One of the understated changes in the 2026 Budget was the National Treasury’s decision to double the amount a South African resident can send offshore without involving SARS.
The single discretionary allowance has been doubled from R1 million to R2 million. This applies to private individuals via Authorised Dealers for all purposes, including travel, gifts, remittances, investments and donations.
This allows a resident to transfer R2 million offshore per year without approval from the South African Reserve Bank (SARB) or a SARS tax clearance certificate.
The news is even better for South African couples, who can now transfer up to R4 million per year if using both allowances.
According to the Institute for International Tax and Finance (INTLTAX), the higher allowance is critical, as the process to obtain the required AIT Tax Clearance certificate from SARS is often slow and administratively burdensome.
Typically, to get the certificate, taxpayers must submit a formal application supported by extensive documentation, including proof of tax compliance, details of the proposed transfer, and supporting financial records.
“Processing times can extend for weeks and are frequently subject to additional queries and documentation requests,” said Michael Kransdorff, CEO of INTLTAX.
“The AIT process often acts as a deterrent to legitimate offshore investment on account of friction and uncertainty rather than cost.”
By contrast, the single discretionary allowance requires no SARS pre-approval. A compliant taxpayer can instruct their bank to transfer up to R2 million offshore in a calendar year without engaging SARS at all.
“For a couple each making use of their allowance, that means R4 million per year invested abroad, cleanly and efficiently,” Kransdorff said.
INTLTAX noted that the allowance was originally set at R500,000 in 2008, increased to R1 million in 2011, but remained unchanged for almost 15 years.
Because of the long wait for the upgrade announced this week, in real terms, the new R2 million threshold largely restores the purchasing power of the original allowance, which was significantly eroded by inflation and currency depreciation.
Because of this, the increase isn’t really a windfall, but rather an overdue correction for South African families managing cross-border finances and an opportunity for greater investment access.
“Offshore exposure reduces concentration risk in a small, emerging-market economy and expands access to global sectors underrepresented on the JSE, including technology, healthcare, infrastructure, international property, foreign currency bonds and alternative assets,” Kransdorff said.
One drawback for South Africans looking to emigrate
While the changes will undoubtedly benefit couples residing in South Africa, there are hang-ups for non-resident spouses.
South Africans who cease tax residency are generally limited to a once-off R1 million discretionary allowance in the year of emigration, rather than the annual allowance for residents.
In practice, this can create liquidity constraints for individuals who have formally exited the South African tax net but remain subject to exchange control restrictions on their remaining South African assets.
“If the resident single discretionary allowance is increased to R2 million to reflect economic reality, policymakers should clarify whether a corresponding adjustment will apply to non-residents as well. Failing to do so risks perpetuating an already inequitable framework,” Kransdorff said.
On top of the disparity, the National Treasury is also clamping down on tax evasion schemes between spouses, where there have been cases of tax-exempt “donations” happening across borders.
“The government has become aware of tax avoidance arrangements, particularly involving high-net-worth individuals planning to cease to be South African tax residents,” the Treasury said.
The arrangement involves deliberately staggering the cessation of tax residence between spouses where significant assets are transferred to a spouse who has already become non-resident before the remaining spouse ceases residence.
In these circumstances, the donations tax exemption applies, while the subsequent cessation of tax residence by the remaining spouse results in a reduced income tax liability.
“These arrangements are designed to avoid both donations tax and the income tax on cessation of residency, undermining the original policy intent of these provisions,” the Treasury said.
To avoid this, the finance department is now proposing changes to the laws where donation tax exemptions are only applicable where the receiving spouse is a resident, effective from 25 February 2026.
