YOUR MONEY: What to do with my dollar ka-ching?

Question:

I’m expecting a dollar amount to be paid into my account in the next few weeks. I want to know how best to handle it. Should I have it paid straight into my account and converted to rand? Should I set up an offshore bank account and have the money paid in there? And last, how do I handle tax? As I have an income, I’m worried that most of it will be gobbled up by tax.

— Anonymous, on The Fat Wallet community on Facebook

Answer:

Whether to bring back money in rand or leave it in dollars depends on a number of issues.

For starters: do you need the money locally, maybe to pay off a debt or build an emergency fund?

Generally, if you don’t need the cash locally, leave it offshore, as a number of fees and transaction costs are involved: first in conversion to rand and later the reverse, if you decide to take the money offshore again.

You will be taxed on the money as income — so yes, you will have a larger tax bill. You would declare it to the South African Revenue Service as normal and it will be taxed at your marginal tax rate.

— Your Money team 

Next week’s reader question:

I recently paid off a few debts that had been handed over for collection and I had two debts that were cancelled because of prescription. So now I do not owe anything to anyone.

What advice can you give me for the future? I intend to improve my credit score from 540 to 700. I earn a gross monthly income of R24,000, and I have side hustle income of R20,000-R30,000 a month. 

— Victor 

We want to hear from you. Please send your questions to yourmoney@fm.co.za