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SA Tax Emigration

Financial emigration died a very timely death on 28 February 2021 –

Tax Emigration is it’s nasty sister and comes with a whole new set of rules.

 

After some turmoil, confusion and mind-changing at SARS there is now a clear process. This involves notifying SARS that you are no longer a SA tax resident – this is achieved through updating the RAV01 form via efiling (or at a SARS a branch); 

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Once you've updated and submitted your RAV01 form you will receive a request from SARS for information and supporting documentation. 


The documents required to  respond to a RAV01 query are relatively easy to deal with. The most time consuming is obtaining a Certificate of Residence from your new taxing authority (HMRC in the UK) 


This process (in the UK) takes 3 weeks and our advice is to have that letter in hand before starting the SARS process.


The end result of this application should be a letter from SARS confirming that the applicant is no longer a South African tax resident. It’s important to note, though, that even if you are tax non-resident, if you earn income in South Africa it is always subject to tax in SA.

 

The end of this process will be SARS issuing you a letter which serves 2 purposes:

  1. It confirms you are regarded as a non-resident for tax purposes; and

  2. If your emigration was more than 3 years before the application date, you can apply to your retirement fund holder for early release of retirement funds. 
     

Perhaps more importantly is how much you can take out of SA once you have Tax Emigrated.

In the year of your migration you can take:

  • R1 million with no questions asked, and

  • R10 million subject to a successful AIT application being made

  • More than R10 million if you successfully make an application to the SARB for the excess amount

 

Thereafter, you can still take the R10 million annually provided you keep successfully renewing your AIT application

 

As far as your bank account is concerned:

  • Your residential status will change from South African resident to non-tax resident.

  • New capital and income accounts will be opened to separate income and capital.

  • Income is freely remittable out of South Africa, while capital is subject to the allowances discussed above.

  • Your overdraft limit on your personal account will be reduced to zero although you can request to retain the existing limit.

  • Financial Surveillance requirements relating to credit limits and residential home loans will apply.

  • Any SA credit card you have will be blocked for any foreign expenditure.

 

Should you not want to go through the tax emigration process, your Personal Bank Account will remain designated as a South African resident account even if you are living abroad. It's important to note that if you do not go through the tax emigration process SARS still have a legitimate right to expect you to submit a tax return and to tax you on your worldwide income.

 

As with all things SARS, you CAN go through this process on your own! If, however, the thought of dealing with SARS is one you would rather avoid then give us a call to discuss whether you should or shouldn’t tax emigrate and what the impact will be for you both in SA and the UK.

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