12 March 2020
On February 26th, 2020 our Finance Minister Tito Mboweni was brave enough, and so openly “bragged”, to go where others feared to go and came close to abolishing old-fashioned exchange control (Excon) measures resulting in blocked assets and blocked accounts. Could we see the closure of entire bank divisions dealing with blocked accounts? This is yet to be seen; time will learn as to the fate of existing blocked accounts.
Why simply financially emigrate based because a product punter offered a free meeting? There is nothing like a free lunch to grasp a free marketing opportunity! Did the product salesperson share tax expertise or marketing skills? Aha, #FINANCIALEMIGRATION was sold a product to get rid of #ExpatTax2020, despite SARS stating it is not the answer!!
Don’t worry, not too late. Trusted tax practitioner can fix the eFile/Tax profile errors created by proponents of financial agreements. #Tax2020Truth.
Hugo presented a paper, on this topic at the 2020 FISA AGM, held in Cape Town. Next presentation FISA Bloemfontein 16 April 2020.
What does the announcement signify to the #financialemigration” fraternity and short-lived industry?
Government is sending a clear message that the abuse for financial regulation to create a tax industry and cross-selling financial or banking regulations as a SARS process or tax status change, will (rightly) no longer be tolerated as he announced:
“… the concept of emigration as recognised by the Reserve Bank will be phased out. It is proposed that the trigger for individuals to withdraw these funds be reviewed.
Any resulting amendments will come into effect on1 March 2021.”
It is of great interest to note that it is clearly ONLY the SARB formal emigration process and not the tax emigrations (ceasing of tax residence by application of treaty tie-breaker rules) that are being given a sunset death knell.
Since the announcement to partly tax expats on their hereto fully exempt foreign earnings, we saw an exponential increase in SARB approved formal emigrations and the opening of a blocked account. The perceived abuse in inappropriate “product” sale of what became to be known as financial emigration lead to numerous articles on the apparent increase in “emigrations”.
Suddenly, expats living in countries with a 2- or 3-year visa was allowed to swear under oath that they had the intention and ability to never return to SA, despite having no second nationality or passport. Certain groups, mainly lobbying and petition groups, confused the return within 5-year being a failed emigrant (Reserve Bank rule) as an Income Tax Act rule. Expats feared returning within five years could see SARS collecting back taxes, whereas in actual fact the failed Reserve Bank emigrant had no or little punitive tax consequences.
The government realised the incorrect application, if it was not open abuse of form MP336(b) declaration to keep expats out of the country, had a detrimental effect on the SARB FinSurv system, not to mention overloading the banking system with blocked or non-resident accounts.
It Is Indeed rest In peace for the abused and somewhat unnecessarily restrictive system that saw many inheritances trapped and saw loyal Saffas or expats fear to deal with the motherland.
We congratulate the Finance Minister on this bold step to bring an end to the abuse and Incorrect sale of a bank process as ta compliance process. The message is clear; there is no need to break ties because you took up an excellent position in a foreign country.
Hugo van Zyl CA(SA) TEP MTP(SA)