After a slow start in 1997, South Africans began realising the importance of hard currency investments as a means of risk diversification. For the ordinary man in the street there are effectively no barriers to foreign investment since he is unlikely to have more than R11 million annually available for placement. However, for really high net worth individuals, the barriers and limitations remain in place.
Emigration rules have changed significantly as well when it comes to exporting property or funds. There is no longer any limit on the amount that a person or family can take abroad with them provided they complete the required emigration forms via their bankers who lodge them with the Reserve Bank. The limitation of R4 million is gone and even those who emigrated years ago are now able to access and export their former blocked Rand accounts in full. Sadly there is still much confusion about emigration and its impact on Residency and Citizenship rights – but that's the subject of separate articles in this section – see Quick Links.