The Financial Surveillance Department of the SA Reserve Bank announced today that SA resident individuals may use their single discretionary allowance (R1m per calendar year) for foreign investment purposes without having to obtain a tax clearance certificate.
Previously, the single discretionary allowance (applicable to SA residents over the age of 18), covered the following:
a) Donations to missionaries
b) Maintenance transfers
c) Monetary gifts and loans
d) Travel allowance
e) Study allowance
f) Alimony and child support payments
g) Wedding expenses and other special occasions
Foreign investments could only be undertaken within the annual limit of R4m, and one of the requirements included the presentation of a tax clearance certificate.
The position has now been broadened and foreign investments are included in the list of transactions under the single discretionary allowance without the need for a tax clearance certificate however, a form MP1423 would still need to be completed and signed.
It follows that the requirements for the transfer of the annual foreign investment allowance of R4m remain the same.
The circular was issued today, 23 December 2011 and is therefore effective immediately.