News Articles

The new tax and emigration change South Africans should know about

Source: Biz Tech, 29/08/2020

However, it was announced in the 2020 Budget Review that the concept of emigration for exchange control purposes will be phased out.
“As a result, the requirement of formal emigration will be removed and a new requirement for the withdrawal of lump-sum benefits from these retirement funds is proposed, effective from 1 March 2021 ` namely, that the person is not a resident (i.e. for tax purposes) for an uninterrupted period of three years or longer.
“It appears that this requirement is intended to apply to three consecutive tax years, although the amendment refers simply to years.”
Changes
Jean du Toit, head of Tax Technical at Tax Consulting SA, said that under the current rules taxpayers can withdraw their retirement funds prior to their retirement date, upon emigration for exchange control purposes.
This emigration process must be recognised by the South African Reserve Bank in a process known as ‘financial emigration’, he said.
Du Toit said that under the new bill, reference to the emigration process is substituted with a new test that requires a person to prove they have been non-resident for tax purposes for an unbroken period of at least three years.
“This new test will apply from 1 March 2021. How this must be proved other than ‘financial emigration’ remains unclear at this stage.
“Practically, after the effective date, your retirement benefits will be locked in South Africa for at least three years. The proposed amendment signals a big policy shift from a fiscal perspective, but this is one piece to a bigger puzzle that should have those who seek to emigrate on high alert.”
Based on daily interaction with employers, executives and expatriates, Du Toit said that the following groups of people should give this change careful consideration:
• Does it remain prudent for South African executives to keep taking a tax break and maximising their South African approved retirement savings?
• Where you have large retirement savings, the opportunity will soon be over to make best possible investment decisions ` soon some will go towards cheaper access to finance.
• South Africans looking to leave in the next couple of years will benefit from at least expediting their process on retirement savings, being they are locked in for 3 years.
• South Africans who have already left, but who have not yet done financial emigration, should consider doing this within the next 6 months before the window closes.
• Those who have already financially emigrated, but left investments behind, should reconsider their position.
• South Africans with children or other foreign beneficiaries, should relook at their investments and to align with this new landscape

www.samigration.com


Search

  •    Indications are that the billionaire Gupta brothers and their wives have pipped South African law enforcement to the Interpol post with a preventive strike that is likely to stall the issuing of red notices. Interpol red notices are a vital tool in South Africa’s quest to definitively locate members of the Gupta family for possible extradition. It therefore makes sense that blocking efforts to secure such notices would be a priority for the family ` four of whom are fugitives from justice.... Read more...
  •    ... Read more...
  •    Xpatweb has released its 2020/21 Critical Skills Survey Report, which details the eight most sought-after jobs in the IT sector right now. The survey is conducted annually across a wide range of multi-national and corporate companies in South Africa to determine and assess the pressure points that human resource and global mobility practitioners face in sourcing critically skilled individuals when seeking to fill posts locally.... Read more...
  •    Xpatweb has released its 2020/21 Critical Skills Survey Report, which details the eight most sought-after jobs in the IT sector right now. The survey is conducted annually across a wide range of multi-national and corporate companies in South Africa to determine and assess the pressure points that human resource and global mobility practitioners face in sourcing critically skilled individuals when seeking to fill posts locally.... Read more...
  •    The first annual Microsoft Work Trend Index should be a wake-up call for bosses and software developers alike to improve employee experiences as offices reopen.... Read more...
  •    Ukheshe Technologies and Infobip have recently developed South Africa`s very first WhatsApp payment gateway for use by Telkom. In addition to being South Africa’s first digital wallet platform, the solution is also the first WhatsApp channel to enable payments using QR.... Read more...
  •    There is a ban on travelling to India using the land ports till July 14 Bangladeshi nationals who are stranded in India will be able to return home on Sunday, Tuesday and Wednesday of every week.... Read more...
  •    South Africans are enjoying a level of success that is nothing short of remarkable in gaining permanent residency in Canada under the Start-Up Visa program.... Read more...
  •    6 May is observed internationally as World Password Day. This day is seen as an opportunity to promote better password habits while highlighting the critical need for improved cybersecurity. World Password Day originates from the security researcher Mark Burnett as he realised that the passwords most people were using were hopelessly inadequate.... Read more...
  •    The impact of mobile technology is likely to be even more profound in the future, with 5G ` or the fifth generation of mobile communications technologies ` expected to have an even greater societal levelling effect than its predecessors, says Dejan Kastelic.... Read more...

Get the latest Immigration News