As a South African citizen, you are bound by exchange control laws that limit how much money you can send out of the country, and not following these regulations can get you into trouble with the authorities.

These rules might seem restrictive, but the reality is that only a small handful of South Africans are able to send more than R1 million a year overseas. Even fewer still need to worry about exceeding the R10 million annual offshore investment limit.

But even if you’re not aiming to reach these limits, it still helps to understand what the rules are and to whom they apply.

You and your single discretionary allowance

Under South Africa’s exchange control laws, every citizen over 18 with a South African identity document may transfer up to R1 million overseas every year without needing a tax compliance status letter. This is known as your single discretionary allowance (SDA).

Why would you be sending money abroad? You might be saving and investing in offshore accounts, or the money might be used for travel expenses, or to support you if you are living abroad temporarily. It could be to pay for goods and services, overseas subscriptions, offshore investments or to send as a gift to family in another country.

A use-it-or-lose-it policy applies to this allowance, so any portion you don’t use falls away at the end of the year. From 1 January, you are again allowed to transfer up to R1 million before the end of December.

If you want to transfer more than R1 million overseas, you can do so up to a limit of R10 million a year for investment purposes, but you’ll need to get a foreign tax compliance status letter from the South African Revenue Service (SARS) to do so.

Online shopping, donations and gifts

If you have a taste for hard-to-find or exclusive goods that you can buy only from stores outside the country, you’ll be glad to hear that when you make these purchases from South Africa, they don’t form part of your SDA (if you are paying with your bank debit or credit card – if you pay via an international payment, it may affect your SDA). On a card, you can shop to your heart’s content – up to a limit of R50,000 per transaction. And remember that you may have to pay import duties on the goods you’ve bought, so build that into your budget.

If you’re travelling abroad and need foreign currency, you may buy as much as you like, provided it’s under the R1 million SDA. If you use your debit or credit card while abroad, this will also form part of your SDA.

If you have children under the age of 18, regulations allocate a R200,000 travel allowance to each of them every calendar year too. But remember that you’re allowed to take a maximum of R25,000 in cash with you when travelling out of the country.

So, there you have it: The basics of exchange control and how it affects you, in less than 3 minutes. You can speak to your banker or a Nedbank forex consultant for further help.