What is your SDA and FIA – and how they can make you money
If you are interested in investing overseas, it is important to understand the regulations that govern your financial transactions.
Two of the most important concepts to understand are your SDA and FIA – both of which affect how much money you can invest overseas, as well as how you can invest it.
If you do not follow these guidelines, it could cost you a lot of money.
Single Discretionary Allowance – SDA
An SDA is the limit set by the South African Reserve Bank on overseas payments and investments.
It allows South African residents to make up to R1 million worth of overseas payments and investments per calendar year.
Any payments or investments that exceed this value will require supporting documents, and failure to abide by this could result in a significant fine.
Your SDA allowance is available to use for offshore transfers/payments as you please
The following are accounted for by the SDA rules:
- Travel
- Study allowance
- Donations
- Gifts
- Loans
- Maintenance
- Investment purposes
- Missionary or non-profit sponsorship
- Crypto Arbitrage
- Overseas card payments
However, there are additional regulations within each of these areas that must be followed, so it is important that you go through the necessary processes.
Foreign Investment Allowance – FIA
If you wish to transfer or invest money over and above your SDA, you will need to use your FIA.
This allows you to transfer up to R10 million extra abroad during a calendar year.
To make use of this allowance, you must comply with the following requirements:
- Obtain a “Tax Clearance Certificate – Foreign Investment Allowance” (TCC) issued by SARS.
- Be in good tax standing and be 18 years and older.
- Don’t deviate from the format and content of the TCC.
- Acquire a tax compliance status (TCS) letter that contains your tax number and PIN.
- Don’t use funds to enter into a transaction or series of transactions that create a loop structure.
- Don’t re-introduce funds into South Africa as a loan to a CMA resident.
Make good use of your SDA and FIA
This combined R11 million allowance to invest overseas can be incredibly lucrative, and leading South African cryptocurrency platform OVEX offers great returns on overseas investments in cryptocurrency.
It prides itself on offering low fees – a maximum of 1% – tight spreads and fast settlement, and offers products such as interest accounts, cryptocurrency arbitrage, and over-the-counter trading.
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