We so casually whip out our credit cards and debit cards to pay for things that we tend to forget there are strict rules governing the use of these cards, especially when it comes to offshore spending.
Offshore spending on your credit card obviously includes spending while on holiday overseas. But it also includes online transactions with offshore entities that you do on your computer or smartphone at home – for example, paying for a music download from an overseas music website or for a subscription to a foreign online publication.
In a cautionary email to its customers, Nedbank recently reminded cardholders of regulations and restrictions pertaining to international transactions.
“Adherence to these rules is the responsibility of every cardholder. Non-adherence may result in fines and/or withholding of funds by the South African Reserve Bank (SARB) and further penalties from the South African Revenue Service (SARS),” Nedbank said.
The bank highlighted the following areas of concern:
• Offshore gambling. “You may not take part in online lotteries, gambling, or sports betting activities with providers outside of South Africa using your credit, debit, or virtual cards. If you do, we may be instructed to confiscate the winnings and pay them over to the Gambling Board of South Africa,” Nedbank said.
• Offshore allowance. South Africans are allowed to take R1 million offshore per year without having to account to the authorities. This is known as the single discretionary allowance (SDA). You can take more than this out of the country (up to R10 million per year), but only by going through the correct channels, including SARB and SARS. Nedbank reminds us that all foreign transactions count towards your SDA. “These include card payments and cash withdrawals while overseas as well as purchases on international e-commerce sites,” the bank said. “Make sure you do not exceed the R1 million annual limit.”
• Payment limits. Online card payments for imports, subscriptions, or services (excluding foreign-travel-related) may not exceed R50 000 each, Nedbank said. “You also may not split a payment that is over R50 000 into smaller transactions to avoid this rule.” This limit also applies to individual transactions when travelling abroad.
• Duties and customs. You need to be aware of import duties on items you order from offshore companies. “Regardless of the payment amount, you must pay any applicable import duties and follow customs requirements,” the bank warned.
• Transfers to offshore accounts. The funding of foreign currency accounts (locally or abroad) may not be done via card payments, Nedbank said. “Only SWIFT payments or cross-border transfers are permitted for this purpose. This includes funding of international trading, investments, and crypto wallets or accounts. The funding of these types of transactions should be referred to an authorised dealer or bank to process within the prescribed rules.”
Holiday spending
Tax attorneys Michelle Phillips and Richan Schwellnus from Tax Consulting SA say there is often confusion surrounding what people can and cannot do when using their local banking facilities abroad.
They note that, apart from the R1 million annual SDA for adults, under-18s get a R200 000 annual allowance. This means that a family of two parents and two children would have a combined allowance of R2.4 million.
Echoing many of the points above, they add that proof of identification and a passenger flight ticket are required to authorise foreign spending, although no approval or documentary evidence is required for travel expenditure inside the Common Monetary Area, which includes our neighbours eSwatini, Lesotho, and Namibia.
