Donovan83 Posted August 26, 2012 Report Share Posted August 26, 2012 Hello everyone,I have two quick questions:There are two foreign exchange allowances I'm considering - both form part of your discretionary R1m a year that you're allowed to take out. The first one is the R1m investment allowance and the second is the R1m travel allowance. Does it really matter which one I use? From what I understand, if I choose to use the foreign investment allowance then there's a possibility that SARS may see this as an asset for RSA tax purposes, thus when I "dispose" of my foreign bank account "investment" I'll be subject to tax on the gain? I'm erring on using the travel allowance to avoid this - since then I would have "spent" the money I took over. Is Exchange4Free okay? Anyone used them recently? I've seen positive feedback on them but I just want some confirmation Thank you everyone PS - let's hope this exchange rate improves. Flip man! Quote Link to comment Share on other sites More sharing options...
Hugo2 Posted August 26, 2012 Report Share Posted August 26, 2012 Hi! The two options you referred to is for technical reasons one and the same! It is both DA and DA can be used for 6 different purposes! But you need tonelwct or indiate on mp1423Xchange4free ok and save! My clients or at least 85% revert preferring and in fact using Fx Capital! Smaller outfit more personal service and attention to your questions and needs! But Xchange4free the initial pioneer Quote Link to comment Share on other sites More sharing options...
Brad76 Posted August 26, 2012 Report Share Posted August 26, 2012 Hi DonovanI'd lean towards the travel allowance. If I recall correctly you would be subject to gains / losses via Schedule 8 at the end of each tax year plus tax on interest received. less the foreign dividends / interest income exemption.I suppose though you'd possibly be liable for that either way.Less red tape with the travel allowance though! Quote Link to comment Share on other sites More sharing options...
Short&Tall Posted August 26, 2012 Report Share Posted August 26, 2012 I'd lean towards the travel allowance. If I recall correctly you would be subject to gains / losses via Schedule 8 at the end of each tax year plus tax on interest received. less the foreign dividends / interest income exemption. Mmmm I'd be interested in hearing more about whether you get hit for greater tax with the foreign investment vs travel option? We used exchange for free about a year ago - very happy with Tanya. 1 Quote Link to comment Share on other sites More sharing options...
Bronwyn&Co Posted August 27, 2012 Report Share Posted August 27, 2012 I have also used Tanya from Xchange4 free (can't see how it's free, but anyway), it all went smoothly. Quote Link to comment Share on other sites More sharing options...
21yearsoutofrsa Posted August 27, 2012 Report Share Posted August 27, 2012 (edited) It's not free. There is always a bid and a ask price when it comes to foreign exchange transaction. These type of operations live on the spread between the two rates, and maybe a bit more. I've never had my live prices up when doing a transaction with them. I guess the fact that they don't rip the guts out of the differential segregates them from the commercial banks.Just because they don't charge a commission doesn't make them goody two shoes. Edited August 27, 2012 by 16yearsoutofrsa Quote Link to comment Share on other sites More sharing options...
Hugo2 Posted August 27, 2012 Report Share Posted August 27, 2012 Hi DonovanI'd lean towards the travel allowance. If I recall correctly you would be subject to gains / losses via Schedule 8 at the end of each tax year plus tax on interest received. less the foreign dividends / interest income exemption.I suppose though you'd possibly be liable for that either way.Less red tape with the travel allowance though!Just remember the technical issue: If you are not resident in the country, you may not qualify for TA in 2nd and alter year after departure. So, you may fall of Excon rules living outside electing code 304 (TA) as you do not have air tickets to show! Use code 606 FIA and the comment on Schedule 8- I assume you refer to the 8th schedule to income tax act being the SA Tax act's dealing with capital gains tax. The method you send the funds out is not relevant. So the advice above is incorrect. If you take it out as TA or if you take it as FIA and you invest in say listed shares you face SARS CGT ONLY and ONLY if you are tax resident in SA. If your ATO tax resident, ignore all comments about SARS CGT unless you SOLD property. Selling Rands is not a CGT event for tax non-residents. I suggest you keep to code 606 as code 304 is dependent on air tickets and unspent money end December must be sent back to SA or be re-classified as FIA. Why create more work, use code 606 from day one. It makes no difference to your tax in SA or any other country. In UK you will pay tax just because you took it into GBP area and in Oz/USA you will only pay tax if you are tax resident taxed on world-wide basis and the source of funds was a taxable event. 1 Quote Link to comment Share on other sites More sharing options...
Hugo2 Posted August 27, 2012 Report Share Posted August 27, 2012 Code 304 the travelling allowances has MORE red tape, you need to present or can be asked to present an air ticket for travel commencing in CMA and ending in CMA (common monetary are ie including Nam & Bots). Unspent TA must be returned to SA at end of trip of end of calendar year. Use the code 606, or the gift/loan option if sent to family abroad, as there is no air ticket required, there is no obligation to remit excess back at the end of the year. In all cases there may be tax consequences but only the GIFT transfer could trigger additional tax being donations TAX but only of the donor is SA tax resident. Hope this clarifies Quote Link to comment Share on other sites More sharing options...
miraclebabycaw Posted August 27, 2012 Report Share Posted August 27, 2012 My only concern with a FIA is that I have heard that should the government ever decide to recall any foreign investment, they could issue a recall on your money. I know not likely to happen but who knows with this government. That being said on the other hand people in the know seem to think foreign exchange rules will be a thing of the past in the next couple of yearw, who knows. We are just waiting for the sale of our house to come through and will then send that money over now as a FIA, and take the rest as a TA when we go in December. That's the plan anyway. In the new year we can ask for another FIA for any small amounts of money still sitting here.16years is absolutely correct. there is no such thing as for free. They just don't rip you off with a commission as well as a bad rate which the banks tend to do. Another tip..always insist that your guy at the branch phones the actual dealers for a better rate. They CAN do this, just don't bother because they have targets they have to meet as well. Usually you get a better rate if they call the actual dealers. 1 Quote Link to comment Share on other sites More sharing options...
Hugo2 Posted August 27, 2012 Report Share Posted August 27, 2012 My only concern with a FIA is that I have heard that should the government ever decide to recall any foreign investment, they could issue a recall on your money. I know not likely to happen but who knows with this government. That being said on the other hand people in the know seem to think foreign exchange rules will be a thing of the past in the next couple of yearw, who knows. .Interesting heard...so many hear but I can't read it anywhere. Let us look at the fact: Do SARB or government ask any update as to status or use? Hands up who had such a query! No they don't! When you emigrate they don't even ask about your offshore assets. Please don't be a fear monger! Only SA tax residents need to report on the post FIA status and use, the minute you become tax non-resident (that is before you even formally emigrate, just take a PR) they never ask about your funds and if they recall they would not know where to start. And if you on a PR already, NO ONE IN SA is going to ask you what you did with it as you no longer pay RSA world wide tax, you escape donations tax and you pay estate duty on SA in situ assets only. Please quote me as you read somewhere FIA is written off from SA Inc. balance sheet...forever! 2 Quote Link to comment Share on other sites More sharing options...
Short&Tall Posted August 27, 2012 Report Share Posted August 27, 2012 It's not free. There is always a bid and a ask price when it comes to foreign exchange transaction. These type of operations live on the spread between the two rates, and maybe a bit more. I've never had my live prices up when doing a transaction with them.I guess the fact that they don't rip the guts out of the differential segregates them from the commercial banks.Just because they don't charge a commission doesn't make them goody two shoes.I agree you definitely don't get the live prices when the exchange is made (none of us work for free we would go bankrupt). The difference between the price that some of the exchange agencies use can be a lot different to the banks. What I did was to check a few different options - on the same day at a similar time I asked for a quote on how much I would get at the other end in Oz. I compared our banks with the exchange agencies - it was a very useful exercise and the difference was large. Quote Link to comment Share on other sites More sharing options...
miraclebabycaw Posted August 28, 2012 Report Share Posted August 28, 2012 Code 304 the travelling allowances has MORE red tape, you need to present or can be asked to present an air ticket for travel commencing in CMA and ending in CMA (common monetary are ie including Nam & Bots). Unspent TA must be returned to SA at end of trip of end of calendar year.Only in the event of a return to the country though would a TA need to be repaid..within 30 days if I am correct.. Not at teh end of a tax year..TA should have no bearing on any tax payable..or so I have been told? 2 Quote Link to comment Share on other sites More sharing options...
Gerhardk Posted August 28, 2012 Report Share Posted August 28, 2012 Exchange4free is great - I also used Tanya. You can keep an eye on www.xe.com for exchange rate while transacting with them. Say now it is ZAR : AUD 8.73, you should get around 8.60 with Tanya. ABSA should give you around 8.10 if not less. Since the exchange rate can move a lot during the day, the 'live' ones like Exchange4free is better. Quote Link to comment Share on other sites More sharing options...
OfftoOz Posted February 4, 2013 Report Share Posted February 4, 2013 Hi all, If you use a travel allowance, will they ask for a return air ticket or is one way fine? Quote Link to comment Share on other sites More sharing options...
KIMO Posted February 8, 2013 Report Share Posted February 8, 2013 Tanya from exch4free said no return ticket needed, as long as you make your transfer within 60 days of your dept if using the Travel allowance route. Quote Link to comment Share on other sites More sharing options...
OfftoOz Posted February 8, 2013 Report Share Posted February 8, 2013 Thanks. Ended up going the investment allowance route with Ex4Free Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.