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kgb-girl

Transferring money from SA to Canada

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kgb-girl

Hi everyone

I have a question regarding transferring/investing money. I am currently working in Canada.

If I have a house back in South Africa, and have recently sold it, how do I go about, and what is the best way of, transferring/investing that money from it, from South Africa to here in Canada, without setting off alarms with SARS or the bank back in SA?

Thanks and regards

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Nirak

The best option to not set of 10000 alarms is making use of your R1mil foreign allowance. You can either contact your bank and tell them you would like to transfer the balance on your travel allowance to your Canadian account, since you are here on a contract and need the money to set up a place of living until your contract is finished and you can return to SA. IF the transfer will max out the travel allowance, you will have to send them your credit and debit cards for safekeeping until you return to SA.

Another option is to transfer the money to a friend family and let them transfer the money to you. NOTE this amount will go off both your foreign allowance and theirs! (I transferred R100k to my husband just before I left, and was shocked to learn that it came from both our allowance). You can only receive R1mil out of SA, thereafter you will have to look at investment, get tax clearance certificates, etc.

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chrizette
Hi everyone

I have a question regarding transferring/investing money. I am currently working in Canada.

If I have a house back in South Africa, and have recently sold it, how do I go about, and what is the best way of, transferring/investing that money from it, from South Africa to here in Canada, without setting off alarms with SARS or the bank back in SA?

Thanks and regards

Hi,

SARS allows you to take R500 000-00 in off shore investments overseas without any tax implications. It your profit on the house is more than 1 million, then you will have to apply for a tax clearance certificate.

Regards

Suzette

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hennie_dup

You are also allowed to make a total of R2 million offshore investment. Once the money is in your account, you have to apply for tax clearance from the Receiver of revenue, stating amongst others where the money came from, and how much you have already utilised of your investment R2m. If your tax affairs are in order, there is no reason why they would reject it. Once you have the tax clearance certificate, you can have that taken to your bank where you'll fill in a transfer form and get the money transferred, simple as that.

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kgb-girl
Hi,

SARS allows you to take R500 000-00 in off shore investments overseas without any tax implications. It your profit on the house is more than 1 million, then you will have to apply for a tax clearance certificate.

Regards

Suzette

Hi Suzette

Thanks a lot for that bit of information. What would be the exact steps to take, in that case? If I would like to take the R500 000-00 in off shore investments, where do I start and how do I go about it? Like where do I go and what do I say? Also how long does the whole process take? And any ideas on how much interest is charged for this process/service? In my case, I am looking at around R300 000-00/R400 000-00 to transfer. Any help on this matter would be greatly appreciated.

Thanks again for your input. Have a great day.

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hennie_dup

Hi there

1. You have to have an original bank statement showing that you in fact have the money available.

2. You fill in the form to get clearance for an offshore investment (you can get it from the SARS website, or at their offices)

3. You take your id, the form and the bank statement to the SARS office that deals with these and hand it in. They normally check & tell you if anything is missing.

4. After handing it in, SARS will check your tax account to make sure you're a good taxpayer. It takes about a week (sometimes quicker) and the certificate will be available. When you hand in, they will tell you when to come back for the authorisation.

5. You collect the form from SARS, go directly to your bank's forex dealing window, fill in a transfer of forex form and hand that in, together with your tax clearance certificate. Depending on your bank your money should be in your overseas account within a couple of days.

The cost of this:

Your time

The bank's bank charges to convert to forex and do the transfer (depends on the bank, currency etc)

SARS charges nothing to issue the certificate.

Hope it helps

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Mossie

I'm just going to jump in here.

I was wondering, if you do transfer...say....R500 000 from SA to Canada, do you have to pay income tax on that amount here in Canada, or what kind of tax deduction are you looking at? Also what if you officially immigrated......can you still transfer fund from SA to CA, and if so how do you do that?

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Dedré

Mossie,

If you officially emigrate from SA you will pay tax on any income that will leave SA. They will want their bit before they hand it over to you. Not do they only take their time on it, but what you get out at the end is ridiculous. In this situation you can not make use of your foreign allowance each year anymore. You will also be taxed (unless you put it in a Tax Free Savings account (TFSA)) in Canada at the end of the tax year as it is an additional income... (I'm not sure if you will be taxed on the $5'000 before it enters the TFSA though). Since you have officially immigrated into Canada, you are now a citizen (and even for residents) normal tax law applies. I don't know how the government finds out though. But I won't hide something like that from them. All residents need to declare all foreign income:

Go and look HERE, to see how it will apply

HERE you can read more about reporting,

HERE are some Q&As on Tax in Canada and what should be declared and not.

If you have NOT made use of your officially emigration from SA and you are both SAcan and Canadian, you may use your foreign allowance for both your wife and yourself but will be taxed again in Canada.

Hope it helps.

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alec
If you have NOT made use of your officially emigration from SA and you are both SAcan and Canadian, you may use your foreign allowance for both your wife and yourself but will be taxed again in Canada.

Hope it helps.

I don't see why this allowance would be taxed in Canada if it was capital (not income, albeit taxed or untaxed) in South Africa. E.g. if you sold your house in SA, and then bring the cash into Canada, that is not income and IMO you don't have to declare it as income. If you have shares in a company in SA, and the company pays out a dividend and you bring that as part of your SA allowance out of SA, into Canada, then it will be subject to tax.

If you earned interest on the capital in SA, then it would be income and will have to be declared taking into account any tax already paid in SA. etc etc

There are provisions for declaring capital >$100 000 outside of Canada on the tax forms. Also, as a new immigrant, I have seen mention of having 5 years to repatriate capital to Canada that's in so called tax havens (typically countries not covered by tax treaties with Canada).

I would try to get advice from a CA here in Canada. Also read the CRA website. Good luck - I found it difficult ground to cover or advice to get. What didn't help is the feeling that people are on the take every step of the way when trying to get money out of SA into Canada.

My (untaxed) ,02c :)

I'm not a financial adviser, the above is based on my personal experience and I would urge you to get qualified advice before doing anything.

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chrizette
Hi Suzette

Thanks a lot for that bit of information. What would be the exact steps to take, in that case? If I would like to take the R500 000-00 in off shore investments, where do I start and how do I go about it? Like where do I go and what do I say? Also how long does the whole process take? And any ideas on how much interest is charged for this process/service? In my case, I am looking at around R300 000-00/R400 000-00 to transfer. Any help on this matter would be greatly appreciated.

Thanks again for your input. Have a great day.

Sorry I am only replying to your post now - bit hectic at work.

Hennie dup answered all your questions and he is spot on.

All the best

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Dedré
My (untaxed) ,02c :)

I'm not a financial adviser, the above is based on my personal experience and I would urge you to get qualified advice before doing anything.

I agree, better to hear from the professionals. Sorry if I'm wrong! :cry:

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hennie_dup

Just to emphasise one point where I burnt my fingers before - when I say original bank statement, that is exactly what I mean. A printout from your account from your internet banking will NOT be accepted. You may try with a bank printout that has the bank's stamp on it, but you may or may not be successfull. Typically they want something on the bank letterhead, all nice & official - the theory being that anyone could draw up something that looks like a bank statement on their home PC.

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kgb-girl

Thanks everyone for your help!

I am busy looking through the "Application for a Tax Clearance Certificate" and am a bit confused as to the details.

The "Particulars of foreign investment" and "Other details of investment". I am not sure as to what I am supposed to fill in, in this part. Could someone who has done this before, or has a clue as to how to fill in these details, please help out:

Rand amount to be invested *

Expected annual income from this foreign investment*

With which institution will the investment be made? *

When will this investment be made? *

What is the anticipated duration of the investment?

Source of the capital to be invested: (Please tick at least one) *

This is the link to the Application for a Tax Clearance Certificate: http://www.sars.co.za/home.asp?pid=4153#FIA-001 - Tax Clearance Certificate i.r.o Foreign Investment Allowance for Individuals

I am not sure as what to write in this form as all I want to be able to do is transfer that money into an account here in Canada, so thats why I am confused re what to put under " Expected annual income from this foreign investment" , "what is the anticipated duration of the investment?" etc.

If someone could help me that would be greatly appreciated. Thanks again to everyone who has already helped out.

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Nirak

Do you want to be able to use the money? Or do you want to invest it? If you want to use it, I'm not sure you can go the foreign investment route, except if you will be paying the deposit on a property.

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kgb-girl
Do you want to be able to use the money? Or do you want to invest it? If you want to use it, I'm not sure you can go the foreign investment route, except if you will be paying the deposit on a property.

Hi Nirak

I sold my house back in SA and need to transfer that money from SA to Canada, where I am here now and working. Going by what members of the forum have said, its best not to say that I have officially immigrated to the bank, as they freeze all the accounts and then tax is to be payed on the amount. We have been advised that we can take the foreign allowance/investment route, to be able to transfer the money from SA to Canada.

Bottom line is, we need to transfer that money to Canada and be able to use it, as in a normal bank acc. We're not actually going to be investing the money.

Thanks

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Guest CharlvS
Hi Nirak

I sold my house back in SA and need to transfer that money from SA to Canada, where I am here now and working. Going by what members of the forum have said, its best not to say that I have officially immigrated to the bank, as they freeze all the accounts and then tax is to be payed on the amount. We have been advised that we can take the foreign allowance/investment route, to be able to transfer the money from SA to Canada.

Bottom line is, we need to transfer that money to Canada and be able to use it, as in a normal bank acc. We're not actually going to be investing the money.

Thanks

Hi there,

Before we came across to Canada, we went to Standard Bank to arrange for the wire transfer of money to a bank account we had opened for us on this side (that's a story for a different thread). We went to Standard Bank because that is where Dedré's account is, and because they provide forex services. The very friendly lady who helped us asked us if we wanted to take out the money on our foreign investment allowance (which is I think R2.5 million per person over your lifetime), or on our travel allowance, which is R500,000 per person per year. We chose the latter because between the two of us we had more than R500,000, but less than a million. And since we already had airplane tickets, this was the obvious way to go.

The lady then simply arranged for a transfer of a few hundred thousand rands on my travel allowance as well as some cash for us to take along on the trip. We told her that the proceeds from the sale of our house would also need to come across to us once we have that, and she said it wouldn't be a problem - we could at that time once in Canada simply transfer it on Dedré's travel allowance, and even though we would already have used our airline tickets by then, we had an entire year to still bring money across to Canada.

At no point in time were we taxed anywhere on any money we had transferred to Canada or had in cash on ourselves. Not even when we wire transferred the proceeds of the sale of our house after we've been here for 2 months already. Standard Bank only charged us a few thousand rands in fees to transfer the money and get Canadian dollars in cash.

We did however have to sign numerous documents before the time to set up the second transaction so that we could then only e-mail her the instruction when the time came to transfer the house money across.

When you have to bring more money across than what is allowed for by your travel allowance, then you have to go the foreign investment route and then only would you have to go through the process of getting tax clearance certificates, etc. As far as I am aware you also don't pay any taxes on money you take out this way.

None of the above two methods require that you officially emigrate.

I hope that helps a bit. :-)

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johankok

Remember that you can use your travel allowance on a yearly basis

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Nirak
Hi Nirak

I sold my house back in SA and need to transfer that money from SA to Canada, where I am here now and working. Going by what members of the forum have said, its best not to say that I have officially immigrated to the bank, as they freeze all the accounts and then tax is to be payed on the amount. We have been advised that we can take the foreign allowance/investment route, to be able to transfer the money from SA to Canada.

Bottom line is, we need to transfer that money to Canada and be able to use it, as in a normal bank acc. We're not actually going to be investing the money.

Thanks

Send it over as part of your travel allowance. That way there is no paperwork that has to go through SARS. Our bank still doesn't know that we have PR - just that we are here on a two year contract for work and thus we transferred money to our account here. My banker emailed me the forms which I completed and signed and couriered back to her. No issues whatsoever and no tax clearance needed. You won't be able to use the foreign investment if you don't actually invest the money. If you are over your travel allowance (R1mil per adult), then I suggest you wait until the year is over and you can make a trip back to SA. Else, wait the year and have someone transfer the money from their gift allowance.

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kgb-girl

Thanks for that bit of info. I think I got a bit confused here between the annual travel allowance and the foreign investment allowance. So just to confirm, this travel allowance, do different banks offer different allowances? As in, different amounts? I believe FNB offers R500 000 but what about ABSA? I saw on ABSA's site that it offers R160 000 per year? Not sure about that at all though. Also, if I do take the travel allowance route, do I not need a tax clearance certificate at all? What docs would I need to show bank, etc?

Thanks again everyone. Your input has helped a hell of a lot.

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Nirak

The travel allowance is fixed by the Reserve Bank. The websites have not been updated - it is R500k per adult (I made a mistake earlier - I took our total amount)

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hennie_dup

Hi kgb-girl

Rand amount to be invested * - The amount you want to take out of the country

Expected annual income from this foreign investment* - Whatever - I calculated interest at 1% and converted to Rands using the going exchange rate.

With which institution will the investment be made? * - Your bank in Canada

When will this investment be made? * - Choose a date a week or so after your submission of the Tax Clearance certificate

What is the anticipated duration of the investment? - Indefinite

Source of the capital to be invested: (Please tick at least one) * - Sale of house

My money is simply lying in an account in a foreign bank, and I can use it as and how I wish. Once it's out of the country, they cannot control it, but may check if you do declare the interest. What I have found is that the rand interest we can earn from a bank account overseas is so little that is falls below the tax threshold, and so no tax needs to be paid. I didn't even declare it last year, and the taxman had no problem.

I agree with the others, use your R500k travel allowance per year if you can, as a first resort. It is much easier and quicker. I am not sure how to do this when you are already there, but I think some of the other members have already answered that. I replied based the foreign investment, since I did not know at the time how much money you needed to transfer.

Take care & all the best!

Edited by hennie_dup

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Barnie
Hi there,

Before we came across to Canada, we went to Standard Bank to arrange for the wire transfer of money to a bank account we had opened for us on this side (that's a story for a different thread). We went to Standard Bank because that is where Dedré's account is, and because they provide forex services. The very friendly lady who helped us asked us if we wanted to take out the money on our foreign investment allowance (which is I think R2.5 million per person over your lifetime), or on our travel allowance, which is R500,000 per person per year. We chose the latter because between the two of us we had more than R500,000, but less than a million. And since we already had airplane tickets, this was the obvious way to go.

I assume you had paper tickets. Do they accept e-tickets as well? :rolleyes:

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hennie_dup

Yes Barnie, they do - all they actually want is the ticket number, as that forms part of the report they have to submit to the SARB.

Everything we spend, whether on our credit cards on the net, or money taken out as travel allowance, form part of the R500k per annum, and somewhere the SARB has a system that tallies all of these up against our id's, together with the reasons, and raise the warning flags if the R500k is exceeded in the year.

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Barnie
Yes Barnie, they do - all they actually want is the ticket number, as that forms part of the report they have to submit to the SARB.

Everything we spend, whether on our credit cards on the net, or money taken out as travel allowance, form part of the R500k per annum, and somewhere the SARB has a system that tallies all of these up against our id's, together with the reasons, and raise the warning flags if the R500k is exceeded in the year.

Thanks Hennie; when talking to the bank, do you need any other form of id (showing your id number) or your passport?

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hennie_dup
Thanks Hennie; when talking to the bank, do you need any other form of id (showing your id number) or your passport?

Hi Barnie

I cannot remember that they asked me for id, but I know the form you submit needs your id number on it.

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