During October 2011 the Finance Minister announced that resident individuals will be able to take up to R5 million (i.e. an additional R1m) a year offshore as their “foreign investment allowance”. Nothing further was heard in regard to this announcement until the Exchange Control manual was amended last week to reflect that the single “discretionary allowance” of R1 million could also be taken out as part of the foreign investment allowance but subject to the normal requirements and in particular that a tax clearance first be obtained.
As the discretionary allowance covers a person’s offshore travelling costs, one cannot invest the additional R1 million offshore and at the same time spend up to that amount again on travelling costs. The limit is R1 million for both. It is a minor but welcome adjustment but in my view the continuation of any exchange control restrictions other than in the form of prudential regulation is off-putting to foreign investors!
Andrew Duncan
www.walkers.co.za
In response to this blog I have been told that the Reserve Bank do NOT require a tax clearance for the discretionary allowance being used as part of the foreign investment allowance. good news again!!
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