Real Estate Investor Magazine South Africa September 2018 | Page 54

FINANCIAL EMIGRATION
South African expats
and the importance of financial emigration
BY TIM POWELL
E
migrating can be an exciting experience, but it’s also
immensely stressful. It’s challenging to move your en-
tire life overseas and sorting out your financial affairs
often makes the process even more complex. Many South
Africans who have relocated abroad, or are thinking of doing
so, can benefit from tidying up their financial affairs in the
Republic by undergoing the process of financial emigration.
What is financial emigration?
Financial emigration is the process of informing the South
African Reserve Bank (SARB) that you have permanently left
South Africa and relocated abroad. This changes your official
status with them from a permanent resident, or resident living
temporarily abroad, to that of a non-resident of South Africa.
This doesn’t happen automatically when you emigrate from
the Republic.
A common misconception is that financially emigrating
requires you to lose your South African citizenship – an emo-
tive issue. However, declaring yourself a non-resident of South
Africa does not mean that you relinquish your citizenship in
any way. You can return to South Africa and become a resident
again any time you choose.
The benefits of financial emigration
After you have financially emigrated, you will be able to access
and withdraw your retirement annuities before the age of 55,
along with your other financial assets. Your application, and its
complexity, will differ depending on your unique situation. In
our experience the benefits usually outweigh the hassle of the
admin involved in this process.
Financial emigration allows you to access and transfer the
following out of South Africa:
• Proceeds from your South African retirement annuities
before retirement age
• Future inheritance funds
• Passive income from rentals, dividends, director’s fees or
a salary
• Proceeds from a third-party life policy
Financial emigration is not required to move the proceeds
of other assets, such as bank accounts, discretionary funds, liv-
ing annuities, pension and provident funds, proceeds from sale
of property and life insurance policies. These funds can still
be transferred using the R1 million and R10 million foreign
investment allowances.
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SEPTEMBER/OCTOBER 2018 SA Real Estate Investor Magazine
The initial and ongoing tax treatment may differ signifi-
cantly between different assets, so it is important that you get
the correct tax advice before making any decisions or applica-
tions. This will ensure that you make an informed decision and
do not face repercussions down the line.
Furthermore, with the changes to the tax laws promulgated
for the 2020 tax year, many South Africans working abroad are
financially emigrating to ensure that they are not seen as tax
resident, and therefore taxed on their foreign income earned
while working overseas.
Is financial emigration for everyone?
Whether financial emigration is right for you will depend on
what kind of retirement savings and assets you hold; it is not
necessary for all expats. All South Africans have the annual R1
million single discretionary and R10 million foreign invest-
ment allowances. These can be used for foreign investment and
asset transfer without having to financially emigrate. However,
if you have a retirement annuity that you would like to cash in,
then financial emigration is the on ly option.
While the current law allows expats to access their retire-
ment policies, legislation may change in the future. It’s best to
start your financial emigration once you have relocated, so you
can access your funds as soon as possible.
Where to begin?
The financial emigration process can be daunting and intense,
but its benefits can make it worth it. We recommend using an
experienced South African financial emigration specialist who
can carefully consider your personal circumstances and advise
on the best strategy.
The average turnaround time to complete a financial emi-
gration is three months, barring any speedbumps with SARS
or particularly complex circumstances.
There are potential tax implications as well as opportuni-
ties to implement tax-efficient plans. A specialist who also has
cross-border financial and tax planning knowledge will ensure
that you make the best decisions for your long-term financial
goals.
If you’re considering financial emigration, or are unsure
about whether it’s right for you, get in touch with our financial
emigration specialists. You can email us on safe@sableinter-
national.com or give us a call on 021 657 2133 and we will
provide you with a complimentary financial emigration assess-
ment.