Tax guidelines and regulations for large money transfers into South Africa

Sharing wealth can sometimes mean taking on costs, and occasionally it can even put some of those costs on the person you’re trying to gift to. While South Africa won’t tax a non-resident sending funds into the country, there are still reporting procedures that both you and your recipient need to follow.

How South Africa regulates large remittances

Gifting money to a South African resident is taxable only if the gifter is also a resident. The Donations Tax, which is a gift tax that the South African Revenue Service (SARS) regulates, is paid by the gifter.

If you live outside of South Africa, it’s likely that neither of you are required to pay taxes in South Africa. You’re not completely out of the woods though; you may be taxed in the US, and your recipient still has to declare the amount they receive.

What is the Donation Tax rate?

Currently, South African residents pay a 20% tax rate on the value of donated property that doesn’t exceed ZAR 30 million. The tax increases to 25% if the value of the property donated is above ZAR 30 million. The first ZAR 100,000 of donations is exempt from taxation.

Required forms

To declare the gift you’re giving, your recipient likely needs to list it on their income tax return form.

Your recipient may also need to fill out a Reporting Mandate if you’ve never sent money to them before.

Because tax regulations can change, it’s important for your recipient to check with a local tax professional to make sure all of the proper amounts are reported and forms are filed.

What are the penalties in South Africa if my recipient fails to file?

If your recipient fails to report the gift, they may be hit with an administrative penalty. According to our research, this is a kind of catch-all for many different types of noncompliance issues defined by SARS.

The penalty can cost anywhere from 250 ZAR to 16,000 ZAR for each month that the noncompliance continues — this data is from February 2023.

How can my recipient in South Africa get the money?

Your recipient has several options for how they can get the funds you send. Cash pickup, bank deposit and even mobile wallet are available.

Keep in mind that both how you send the funds and how they receive them will affect how much the transfer costs. Check out our guide to learn more about the process and find cash pickup locations in South Africa.

Our South Africa guides

• US Dollar to South African Rand Exchange Rate: Explore our live exchange rates, historic exchange rates and a money transfer calculator
• Sending money to South Africa: How to send money to South Africa from the USA, safely and affordably.

Compare providers for your next large transfer into South Africa

Do I have to report large remittances out of the US?

In short, yes. The IRS requires that banks report any and all cash transactions over $10,000, but even transfers as small as $1,000 may be reported by some transfer specialists. Also keep in mind that sending many small transfers may also be reported.

You may need to file one of the following, depending on your circumstances:

• Form 114, Foreign Bank and Financial Accounts (FBAR) This applies if you had a foreign account valued at over $10,000 during the year.
• Form 709, Gift (and Generation-Skipping Transfer) Tax Return Give away more than $17,000 in the past year and you’ll need to file this one.
• Form 8300, Currency transaction reports You’ll need to file this one if your business sent at least $10,000 in checks, traveler’s checks, money orders, bank drafts or cash payments over the past year.

How much money can I send to South Africa?

Exchange control legislation can limit how much money you can send to South Africa at once. The same legislation limits how much cash can be physically brought into and out of the country.

Outside of legal regulations, banks and transfer services may have their own caps on the maximum amount you can transfer. You’ll need to find a provider without maximums like Xe if you want to avoid further limitations.

Bottom line

Sending money to South Africa comes without tax consequences for the recipient, but they’ll still need to declare it on their income taxes. Before you hit send, you can compare money transfer services and learn more about international transfers to find the provider that fits your needs.

Frequently asked questions

• Can I take cash with me to South Africa instead of transferring it?

  Yes, but you’ll be limited. Only 25,000 ZAR can be brought in and the limit is US$10,000 (or equivalent) in cash in other currencies, Any sums above these limits need to be declared when entering South Africa.

• How long does it take to get a Reporting Mandate on file?

  Depending on how it’s being submitted, it can take as little as one business day to be processed and approved.