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.

Contact details for Hugo van Zyl

Our contact details

Office 0283122764 or Mobile 082 55 44831

Email  hugovz(at)iafrica.com

 

Budget 2013 Webcast @Treasury page

Budget 2013 Webcast @Treasury page

This Webcast is scheduled for Wednesday, February 27, 2013 at 14:00 South African time.
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WW Directory Of Tax Professionals – My Blog

WW Directory Of Tax Professionals – My Blog

Full blog on http://taxconnections.com/taxblog/tax-year-end-in-south-africa/ 

New webpage address is taxmigration.com or cgt.co.za 

Tax year-end in South Africa, for smaller companies and all individuals, is on the last day of February 2013.

In terms of the collection process, South African Revenue Services (SARS or the equivalent of IRS and HMRC, the competent taxing authority in SA)  expects all provisional taxpayers to be either 80% or 90% correct in the end February provisional tax estimate, compared to the final assessment or IT34.

Read more ….

TAA Draft rules for lodging an objection and appeal against an assessment

TAA Draft rules for lodging an objection and appeal against an assessment

Draft rules to be promulgated under section 103 of the Tax Administration Act, 2011 (Act No. of 2011), prescribing the procedures to be followed in lodging an objection and appeal against an assessment or a decision subject to objection and appeal referred to in section 104(2), procedures for alternative dispute resolution, the conduct and hearing of appeals, application on notice before a Tax Court and transitional rules

Pregnant or half pregnant?

Pregnant or half pregnant?

When you take amnesty or use the voluntary disclosure route, do come clean, totally clean. You just can be half dead or half pregnant. Jail is jail as lying is lying.

“According to HM Revenue & Customs, Roderick Smith of Wigan in the UK, said he had only one offshore account while using HMRC’s Offshore Disclosure Facility in 2007 and failed to mention 11 further accounts. HMRC said Smith’s business partner Stephen Howarth also failed to disclose any of his accounts during the campaign.”

Tax consequences of packing for Perth

My other blog –cross border tax

The Sake24 Article on RA’s

Having read the very informative article one is left wanting some more facts on the deemed C G T (capital gains tax) on the assets not sold, yet left behind. The one nice thing as that CGT on immovable property is always payable on actual sale only!

No need to bond the immovable property to pay its taxes, but you may need to cash n a few shares or mutual funds!

More information on request

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