You probably already own offshore assets
Before worrying about allowances and tax clearance, it is worth knowing that most South Africans with any market exposure already hold offshore assets without having moved a cent out of the country. A global feeder fund or a rand-denominated world-index tracker bought on the JSE gives you exposure to companies listed in New York, London and Tokyo while your money never leaves a South African account.
That route uses no allowance, needs no approval, and is how the large majority of people should get their offshore exposure. The allowances below matter when you want to hold money in a foreign currency, in a foreign account, outside the local system entirely.
The two allowances, and how they differ
South Africa still has exchange control, which means there are limits on how much you can move out of the country in a year. There are two of them for individuals over 18.
The single discretionary allowance is the easy one. It doubled from R1 million to R2 million per calendar year after the February 2026 Budget, and the Reserve Bank made it official on 8 April 2026 (Exchange Control Circular 6 of 2026). It covers any legal purpose abroad, including travel, gifts and investment. It needs no prior approval from SARS. You arrange it through your bank or another authorised dealer. Because it is a calendar-year limit, anything you already sent abroad earlier in 2026 counts towards the R2 million.
The foreign investment allowance (the Reserve Bank calls it the foreign capital allowance) sits on top of that and runs to R10 million a calendar year. This one does require approval: you apply to SARS for an Approval for International Transfer (AIT), which means your tax affairs need to be in order. SARS asks for proof of where the money came from, bank statements no more than 14 days old, and a statement of your assets and liabilities for the previous three years. Allow several weeks, because approval can take a while and you do not want to be stuck waiting mid-transfer. Between the two allowances, an individual can move up to R12 million a year. Above that you need special approval from the South African Reserve Bank.
A married couple each have their own allowances, which is worth knowing before anyone assumes the household limit is R12 million.
What actually happens when you use them
Using the discretionary allowance is closer to an international transfer than to a stockbroking transaction. You convert rands to your target currency, pay the spread and fees your bank or a foreign exchange provider charges, and the money arrives in a foreign account or with an offshore investment platform. From there you buy whatever that platform offers.
The costs are not trivial and they are easy to overlook. Banks and specialist providers quote different exchange rates, and the gap is easy to miss because it is buried in the rate rather than shown as a fee. A rate that is just 1% worse costs you R5,000 on a R500,000 transfer. Compare the all-in rand amount that lands offshore, not the advertised commission.
Feeder fund or direct offshore: how to choose
Both give you exposure to global markets. The practical differences are these.
- A rand-denominated feeder fund or global ETF is bought in rands on the JSE, costs nothing in allowance, settles like any local trade, and appears on your ordinary investment statement. It can be held inside a tax-free savings account, up to R46,000 a year and R500,000 over your lifetime.
- Direct offshore means the money and the asset genuinely sit outside South Africa. That matters if you expect to spend the money abroad, if you want to hold hard currency rather than rand-priced exposure, or if you are planning to emigrate. It uses allowance, involves conversion costs, and brings foreign estate and tax questions with it.
For most people building long-term wealth who intend to retire here, the feeder route does almost everything the direct route does at lower friction. Our guide to ETFs in South Africa covers how those funds are structured and what they cost.
Currency is the risk nobody plans for
Offshore investing is usually sold as protection against the rand. It is worth being precise about what that means. If the rand weakens, your offshore holding is worth more in rands, which feels like a gain. If the rand strengthens, the same holding is worth less in rands even if the underlying shares did nothing wrong.
You have not removed risk, you have swapped one kind for another. That is a reasonable trade if most of your income, property and future spending is already in rands, because it spreads your exposure. It is a bad trade if you are going to need the money in rands in two years and cannot afford the currency to move against you in the meantime.
It is also worth remembering that a Top 40 tracker is already substantially offshore in economic terms, because so much of what the JSE's largest companies earn is made in dollars. Adding a global fund is still worth doing, but it adds less new diversification than the labels suggest.
What SARS still expects from you
Moving money offshore does not move you out of the South African tax net. If you are a South African tax resident you are taxed on your worldwide income, which means interest, dividends and rental earned on offshore assets are declarable here, in rands, translated at the appropriate rate.
Foreign dividends are taxed differently from local ones. Instead of the flat 20% dividends withholding tax, they go through your tax return. For an individual holding an ordinary portfolio of foreign shares, 25/45 of the dividend is exempt and the remaining 20/45 is taxed at your marginal rate. That caps the effective rate at 20% for someone in the top 45% bracket, and it is lower further down. Where a foreign country has already withheld tax at source, a double taxation agreement usually allows you to claim relief rather than pay twice, but you have to claim it.
Capital gains on offshore assets are also yours to declare. When you buy and sell a direct holding in the same foreign currency, the gain is worked out in that currency first and then translated into rands, using either the average exchange rate for the tax year or the spot rate on the day you sell (paragraph 43 of the Eighth Schedule). In practice, a share that finishes flat in dollars produces no capital gain, however far the rand has moved. Holding foreign cash and later converting it back to rands is a separate calculation, so get advice if that is part of your plan.
Do not assume nobody is watching. Under the Common Reporting Standard, foreign financial institutions report the balances, income and sale proceeds of accounts held by South African tax residents to their local tax authority, which passes them on to SARS. Declaring offshore income is not optional, and SARS can check what you report against what the foreign institution reported.
None of this makes offshore investing a bad idea. It does mean the admin is heavier than a local unit trust, and that a feeder fund bought on the JSE avoids most of it, because the fund handles the underlying foreign tax and you are simply holding a South African instrument. If your offshore exposure is modest, that simplicity is worth a great deal.
Quick answers
Do I need tax clearance to invest offshore?
Not for the first R2 million each calendar year. The single discretionary allowance needs no prior SARS approval. Beyond that, the R10 million foreign investment allowance requires an Approval for International Transfer (AIT) from SARS.
Is a global ETF bought on the JSE actually offshore?
The underlying assets are offshore, but the money and the investment stay in the South African system, priced in rands. That is why it uses none of your allowance. It gives you global market exposure, not money held abroad.
How much should sit offshore?
There is no regulated answer, and anyone quoting a precise percentage is guessing. The sensible framing is how much of your future spending will be in rands. If nearly all of it will be, a heavy offshore tilt adds currency risk you have no natural use for.
Keeping track once it is spread out
The practical cost of investing offshore is that your money ends up in more places. A local broker, a feeder fund, maybe a foreign platform, plus whatever sits in a retirement annuity. In Budget Hub you can log each of these as a holding and track its current value in rands, with market-linked ones like ETFs carrying delayed pricing and statement-based products like an RA updated from provider statements. Anything you have not refreshed in a while is flagged, which matters most for the account you check least often.
If you are earlier in the process than allowances and foreign accounts, starting with R500 a month is the more useful place to begin. The free plan covers three holdings, which is enough to see whether your offshore exposure is where you think it is rather than where you last remember putting it.