What you might not know
South Africans looking to diversify their investments globally now have a little more room to do so.
The Single Discretionary Allowance (SDA) has increased from R1 million to R2 million per calendar year, allowing South African resident individuals aged 18 and older to transfer up to R2 million offshore each year without requiring a SARS Tax Compliance Status PIN for the transfer.
But what exactly is the Single Discretionary Allowance, how does it differ from the R10 million foreign investment allowance, and should you be using it?
What is the Single Discretionary Allowance?
The Single Discretionary Allowance is an amount South African resident adults can transfer offshore each calendar year for permitted purposes, including offshore investment. Following the 2026 change, this allowance is now R2 million per person, per calendar year. A married couple could therefore potentially transfer a combined R4 million using their individual allowances. One of the key benefits is that transfers within the SDA generally don’t require a SARS Tax Compliance Status PIN.
What if I want to invest more than R2 million offshore?
The SDA isn’t the only mechanism available. South African residents can also make use of the R10 million foreign capital/investment allowance per calendar year, although this requires the relevant SARS approval through the Approval International Transfer process.
This means an individual may potentially transfer significantly more offshore each year, subject to the applicable requirements and approvals.
Why consider investing offshore?
Investing offshore isn’t just about moving money out of South Africa. It can form an important part of a diversified long-term investment strategy. Offshore investing can give you access to different markets, hard currency, industries and companies that may not be well represented on the JSE. It can also reduce the risk of having too much of your wealth concentrated in a single country or economy. The right offshore allocation, however, will be different for every investor.
Should you automatically invest the full R2 million?
Not necessarily. An allowance tells you how much you are permitted to transfer, not how much you should transfer. Your offshore exposure should be considered alongside your overall portfolio, future expenses, liquidity requirements, tax position, investment timeframe, and long-term financial goals.
For some investors, increasing offshore exposure may make sense. For others, their existing portfolio may already provide sufficient global exposure.
Think globally, but start with your plan
The increase in the Single Discretionary Allowance gives South African investors greater flexibility when considering their offshore investments. The opportunity isn’t about taking R2 million offshore. It’s about deciding where your money should be invested to support your overall financial plan.
If you’re considering increasing your offshore exposure, speak to your Harbour Wealth adviser about how offshore investing could fit into your broader investment strategy.
This article is for general information and educational purposes only and does not constitute financial, tax or investment advice.
