The South African Reserve Bank (SARB) has adjusted the operation of the Single Discretionary Allowance (SDA) regime for South Africans transferring funds abroad, now allowing greater flexibility for bona fide current transfers above the R1-million annual threshold.

On 7 January 2026, the SARB communicated that the headline annual transfer limit of R1-million without needing South African Revenue Service (SARS) tax clearance remains unchanged. However, the practical reality for resident individuals wishing to send funds offshore has shifted.

The update introduces broader flexibility for bona fide current transfers exceeding R1-million, while simultaneously reinforcing strict controls where capital transfers are involved. For taxpayers and advisors alike, understanding this distinction is critical.

The R1-Million Rule Remains, But with an Important Refinement

Under the Exchange Control framework, South African residents aged 18 and older may utilise the SDA of up to R1-million per calendar year to remit money for any lawful purpose abroad, including travel, gifts, and certain investments.

Historically, any transfer exceeding this threshold required a Tax Compliance Status (TCS) approval from SARS, regardless of the nature of the transfer. Exchange Control Circular No. 1 of 2026 changes this position in a targeted way.

SARB has now confirmed that additional transfers above R1-million will not automatically require a SARS TCS, provided that the transfer is:

• of a current nature, and
• supported by proof of its bona fide purpose and legitimacy.

These requests will instead be considered directly by the SARB’s Financial Surveillance Department (FinSurv), subject to verification.

Current Transfers vs Capital Transfers: Why the Distinction Matters

The relief introduced by the Circular does not extend to capital transfers.

Where an individual seeks to externalise funds of a capital nature above the R1-million SDA, the existing rules remain intact. In such cases, a SARS TCS is still mandatory in terms of section B.2(B) of the Currency and Exchanges Manual for Authorised Dealers.

In practice, this means current transfers may qualify for SARB approval without a TCS, even above R1-million. However, capital transfers, including offshore investments of a capital nature, remain subject to full SARS clearance before funds may leave South Africa. Misclassifying a transfer can result in delays, rejection by the bank, or additional scrutiny.

Increased Responsibility for Banks and Clients

Circular 1 of 2026 places a renewed compliance burden on Authorised Dealers. Banks are now required to independently verify the bona fide nature and legitimacy of current transfers above the SDA limit and ensure that the correct balance of payments category is reported on the FinSurv Reporting System.

From an individual perspective, this means that although a SARS TCS may no longer be required in certain cases, documentary substantiation has become even more important. Banks retain discretion and will not process transfers without adequate supporting evidence.

Understanding the Impact

While the Circular introduces flexibility, it does not represent a relaxation of exchange control oversight. Instead, it reflects a recalibration of regulatory responsibility between SARS and SARB.

Individuals should be aware that:

• exceeding the R1-million SDA will almost certainly trigger enhanced scrutiny;
• banks may apply differing internal risk thresholds; and
• poorly structured applications can still result in funds being blocked.

Advance planning and proper classification of the transfer are essential.

Act Before Problems Arise

With increased coordination between SARB, SARS and financial institutions, offshore transfers are now assessed through a more sophisticated compliance lens. Whether a TCS is required or not, delays often arise because applications are lodged too late or without adequate substantiation.

If you are planning to remit funds offshore above the SDA, or if your bank has requested additional documentation under Circular 1 of 2026, it is advisable to obtain professional guidance upfront. Proper structuring can mean the difference between a seamless transfer and months of regulatory delay.

Early engagement remains the most effective way to ensure that your funds move legally, efficiently, and without unnecessary disruption.

Written by Micaela Paschini, Team Lead: Tax Legal at Tax Consulting SA; and Michelle Phillips, Senior Attorney: Exchange Control & SARS Engagement at Tax Consulting SA