The document provides information about South African exchange controls, including definitions of key terms, the history and purpose of exchange controls, and rules regarding emigration from South Africa. It summarizes the emigration process, which involves completing forms, providing supporting documents, and obtaining approval from the South African Revenue Service and South African Reserve Bank. It also outlines restrictions on funds held in blocked accounts and rules regarding trusts, estates, policies and assets after emigrating from South Africa.

1. Welcome

2. THE SOUTH AFRICAN
RESERVE BANK AND
EXCHANGE CONTROLS

3. EXCHANGE CONTROL DEFINITIONS
• Emigrant – SA resident who is leaving or has left
the Republic to take up permanent residence
outside the CMA.
• Emigrant Blocked Account – The account of an
emigrant from the CMA to which exchange
control restrictions have been applied.
• Resident – Any person (natural or legal entity)
who has taken up permanent residence, is
domiciled or registered in the Republic.

4. EXCHANGE CONTROL DEFINITIONS
• Resident Temporary Abroad – Any resident
who has departed from the Republic to any
country outside the CMA, with no intention
of taking up permanent residence in another
country, but excluding Residents who are
abroad on holiday or business travel.

5. EXCHANGE CONTROL HISTORY
• First introduced in SA during 1939.
• The current control measures, as amended,
became effective as from 1/12/1961.
• Introduced in 1961 owing to the
deterioration of the capital account of the
balance of payments. Introduced to block
the repatriation of the proceeds of non-
resident owned securities.

6. EXCHANGE CONTROL HISTORY
• In 1978 the Financial Rand System was
introduced. This system laid down the
terms and conditions on which the Rand
proceeds of sales of assets owned by non-
residents in SA could be reinvested or
transferred to another non-resident.
• 7 February 1983 exchange controls over
non-residents were abolished.

7. EXCHANGE CONTROL HISTORY
• 2 September 1985 the Financial rand system
was reintroduced. Effect was that the local
sale of non-resident owned assets could not
be converted into foreign currency at the
Commercial Rand rate but had to be
retained in SA with Authorised Dealers in
the Form of Finacial Rand balances.

8. EXCHANGE CONTROL HISTORY
• 13 March 1995 all exchange controls over non-
residents were abolished.
• June 1995 SA institutional investors were allowed
to asset swap part of their portfolios. This
concession has been relaxing ever since.
• June 1997 private individuals were allowed to
invest offshore. Started at R200k, then R400k,
then R500k, then R750k and now R2m.

9. DISCRETIONARY/FOREIGN CAPITAL
ALLOWANCE
• SA residents are allowed the following
allowances;
• An annual R500,000 discretionary
allowance for travel, gifts, donations and
maintenance. This is in addition to :-
• A once off Foreign Capital Allowance of up
to R2 million per person.

10. EMIGRATION PROCESS
• Applicants must complete a MP336(b) form
furnishing details of the nature and value of their
assets in SA.
• Applicants must furnish all supporting
documentation required in terms of MP336(b)
form.
• Applicants must complete a SARS IT 21 form.
• These documents are now forwarded to the
Authorised Dealer for review.

11. EMIGRATION PROCESS
• After initial review the Authorised Dealer will
provide a certified copy of MP336(b) form which
is attached to the IT21. This is sent to SARS.
• Turnaround time at SARS 1 day to 21 days.
• Upon SARS approval the Authorised Dealer
submits all the documentation to SARB.
• Turnaround time at SARB 10 weeks +.

12. EXPORT OF HOUSEHOLD & PERSONAL
EFFECTS
Household and personal effects, motor
vehicles, caravans, trailers, motor cycles,
stamps and coins (excl. SA coins) with an
overall value up to R1 million may be
exported.

13. CONTROL OF BLOCKED RANDS
• After the emigration application has been
facilitated, the remaining SA assets of the
emigrant must be brought under the physical
control of the Authorised Dealer concerned.
• This is to ensure that all capital accruing after
date of emigration and the proceeds of any asset
subsequently sold, are placed to the credit of a
blocked account with an Authorised Dealer.

14. CONTROL OF BLOCKED RANDS
Funds held in a blocked account may be used for
• Investment in quoted SA securities.
• Investment in unitised investments (unit trusts).
• Up to R75k per family unit for expenses while visiting SA
at a rate of R3,000 per day and R1,500 per day for children
under 12.
• Travel expenses in respect of subsequent travel to SA.
• Payment of expenses re emigration (eg packing &
removal).
• Payment to SARS for tax on income earned prior to
emigration.
• School & university fees for children who remain in SA.

15. CONTROL OF BLOCKED RANDS
Funds held in a blocked account may be used for:
• Payment of professional fees to accountants, tax consultants and
attorneys for services rendered.
• Payment of premiums on long term insurance policies (Life,
Endowment and RA). Proceeds would still be blocked.
• Payment of rates and taxes on vacant stands (non-income earning).
• Maintenance payments to a local resident in terms of a court order.
• Payment of medical bills for treatment while visiting SA.
• Release of up to R100k pa in respect of gifts, donations and
maintenance to third parties resident in SA.
• Release of up to R100k pa in respect of maintenance & alterations to
fixed property which form part of controlled assets.
• Payments of short-term insurance premiums.

16. INCOME ACCRUING TO EMIGRANTS
• The authorised dealer may allow the remittance of
income to an emigrant provided that there is a
documentary evidence that:
– The funds represent earned income from normal trading
activities and do not include any element of a capital
nature.
– The assets from which the income accrues are the sole
property of the emigrant.
– No third party has any interest in the income to be
transferred.

17. SARB EXIT LEVY
• Emigrants can request to transfer blocked
assets in excess of the limited foreign
capital allowance, subject to an exiting
schedule, at the discretion of the Exchange
Control Department of the SA Reserve
Bank, but at an exit charge of 10% of the
amount.
• When application is made to transfer such
funds the process is as follows;

18. SARB EXIT LEVY
• Individual sends instruction to his Authorised Dealer to
apply to SARB for approval to transfer funds from
Blocked Account.
• AD then applies to SARB. This takes between 2 – 6
weeks.
• Upon receiving approval from SARB application is made
to SARS for Blocked Funds clearance. This takes 5 -10
working days, depending on the SARS office.
• AD may only transfer the funds upon approval from
SARS.
• This process must be repeated every time the individual
wants to take money out of SA.

19. ALIMONY AND EMIGRATION
• Authorised Dealers may permit transfers to
non-residents for alimony against
production of a court order.
• Authorised Dealer may allow payments of
R9,000 over the amount in the court order.
• It does not seem to appear that Alimony
payments form part of the R500,000.

20. ESTATE DUTY TAX FOR NON-
RESIDENTS
• Only the SA assets of a non-resident will
be included in his estate for the purpose of
determining his SA estate duty liability.

21. SA WILL FOR NON-RESIDENTS
• Benefits of a Local Will are:
– Separate administration of the estate carried out in parallel to the
administration of the offshore assets.
– An executor familiar with the procedures required in SA can save time
and therefore costs.
– An opportunity for early advice on any potential taxation and succession
dangers.
• Only an approved SA executor can wind up an estate in SA.
• Advisable to have a will in SA if;
– Assets are substantial,
– They are urgently needed by beneficiaries and timing is of
importance.
• It is vitally important that where more than one Will is in existence
that both documents dovetail together and do not have the effect of
revoking one another!

22. LEGACIES AND DISTRIBUTIONS FROM
ESTATES
• Legacy transfers
– Cash bequests and cash proceeds due to beneficiaries permanently
resident outside the CMA, including emigrants, may be remitted
abroad.
– Securities inherited must be endorsed “Non-Resident” and may
exported to the legatee.
– Where beneficiary is an emigrant assets may only be transferred
once it has been determined that the individual has been formally
redesignated as a non-resident.
– Where the estate holds authorised foreign assets – these assets may
be distributed once all foreign administrative costs have been met
from the foreign portion of the estate.

23. LEGACIES AND DISTRIBUTIONS FROM
ESTATES
• Export of Jewellery and Personal effects
– Authorised Dealer may allow the transfer of
jewellery and personal affects after having seen
the L & D account.
• The above applies to a SA resident
bequeathing assets to a non-resident as well
as to the SA estate of a non-resident.

24. TRUSTS AND EMIGRATION
• Trusts funded from own assets get more
favourable treatment than 3rd
Party funded trusts.
• SARB will always determine who the “funder” is
and are not who the “donor” is.
• Where the trust was established and funded by the
emigrant – SARB will consider allowing the
income derived to be transferred to the emigrant
• SARB will not allow income to be transferred to a
3rd
Party ie a non-resident child of the funder.
Funds will be credited to a blocked account.

25. TRUSTS AND EMIGRATION
• Distributions to non-residents:
– Income and capital will be credited to a Regulation 4(2)
blocked account during the lifetime of the funder.
– On the death of the funder the distributions from the
trust become a legacy and may be transferred.
• Required Procedures:
– There are a number of administrative procedures that
must be complied with on emigration.

26. SA OWNED POLICIES
• Retirement Funds:
– Income payments emanating from Pension
Funds, Provident Funds or Retirement
Annuities may be paid to the non-resident
account if original policy was declared on MP
336(b).
– Retirement annuities must have been in place
for at least 5 years.

27. SARB TREATMENT OF ASSETS
• All transactions will be controlled by the AD.
• No cash may be transferred by individual –
only by AD.
• Loan accounts cannot increase or decrease
with AD approval. All repayments must be
made to Blocked Account.
•

28. CONTACT DETAILS
Johannesburg
• First Floor, Block 3, Morning View Office
Park, Corner Rivonia & Alon Roads,
Morningside, 2196
• Tel : 011 784 0004
• Contact: Gordon Stuart
• Email: gordons@sentineltrust.co.za