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How can a CC get forex for investing offshore or paying overseas employees ?
Can I, as the owner lend some of my forex to the CC ? The amounts will be less than R1m per year. Can I use my discretionary allowance ?
Otherwise I believe it is legal to use your SDA for this.
I don't think so. A CC is a separate legal entity to its owners.
You just do it through a director/member loan account. That's how my accountants do it, and SARS had no issue with it either.
Jay is implying that the CC is repaying the loan with local money.Ok, but loans have to be repaid. Otherwise you have a whole other set of problems.
Yes, but that's where the scheme falls over. It would (probably) be fine to use your SDA to "invest" in a loan to the CC, that's an approved use of the SDA. But repaying the loan with local funds is an end-run around the forex regs; you're allowing another entity to use your SDA to transfer funds overseas. Which is certainly not an approved use(!). Otherwise South African individuals could "sell" their SDA to other people wanting to transfer money out of the country. This is the issue with the forex regs - even if two legs of transaction are individually ok, you can still be in violation because of what the separate legs add up to.Jay is implying that the CC is repaying the loan with local money.
Yes, but that's where the scheme falls over. It would (probably) be fine to use your SDA to "invest" in a loan to the CC, that's an approved use of the SDA. But repaying the loan with local funds is an end-run around the forex regs; you're allowing another entity to use your SDA to transfer funds overseas. Which is certainly not an approved use(!). Otherwise South African individuals could "sell" their SDA to other people wanting to transfer money out of the country. This is the issue with the forex regs - even if two legs of transaction are individually ok, you can still be in violation because of what the separate legs add up to.
If the above is illegal, then incurring expenses on a credit card (using SDA) during business travel then getting reimbursed is also illegal. Almost every business traveler I know does this.
You may use your SDA for foreign investments. One form of foreign investment is corporate bonds. If you can buy bonds, then you can make corporate loans. If you loan money to your own company, then SARB and SARS have more say than when you loan money to a foreign company.Travel expenses are an authorized use of the SDA, so no problem. Transferring capital for another legal entity, not an authorized use.
