Hugo presenting Expat Workshops in Mauritius, Dubai (UAE) in April and Doha (Qatar) early May

Topic: expat tax 2020 or #Tax2020. To tax emigrate to Financialy Emigrate?

Know anyone in Mauritius that may benefit from a tax seminar on 16 April?

Need more info? Wegkaner@iafrica.com

My next trip will be to Dubai. Know anyone in The UAE that may benefit from a tax seminar on 26/27 April?

Note: I will also be available for one on one tax advisory meetings and consultation on various tax and exhange control topics

For Mauritius: Kindly hosted by W Consultant and Accuro in Mauritius and this is the updated link for the registration http://www.bookit.mu/2020

#Tax2020Truth

#tax #diaspora #incometax #internationaltax

Expat tax or #FinancialEmigration Wars vs. #Taxmigration

 

7 March 2019 Webinar: Tax2020: The Tax Migration vs Financial Emigration

See below for more info or visit the SAIT page 

Here you can view all 3 parts of my recent The South African series on

#Taxmigration vs #FinancialEmigration #Tax2020 the Truth

My Moneyweb/RSG interview on Expat tax in Afrikaans on https://embed.iono.fm/chan/2249?theme=moneyweb#

Overview pf the Webinar to be held on 7 March 2019

#Tax2020 is effective as of 1 March 2020. As of South African tax year 2021, expats will be facing an additional tax on their now tax-exempt foreign earned income.

Is this taxing of expats such a simple matter? And will affected parties merely roll over and accept the fact that SARS will now tax expat South Africans, despite them having no ties to South Africa?

Not only does the topic appear to be complex, it is also emotive. Financial emigration wars have broken out. Most wealth advisers, payroll administrators, and financial and investment advisors are now told their clients will have to formally or financially emigrate from South Africa.

This two-hour webinar will attempt to unpack the Act, as it was promulgated in December 2017 (effective as of 1 March 2020), and share some thoughts on the relevant 2019 foreign payroll and foreign remuneration tax policy changes (if any) to be announced by the new Minister of Finance.

Despite the new uncertainties, the webinar, hosted by Hugo van Zyl MTP(SA), will not only clarify the known issues, but will also ensure you know the difference between #Taxmigration and #financialemigration. You should also be able to guide your clients on the pros and cons of financial emigration.

Hugo will address the true, relevant issues of being tax resident or tax non-resident in terms of a tax treaty’s tie-breaker rules. What is the impact on tax emigration and the risk of availing to the UAE (Dubai) tax treaty benefit in the 2019 or 2020 tax year when the treaty has been in place for nearly three years? How will SARS deal with the overdue exit tax?

Hugo will also attempt to address some, if not all, of your questions on the ITA section 9HA exit (CGT) tax facing expats or who claim they should not be suffering the new capped R1 million foreign income exemption.

Make sure you are up to date. Although the implementation date is a year away, your clients expect you to have all the answers and provide possible solutions. Ensure the financial emigration service providers are not harvesting your clients because you ignored the latest hot topic being #Tax2020.

 

Wish to attend? Follow this link

Resident – the South African Conundrum

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The conundrum faced by most South Africans

Do not believe the articles and publications suggesting all SA Expats face a new tax charge as of 1 March 2020 (#Tax2020)

Only SA tax residents not having completed tax emigration (#taxmigration) not necessarily #FinancialEmigration, need to consider the new rules.

What must you do? Blog TAX EMIGRATE – easy as that but painful as you may face a tax exit charge (section 9H of the Income Tax Act)

If ever you are told #FinancialEmigration (FE) is the only way to ensure tax emigration to tax non-resident status, ask the tax practitioner to explain these two quotes taken from Interpretation Note 3 (Issue 2):

“…a natural person may be resident in the Republic even if that person was not physically present in the Republic during the relevant year of assessment.” Page 6 Para 3

“The concept of ordinary residence must not be confused with the terms “domicile”, “nationality”, “citizenship” and the concept of “emigrating” or “immigrating” for exchange control purposes.”  Page 7 Para 2

Need help?

Who then is a resident? If you live in a treaty country (UAE, USA, UK and all EU Countries) you are most probably ALREADY tax non resident and need not worry about #Tax2020. You also need not financially emigrate.

You do not use the #FinancialEmigration process, however should you opt to do so, for whatever reason, do remember that you will be regarded as tax non-resident, but your relationship with SARS and the tax compliance in SA, will not be brought to an end. In fact, you will remain on the SARS register and should remain tax registered (albeit paying tax on SA sourced income and assets) until there is no more remaining emigrant assets (previously “Blocked Assets”.

Read more on the SARS page HOW TO TRANSFER BLOCKED FUNDS?

SARS is very clear on the topic:

Resident

As defined in section 1 of the IT Act– Includes: Any natural person who is ordinarily resident in South Africa; or Any natural person who complies with the physical presence test; and Any person (other than a natural person) which is incorporated, established or formed in South Africa or which has its place of effective management in South Africa, but: EXCLUDES any person who is deemed to be exclusively a resident of another country for purposes of the application of any agreement entered into between the government of South Africa and that other country for the avoidance of double taxation.

What is the missing words? There is NO reference to a person having financially emigrated!

It is however true that SARS do agree on their Tax Compliance Status pages that:

          “In terms of the SARB exchange control regulations, this is when a taxpayer has formalised emigration with SARB. The taxpayer will be regarded as non-resident by SARS”

The date you became tax non-resident, will however be determined, in most cases by the treaty applicable to the country where you are now tax resident.  A list of tax treaties on DTA Pages on the SARS web pages

Expats – the questions you should be asking

Looking for the last blog? Follow this link

How foreign employment income tax will impact South African expats

Blog updated 3 February 2019

#Expats

– the questions you should be asking

Expats living outside SA must first answer the following questions before they agree to emigrate financially:

  1. Provide a family structure and background information on the immediate family, i.e.:
  2. Married, single, children?
    • Do your spouse and all your minor children reside with you in a foreign country
      • If not, provide some background information on the location and reason therefor, concerning your immediate family. Any intention for them to join you soon?
  3. Your family home in SA:
    • Did you sell or rent it out? If rented out, is it a long-term rental agreement?
  4. Do you own a holiday or house on the family farm, always available to you?
    • When you and you and the family visit South Africa, where will you reside?
https://taxmigration.com/contact/
https://taxmigration.com/contact/

And now the questions we will be asking:

  1. Will this be the same for you, travelling all by yourself on a business trip?
  2. Where do you live? Country, Province/State and City
    • Rental property or owned by the family, directly or indirectly via a family trust?
  3. Did you avail to an investor visa, e. deposited some funds with the foreign government or bought/rented a qualifying property (Malta, Golden Visa etc.?)
    • If so; how long ago and have you spent substantial time in the said property?
    • If not, explain your intention with the property or investment?
  4. Where were your born and how long did you sta in SA?
    • Provide some information on the passports ou held?
    • If not born in SA, when did you arrive in SA?
      • Wht was the reason for coming to SA?
    • What was the reason for leaving? Job, secondment or a family decision to find a new home country?
  5. Can I avail to tax treaties and be considered tax resident in my new home, as this is not subject to financial emigration?
    • If yes, on what date was the tax exit?
    • Do you pay income tax, in the new home country on sourced income only or worldwide income?
    • Have you ever obtained a tax residency certificate from the new county’s tax authority?
  6. Can I claim tax credits in SA, as I have paid the necessary tax in the country of employment?
    • Most countries, apart from the UAE, has the ability and intention to tax you on locally sourced income. Yes, even “tax havens” such as the Channel Islands do charge a personal tax on remuneration earned by employees residing in their country
  7. It could be that your employer is paying on your behalf, do ask the HR department
    • If you are not in a treaty country, can I tax emigrate based on facts and intention?
    • Could the FE option be part of the building blocks to show the intention to exit South Africa and the SARS tax system as ordinarily tax resident?
    • If so, was the tax exit date this year or sometime in the future?
  8. Why would you consider or wish the complete the FE process? Here are some reasons:
    • To cash out a retirement annuity
    • To be able to re-invest into SA via my offshore trust or non-SA company to ensure I am not exposed to SA estate duty
    • To exit large funds (more than R20m per family) sourced from past savings or huge inheritance?
  9. Why do you think do service providers place so much emphasis on FE, insisting I incur the huge costs?
    • Should I not obtain a formal tax opinion from a person not selling FE to one and all, but only to persons that could show a clear benefit?
    • Did you pay your exit tax (CGT in terms on section 9H of the SA Income Tax Act)? If so: in which tax year?
  10. Do you need to transfer funds from ZA Rand to foreign currency and vice versa?
    • Provide some additional information as to the reason, monetary value and the life events that may impact on this, e. sale of a house or parents being supported from abroad, passing on
  11. Where do you intend to retire? Back in SA?
    • Irrespective of retirement plans, do you intend to return SA at any given time?
      • Timelines and life events that catapult you into making this decision?

Once you have considered all off the above, feel free to be in contact.

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Cape Town

3 February 2019

 

#financialemigration #Saffas #Expar #Taxmigration #Wegkaner #taxemigration #formalemigration

How foreign employment income tax will impact South African expats

Do not believe the fear mongers suggesting you must emigrate formally to correct non-compliance.

Read more in The South Africa NewsPaper

Have questions? Make Contact with Hugo

https://taxmigration.com/contact/

The current hype into formal emigration being the absolute and final solution to escape the tax consequences of the new #Tax2020 rule has resulted in too many expats South Africans incorrectly opting for formal emigration.

Any expat that is concerned about the pending changes should immediately ask the following question: Did I file all my tax returns up to February 2018 and am I correctly registered as a provisional taxpayer? Being tax exempt does not exempt you from tax filing obligations.

Before one gets overly concerned about the March 2020 [#Tax2020] liability, you need to address the issue of outstanding and overdue tax returns. Anyone impacted by the new rules should have been tax filing with SARS.

If not tax filing for some years, one must ensure you have correctly tax emigrated and paid your exit levy on time. Doing a financial emigration in the current tax year, will not shield you against tax penalties and interest on the unpaid taxes.

Continue reading on https://www.thesouthafrican.com/south-african-expats-foreign-employment-income-tax/

Tax free salary does not equate to tax non-resident

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South Africans living in the UAE (Dubai) or Qatar (Doha) not paying South African tax on their foreign earned salary,  in most cases will remain tax resident in SA.

The 183/+60-day rule only speaks to the (partial) exemption of remuneration from employment. South Africans will continue to pay SA tax on worldwide income from all other income, including most retirement fund income albeit that the retirement fund is foreign based.  Immigrant South African may enjoy some limited tax exemption on foreign pension, yet the SA retirement funds will indeed pay SA taxable retirement benefits, albeit that contributions were made from tax exempt foreign employment income.

Immigrants must therefore distinguish between retirement funds accumulated before they arrive in SA, funds transferred from a foreign fund to a SA fund (QROPS to Living Annuity in SA) and funds contributed since they arrived in SA.

Because of the 2021 tax year changes (effective as of 1 March 2020 [#Tax2020], SA expats (being tax resident in SA, albeit that they are) residing and working in say UAE, Germany, USA and most other countries, will no longer enjoy full tax exemption on all their foreign sourced salary.

In fact, as of 1 March 2020, the taxpayer’s tax exemption will be capped at R1m per tax year.

This aligns the SA system with that of the USA yet we are not taxed based on nationality (as in the USA) but on tax residency status. SA tax residents can therefore tax emigrate (#taxmigration) unlike USA taxpayer that remain IRS tax filers on worldwide income, despite living in SA.

The USA exempts foreign earned income to a specific monetary value, which is adjusted upwards annually. Will SARS increase the R1m cap annually? Perhaps this where the Tax Petition Group need to focus on?

One is also extremely concerned about the misleading articles carried by news agencies! Even the News24 articles stating that “When one “emigrates financially”, however, they cease to be a South African tax resident and will not be liable to pay any South African tax on their worldwide income. ” is so far removed from the truth!

What is required is to tax emigrate and formal or financial emigration are not directly link and neither does the one guarantee the other.

Many expats now rush to tax emigrate from South Africa, all in an attempt to save the SA tax on the foreign income. In doing so the taxpayers may indeed trigger capital gains taxes on the tax exit placed on record, so late in the relocation process.

The unpaid exit charges may call for a VDP process! Need some guidance? Feel free to contact us

You need more information? Welcome to contact writer on

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24 Jan 2019

USA celebrates 4th of July! Aliens funds the party

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As Americans recover from their 4th of July parties, it is indeed time to consider the tax cost and consequence for aliens investing with Uncle Sam

Yes, South Africans are aliens. President Trump may or may not have referred to people from South Africa as living in a s’hole country, who am I to say!

The IRS and USA tax laws most certainly labels us South Africans without an USA passport or green card as non-resident aliens.

We may not be from Mars nor Jupiter yet we are, upon death to pay FET (Federal Estate Tax) on our USA situs assets.

FET’s maximum rate is 40% and there is no spousal roll over. The exempt amount is a mere $60 000. No further SA estate duty is payable on the said USA assets, as there is a treaty in place

No spousal roll-over you ask? Yes, no roll over and the take home is that USA stock and cash held by you USA stock broker, should NOT be bequeathed to your spouse!

No, not to the offshore trust either as your wife will be taxed, upon her death assuming she is the surviving spouse, on the USA situs assets held within the offshore trust.

Who then, should be nominated as the named legatee in your will, as the person to inherit eBay, Facebook and all other USA equities?

Indeed an interesting question and one best addressed during a one-on-one meeting, with your SA accountant, duly present.

Need an appointment? Feel free to make contact on

 

signature name address 2018

Formal Emigration – Not advisable for all!

Formal Emigration – Not advisable for all!.

First publisched by: http://www.bcbadvisory.com/formal-emigration-not-advisable-for-all/

Formal or financial emigration is the process to formally change your exchange control status from resident to non-resident. It is also sometimes known as Excon Exit.

Financial emigration will not affect a South African’s right to retain their South African citizenship or dual citizenship. It is thus a purely financial process.

Following financial emigration from South Africa, a person can remain tax resident in SA, based on the time spent in the country and subject to the double taxation agreement (DTA) in which the person will be living in future.

Tax emigration or exiting the SA tax system is not subject to formal emigration.

It is a complex process and not advisable for all, but why would one consider the options? What will be the costs?

The process

Before a person can start the process of formal emigration his/her tax affairs must be in order and up to date, as a tax emigration clearance certificate from SARS is needed to get the ball rolling.

As soon as a tax clearance certificate is obtained from South African Revenue Service (SARS), an application is lodged through a South African Bank also known as an authorised dealer (AD) of the SA Reserve Bank (SARB). All assets need to be declared to SARB. The AD then applies at the South African Reserve Bank for an Exchange Control Approval Number (ECA) where after a blocked account is opened alternatively an existing account is converted into a blocked account. Each immigrant may have only one blocked account.

Once the emigration process has been completed, capital transfers have to flow offshore via this ‘blocked’ account.

Capital acquired and income earned post formal emigration need not flow through this blocked account. Typically inheritances received once you have been formally emigrated can be paid by the executor to you foreign bank account.

Should you only leave a pension or living annuity behind, there is no need for a blocked account as the fund can pay directly to your foreign bank account.

Funds allowed to be taken out of South Africa

The South African Reserve Bank allows emigrants the following facilities:

Foreign Capital Allowance (FCA) – R10 million per adult per calendar year or R20 million per family unit per calendar year.

In the year of actual departure, a travel allowance of up to R1 million per adult and R200 000 per child under the age of 18 years is allowed. The travel allowance may not be accorded more than 60 days prior to departure; and

Export of household and personal effects, motor vehicles, caravans, trailers, motorcycles, stamps, coins and minted gold bars (excluding coins that are legal tender in South Africa) within an overall insured value of R2 million.

Any remaining assets in South Africa will be blocked, but can be used for locally for any purpose and more recently SARB will allow listed and unlisted equities to be transferred out of SA as part of your annual R10m FCA.

What BCBA can do for you

Many service providers focus on formal emigration or retirement annuities only. They therefore encourage clients to formally emigrate. In fact, formal emigration services are sold as a free consultation.

The days, if it ever existed, of free lunches is long gone.

Not only can you personally manage the formal emigration process, you can often legally avoid the cumbersome process

For certain clients, formal emigration is often the only option available for the cost of a telephone conference (R969). We will be able to analyse your position and suggest the best solution.

Where clients so elect, we will complete the entire formal emigration process on their behalf. The process will be explained to you in detail and once again, we facilitate the free flow of funds. Your SA Rand will at all times remain under your own control.

BCBA will also be able to assist and advise you on how funds from the blocked account can be accessed.

For clients with “trapped” retirement annuities, preservation funds and so called living annuities, BCBA will provide the necessary guidance and where required, we will facilitate with or without formal emigration.

You formally emigrated and need advice or a second opinion? Call on us and we will assist and guide you in the right direction.

Clients having inherited funds or assets need not formally emigrate. There may be a cheaper and easier alternative.

For more information in your unique circumstances, please contact Hugo van Zyl athugo@bcbadvisory.com

FATCA in Afrikaans? BRS:AEOI? Is this Marmite on Toast you ask?

BRS: AEOImeans Business Requirement Specification: Automatic Exchange of Information

There is so many new tax acronyms, one can’t be blamed for not always knowing  the full phrase behind the tax acronym.

To guide you, we add a few new once, all from an SA perspective yet they are all well-known international acronyms or abbreviations.

Here they are, but it is not an exhaustive list:

  1. AEOI – Automatic Exchange of Information aka AEFAI as per SARS press release on BRS
  2. AEFAI – Automatic Exchange of Financial Account Information
  3. ATO – Australian Tax Office www.ato.gov.au
  4. BRS – Business   Requirement   Specification or Direct Data Flow Channel Guide  aka SARS Modernised 3rd Party Reporting platform, used to report inter alia PAYE, VAT, Investment Income (IT3’s).
  5. CRA – Canadian Revenue Authority – http://www.cra-arc.gc.ca/menu-eng.html
  6. eFile – the South African online tax filing portal www.sarsefiling.co.za
  7. Excon – Exchange Control aka FinSurv- SA monetary laws administered by SARB
  8. FATCA – Foreign Account Tax Compliance Act – FFI and other tax offices dotted over the word reports on you to the IRS. An USA Act see http://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-FATCA
  9. FBAR – Report on Foreign Bank Account reporting – you tell IRS
  10. FFI – foreign (non-USA) financial institutions – FATCA terminology compare with USFI or FI that is USA based
  11. FinSurv – Financial Surveillance, previously known as Control or SARB’s Exchange Control watchdog
  12. HMRC – Her Majesty’s Revenue & Customs – UK tax office http://www.hmrc.gov.uk/
  13. IGA – Model 1 and Model 2 intergovernmental agreements (IGA) or FATCA agreement between IRS and SA on the AEOI process using the BRS designed and implemented in the various IGA jurisdictions
  14. IRD – Inland Revenue – New Zealand aka Maori as Te Tari Taake
  15. IRS – Inland Revenue Services in the USA www.irs.gov
  16. MTP (SA) – Master Tax Practitioner in SA – the Who’s Who in SA tax environment 
  17. PR – Tax practitioner registered with SARS
  18. SARB – South African Reserve Bank, equivalent to the Central Bank in international terms www.resbank.co.za
  19. SARS – South African Revenue Service – www.sars.gov.za
  20. TAA – Tax Administration Act – South African Act dealing with C:SARS rights to administer tax acts
  21. USFI – U.S. financial institutions the internal US hold Co aka as lead FI reporting for all FFI’s in the FI Group

OK, you still lost? Need some more info on all the buzz words and your compliance risk and obligation? Feel free to ask the questions:

Ex-pat Pensioners enjoy Exchange Control Freedom

On our Exchange Control Blog we posted an interesting Exchange Control update (Circular 4 of 2014) refers. See http://wp.me/P4efR1-q

In short:

Ex-pat Pensioners residing abroad (not having formally emigrated) can now extract their monthly pension and retirement annuity income from South Africa (SA) without the need of a tax clearance certificate, despite living abroad as so called temporary non-residents.

TAX ISSUES

UK resident ex-pat pensioners must take note of their NDR status and the tax consequences of remitting SA pension to the UK.

UK, USA, Australia and New Zealand ex pat pensioners may need to avail to treaty benefits to extract their pensions tax free from SA.

Should you need help complete the section below and we will be in contact.