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 are now 2 clear processes:
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); and/or
Completing and submitting an Emigration Tax Compliance Request (TCR01) application to SARS.
Both events are (or should be) followed by 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 it 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 second application type is more complex and the more capital growth type assets you have the more documentation they want from you. Apart from current value statements for all taxable assets, SARS also want original contracts so it’s best to gather all this paperwork before you even start the application process.
The end of this process will be SARS issuing you an Emigration Tax Clearance Status (ETCS) PIN letter which serves 2 purposes:
It allows you to continue to move funds out of SA through normal banking channels; and
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 valid ETCS PIN letter issued by SARS
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 renewing your ETCS PIN
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.