The Budget Just Changed the Rules on Offshore Investing

On 25 February 2026, Finance Minister Enoch Godongwana did something that fifteen years of budget speeches had failed to do: he actually moved the needle on how much South African investors can take offshore without the administrative headache of involving SARS. The single discretionary allowance was doubled, from R1 million to R2 million per person a year. For a married couple, that is R4 million annually, moved with nothing more than a compliant bank instruction.

That is not a small thing. But before the announcement becomes the strategy, it is worth understanding exactly what changed, what did not, and how to think about it as an investment decision rather than a reactive one.

What Has Actually Changed

The single discretionary allowance, or SDA, was first introduced at R500,000 in 2008. It was raised to R1 million in 2011 and then sat untouched for nearly fifteen years while the rand lost roughly half its value against major currencies. In real terms, the new R2 million limit largely restores the purchasing power of the original allowance. That framing matters: this is a correction, not a bonus. But corrections can still be significant.

What makes the SDA so useful, and why the doubling is genuinely valuable, is what it does not require. Unlike the Foreign Investment Allowance, which allows up to R10 million per person annually but requires a SARS Approval for International Transfer (AIT) clearance certificate, the SDA requires no SARS pre-approval whatsoever. A compliant taxpayer can instruct their bank and the funds move. The process that used to gate off amounts between R1 million and R2 million, a process tax specialists routinely describe as slow, documentation-heavy and administratively burdensome, is now bypassed entirely for amounts within the SDA threshold.

Most investors will focus on the R2 million. The more important factor is the reduction in friction: the removal of an administrative barrier that was actively deterring legitimate offshore investment for amounts well within most investors' planning horizons.

In practice: a South African resident can now move up to R12 million offshore per year in total, comprising R2 million via the SDA without SARS involvement and R10 million via the FIA with SARS clearance. A married couple can access R24 million in combined annual allowances. Note that the SARB is still finalising the formal circular enabling banks to transact at the new R2 million level, expected by end of March 2026, so confirm with your authorised dealer before acting.

Why Offshore Exposure Belongs in Most South African Portfolios

This is the part of the conversation that tends to get muddled by timing. Investors often think about offshore allocation in response to rand weakness or domestic political anxiety. That reactive framing is the wrong starting point.

The structural argument for offshore exposure is simple: the JSE represents less than 1% of global market capitalisation. A portfolio that holds all its wealth in South Africa is not cautiously domestic. It is highly concentrated in a single small emerging market. That concentration risk exists regardless of how well local markets perform.

Beyond concentration risk are the limitations of the JSE itself. On a sector basis, the JSE is heavily skewed toward mining, financials and a handful of dual-listed multinationals, with a lack of meaningful exposure to sectors such as technology. The entire semiconductor and AI infrastructure cycle of the past decade, one of the most significant wealth-creation events in modern market history, was simply not accessible to investors who stayed local. If you want meaningful exposure to global technology, healthcare, consumer brands, infrastructure or foreign-currency bonds, you cannot get it on the JSE alone.

There is also the currency dimension. The rand's long-term trajectory against hard currencies, while subject to periods of strength, reflects the structural realities of a small, commodity-dependent emerging market economy. Offshore assets provide a natural hedge against that structural exposure, and no investor should have all their wealth subject to the same set of domestic risks.

How to Think About This Strategically

The most common mistake I see with offshore allocation decisions is that they are made in reaction to something: a rand sell-off, an election result, a headline that creates urgency. The quality of the decision almost always suffers when urgency is the driver. The right approach is systematic and pre-planned.

Start with your target offshore allocation as a proportion of your overall portfolio, reflecting your investment objectives, time horizon, any foreign spending obligations, and an honest assessment of the domestic concentration risk you are already carrying through property, employment income and existing investments. For someone with no foreign obligations and a long time horizon, a 20 to 35 percent offshore weighting is a common starting anchor, though the right number will vary significantly based on your specific circumstances. For someone with emigration plans or children studying abroad, it should be materially higher.

Direct offshore investment is not the only path. Local unit trusts and ETFs with offshore mandates, rand-denominated structured products, and Regulation 28-compliant funds (many of which allocate up to 45% internationally) all provide genuine global market exposure from within a local wrapper. For investors who need liquidity or whose portfolio size does not yet justify the costs of holding foreign accounts, these vehicles are often the more appropriate solution. The right question is not whether to go direct or stay local. It is which structure serves your situation.

For investors with larger portfolios, there is a case that goes beyond returns. Actually holding capital in foreign currencies, rather than gaining offshore exposure through rand-denominated instruments, gives your wealth a secondary layer that local wrappers cannot provide.

It means your wealth is not entirely subject to a single monetary policy, a single set of political risks, or a single fiscal environment. And if your circumstances change (emigration, children studying abroad, extended time overseas, or simply wanting a plan B), capital already positioned offshore is far easier to mobilise than capital that first needs to be externalised.

The SDA resets every January 1st. What you do not use, you lose, and that is a real cost. Waiting for perfect conditions is usually how investors miss the window entirely.

Putting it into Practice

With the Budget change South African investors can now externalise more funds, easier and more efficiently than before. We work with clients across the full spectrum of offshore strategies, from building offshore exposure through local investment vehicles to facilitating direct offshore investment for those ready to externalise capital.

For clients moving money offshore, we work with Currency Partners, South Africa's largest specialist foreign exchange intermediary authorised by both the FSCA and SARB, to ensure the process is competitive, compliant, and properly structured.

For clients who want genuine foreign banking capability alongside their investment accounts, we offer access to Swissquote, a Swiss-headquartered banking group with an FSCA-licensed South African entity, providing multi-currency accounts, global market access, and day-to-day banking functionality in one platform. It is particularly suited to clients who travel frequently, maintain international commitments, or want a foreign-currency account as a practical part of their financial life rather than just portfolio exposure.

If you have not yet built meaningful offshore exposure, now is the time to have that discussion. For those already positioned offshore, it is worth reviewing whether the current allocation still reflects your objectives and whether the increased allowance creates room to adjust.

The rules have changed. The question is whether your portfolio reflects that.