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 amount has been increased from R1 million to R2 million per year, meaning that registered taxpayers can move this money abroad without requiring South African Reserve Bank (Sarb) or South African Revenue Service (Sars) pre-approval.

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

Diversifying your money

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

She says that while local markets do offer South African investors a proven and reliable avenue for their earnings, diversification into broader global markets opens 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.

“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,” says Singh.

“With Shyft you can buy and sell stocks globally or even just hold hard currency in your wallet when rates are favourable, among 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.”

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 advisor to guide you through international opportunities can help avoid potential pitfalls.”

Singh says 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 semigration 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 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.”

Further foreign exchange changes to be aware of

There are other upgrades to foreign exchange rules that have come into effect beyond the personal discretionary allowance.

One can now carry more cash because the limit on 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.

Disclaimer

This article does not constitute tax, legal, financial, regulatory, accounting, technical or other advice. The material has been created for information purpose only and does not contain any personal recommendations. While every care has been taken in preparing this material, no member of Liberty gives any representation, warranty or undertaking and accepts no responsibility or liability as to the accuracy, or completeness, of the information presented. Please consult your financial advisor should you require advice of a financial nature and/or intermediary services. Liberty Group Limited is a Licensed Life Insurer, an Authorised Financial Services Provider (FSP number 2409) and part of the Standard Bank Group. Terms and Conditions, Risks and Limitations apply.

Shyft operates under the licence of The Standard Bank of South Africa Limited. (”Standard Bank”), an Authorised Financial Services Provider (FSP number 11287). Its terms and conditions can be found here.

About Liberty

Liberty is a wholly owned subsidiary of The Standard Bank Group and is currently one of the largest providers of long-term insurance solutions to South Africa’s retail affluent market. With a strong and relevant brand of more than 60 years, Liberty offers an extensive, market-leading range of products and services to help clients build and protect their wealth and lifestyle. This is enabled by Liberty’s 3 000-strong tied distribution force that expertly equips customers with knowledge to make financial decisions that add value throughout their various life stages. Liberty’s incorporation into Standard Bank provides synergies and advantages not only in South Africa but across the African continent, positioning Liberty as an integral part of a universal financial services organisation focused on delivering exceptional customer experiences and superior value. Liberty’s wholly owned asset manager STANLIB is one of the biggest retail unit trust managers (including money market) in South Africa, with award-winning capabilities in property and fixed income, who together with their market-leading offshore partners are able to provide unique investment opportunities for clients

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