Exchange control regulations have been changed to give you a R500 000-a-year discretionary allowance for you to use on anything, including foreign travel, gifts to foreign friends and relatives, and paying for maintenance while you or your dependants are studying abroad.
What you don't use in any one year cannot be carried forward to the next.
Prior to this, there were different allowances for travel, foreign maintenance, gifts and donations.
Alick Bruce-Brand, the head of Exchange Control at the South African Reserve Bank, says you will still have to apply through an authorised dealer for foreign exchange for your foreign holiday. Other regulations, such as re-selling unused currency from your trip, still apply.
The R20 000 a transaction for credit card purchases for goods ordered locally from abroad (such as books from, for example, Amazon.com), still applies and is not included in the R500 000 foreign allowance.
The discretionary allowance is in addition to the existing R2 million you can invest offshore.
There are no limits on investments made through rand-denominated instruments where your money is invested abroad.
You, however, make your investments in rands and get the benefits in rands. The only limitation is if the unit trust management company or life assurance company has used up its foreign investment allocation.
But this should not be too big a problem now as these allocations have also been increased by Finance Minister Trevor Manuel in a general overhaul of the country's foreign exchange controls.
The limits on unit trust management companies, life assurance companies and even your retirement fund will no longer be governed by exchange control restrictions. Instead, prudential restrictions will be placed on institutional investors.
Prudential regulations, in terms of the Pension Funds Act, are already used to reduce the investment risk of retirement funds by ensuring they have a diversification of investments across asset classes by placing maximums on different asset classes and sub-sections of asset classes.
The finance minister said in his Budget speech this week that one reason why South Africa had not been badly affected by the current US$400 billion sub-prime mortgage loan debacle in the United States was that prudential limits are in place on South African banks and other institutional investors.
In other words, they had not been able to invest in the high-risk sub-prime securities.
The "prudential" limit on offshore investment by pension funds and life assurance companies (for policies) has been increased from 15 to 20 percent of total retail product assets; for collective investment schemes (mainly unit trust funds and exchange-traded funds) the limit has been increased from 25 to 30 percent of total retail product assets.
A further five percent may be invested in Africa.
Rod Stevenson, a senior legal adviser at Old Mutual, says a further limit may also apply to individual retirement products you buy, such as retirement annuity funds. So you may be able to be fully offshore or limited to 20 percent in offshore assets at the discretion of the product provider.
The same restrictions may apply to the unit trust prudential asset allocation funds.