Mind currency regulations and reporting requirements.
Sharing wealth can sometimes mean taking on some costs, and can even put some on those you’re trying to gift. While South Africa won’t tax a nonresident 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 outsidef South Africa, that means it’s likely 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.
Required forms
To declare the generous 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 assessed an administrative penalty. According to our research, this is a kind of catch-all for a bunch of different types of noncompliance defined by SARS.
The penalty can cost anywhere from 250 ZAR to 16,000 ZAR as of February 2019.
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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.
Depending on your circumstances, you may need to file one of the following:
- 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 ReturnGive away more than $15,000 in the past year and you’ll need to file this one.
- Form 8300, Currency transaction reportsYou’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 a time. 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.
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: Live exchange rates, historic exchange rates and money transfer calculator
- Sending money to South Africa: How to send money to South Africa from the USA, safely and affordably.
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.
