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Do I have to pay tax on money transferred from overseas to South Africa?
Discover whether you need to pay gift tax and learn about other reporting requirements for transfers to South Africa.
If you are planning on sending money to South Africa, you will probably want to know whether or not you need to pay tax on money transferred from overseas. Sharing wealth can sometimes mean taking on costs, and occasionally it can even put some of those costs on the person you are trying to send money to. 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.
What taxes are charged on large money transfers into South Africa?
If you are sending money from overseas to someone in South Africa, then it is important to understand the tax implications and reporting requirements.
If you are sending money to someone in South Africa, and you do not live in the country, then it is unlikely either of you will be required to pay taxes on the transfer in South Africa. However, keep in mind that you may be taxed in the country you currently reside in, and your recipient still has to declare the amount they receive.
Do I need to pay gift tax in South Africa?
In terms of gifting money, a South African resident is taxable only if the gifter is also a resident. The Donations Tax – gift tax in South Africa – is a tax that the South African Revenue Service (SARS) regulates and is paid by the gifter.
What are South Africa’s tax reporting requirements?
To keep in line with reporting requirements, your recipient will most likely need to list the money they have received from overseas on their income tax return form.
They may also need to fill out a Reporting Mandate if you’ve never sent money to them before.
Remember, tax regulations can change. So it’s important for your recipient to check with a local tax professional to ensure all of the proper amounts are reported and forms are filed.
What are the penalties if my recipient fails to file?
If your recipient fails to report the gift, they may be hit with an administrative penalty for not paying the required gift tax in South Africa. This is kind of a catch-all for many different types of noncompliance issues defined by SARS.
The penalty can range from R250 up to R16,000 a month for each month that the noncompliance continues, up to a maximum of 35 months – this is correct as of December 8, 2021.
How to make a large international money transfer to South Africa
There are several ways to send money from overseas to South Africa. Specialist money transfer services typically have a range of transfer options, giving your recipient a choice on how they want to receive their funds. These include cash pickups, bank deposits and even mobile wallet services.
When looking to send money overseas, it is important to compare transfer costs and the exchange rate margins of different providers. Use our table to compare providers and see who is the best fit for your money transfer.
Compare providers for your next large transfer into South Africa
Enter a few different sending amounts into the table below to see how different companies compare for your money transfer to South Africa from the USA.
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.
How much can I transfer out of South Africa?
South African tax residents are eligible for the following allowances per year when transferring money out of South Africa:
- R1m single discretionary allowance (no tax clearance required from SARS)
- R10m foreign investment allowance (tax clearance required from SARS)
It is important to note that most countries require that banks report any and all cash transactions over a certain threshold, and some require smaller transfers to be reported by money transfer specialists.
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