Brief
South African trusts can now distribute directly to offshore trusts under new exchange‑control rules
The Reserve Bank’s April 8 circulars permit resident trusts to make direct offshore distributions, subject to SARB and SARS approval.
By Felo News Desk · Published
The South African Reserve Bank issued nine circulars on 8 April 2026 that relax exchange‑control rules, most notably allowing resident trusts to distribute funds directly to offshore trusts, according to a Bizcommunity analysis published on 15 October 2026.
What happened
The new framework builds on earlier changes: the Single Discretionary Allowance (SDA) was doubled to R2 million in April, and trust‑to‑trust offshore distributions were already permissible in principle. The April circulars formalise the process, requiring trustees to apply for a Manual Letter of Compliance from SARS, which then forwards the approval to an authorised dealer to lodge the exchange‑control application with SARB.
What the report adds
Bizcommunity notes that the direct trust‑to‑trust route eliminates the previous workaround where a trust paid a resident individual, who used their Foreign Investment Allowance to move the cash offshore and then lent it back to the offshore trust at market‑related interest. That older method exposed the funds to estate duty and required the individual to pay tax on the interest earned.
What was said
The article explains that SARS will conduct a full audit of the trust’s tax compliance before issuing the Manual Letter of Compliance. It warns that trusts with outstanding returns or undeclared transactions will face longer processing times, describing the review as “a full audit”.
How it came about
The change follows a series of regulatory relaxations that began with the SDA increase and the August 2023 SARB signal that resident trusts could eventually distribute directly abroad. The 8 April 2026 circulars codify that signal, turning a theoretical planning tool into a mainstream option for South African trusts that keep their tax affairs in order.
Key facts
- The Reserve Bank issued nine circulars on 8 April 2026 that allow resident trusts to distribute directly to offshore trusts. (bizcommunity.com)
- Trustees must obtain a Manual Letter of Compliance from SARS before the authorised dealer can lodge the exchange‑control application. (bizcommunity.com)
- The SDA was increased to R2 million per individual in April 2026, doubling the previous allowance. (bizcommunity.com)
- The previous workaround required a resident individual to receive the funds, use their Foreign Investment Allowance, and lend the money back to the offshore trust, exposing the assets to estate duty. (bizcommunity.com)
Sources
- [1] bizcommunity.com — originally reported as “Exchange control changes in play: Now what? - Nexia SAB&T”
