Doubling of overseas allowance a good deal for local investors

Standard Bank Group Investments says the government’s recent doubling of the discretionary allowance limit for private individuals represents a significant opportunity for investors in South Africa.

The individual amount has been increased from R1 million to R2 million per year, meaning that registered taxpayers can move this money abroad without requiring SARB or SARS pre-approval.

Effectively individuals can now transfer up to R2 million offshore at will, annually, without any limitation using online foreign exchange tools.

Diversifying your money

“The doubling of the personal discretionary amount means ordinary individuals can access large scale global market opportunities to their potential financial advantage,” says Famida Singh, Executive for Standard Bank Group, Retail Investment Propositions.

She says while local markets do offer South African investors a proven and reliable avenue for their earnings, diversification into broader global markets offers up a bounty of new opportunities not available locally in areas like biotech, artificial intelligence, advanced manufacturing and clean energy.

“In volatile market conditions, global diversification can literally be a free lunch. Moving your money offshore gives you currency, political, industry and sector diversification. It makes sense to spread your risk across the globe rather than being exposed to a limited arena where geopolitical risks and concentration risks would naturally be higher.”

New technologies

One persistent myth about investing internationally is that it is complicated. South Africa’s sophisticated financial system has made expatriation of local currency a relatively simple proposition through various access points.

“With technology like the award winning Shyft application, easily available to all registered South African citizens, irrespective of where they are banked, makes taking your money offshore cost effective and user friendly. With Shyft you can buy and sell stocks globally or even just hold hard currency in your wallet when rates are favourable, amongst a range of other transactions.”

Bringing your money together with the latest global banking technology is something everybody should regularly explore to see what’s in it for you,” Singh says.

Get advice

Singh does caution however that potential investors should not just wade into the almost unlimited pool of global opportunities without seeking advice from experienced financial planners.

This includes applying for a further R10 million yearly foreign investment allowance which is also possible, but requires SARS tax clearance

“Having an experienced adviser to guide you through international opportunities can help avoid potential pitfalls.”

Singh says that investors should view their newly increased international single discretionary allowance in the broader context of their financial plans.

“Making decisions with your money should always include a strategic view, taking your personal circumstances into account. This is bespoke and based on inputs like where you intend to retire, estate planning, possible emigration or semi-gration plans, potentially sending your kids overseas for their education, your frequency of travel and overall portfolio allocation.

The doubled overseas allowance is a new and exciting opportunity for investors and their money. It does not mean however, that investors should automatically move more capital offshore, but it does make global diversification more accessible. The key is ensuring international exposure forms part of a well-considered investment strategy,” Singh says.

Further foreign exchange changes to be aware of

There are other upgrades to foreign exchange rules that have also come into effect beyond the personal discretionary allowance. One can now carry more cash because the limit to South African bank notes when entering or exiting South Africa has been increased from R25 000 to R100 000. 

The limit for miscellaneous imports, services or subscription payments made via credit or debit cards has also been increased from R50 000 to R100 000 per transaction.