Page 2 of 2

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.
Your browser will periodically check if the webcast has started.Should the refresh counter below not have incremented after several minutes,
click the ‘Check if Live’ button to start the webcast manually.

Current Refresh interval is 240 seconds.

Firefox and Mozilla users may need to manually check whether the webcast has started.

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

News – South Africa: A new Minister for Finance – Pravin Gordhan, previous C:SARS

News – South Africa: Full text of President Zuma’s 2009 cabinet announcement – Tokyo, Pieter Mulder and Van Schalkwyk joining Blade Nzimande. However, relax SARS is ready for the change – three new deputy Commissioners:SARS were appointed – 15 April 2009

 

Exchange Control: Foreign Permissible Investment (FPI) by South African 

Previous Blogs: 

  

General Exchange Control Comments & Updated Policy:

In is important to note that no locally owned Intellectual Property (IP) may be transferred  directly or indirectly, without the prior approval of Exchange Control.

The word “transferred” is interpreted to include a alienation or transfer by way of a sale, assignment or cession and/or the waiver of rights in favour of non-residents in whatever form.

Making it available subject to a recurring fair and reasonable revenue stream (be it a license fee, royalty payment none of which may be in the form of a lump sum) appears to be permissible, provided full effective ownership and further development rights are retained in South Africa.

The SARB policy updated April 24th is as follows:

The Exchange control department of the South African Reserve Bank (EXCON) issued the following policy in respect of intellectual property (IP):

  1. Requests by South African resident individuals and/or corporates to sell, cede or transfer IP to unrelated third party non-residents for a fair and market related price must be submitted to EXCON via an Authorised Dealer.
  2. Requests by South African resident individuals and/or corporates to sell, cede or transfer IP to related non-resident parties (i.e. family or a parent company, associate company or a subsidiary company) for a fair and market related price will be declined by EXCON.
  3. Requests by South African resident individuals and/or corporates to license South African IP to unrelated third party non-residents for a fair and market related royalty do not require the prior approval of EXCON, but if an application is received, EXCON may approve it for the term of the agreement. A condition of the approval would be that all royalties must be repatriated to South Africa and be converted to Rand within 30 days of such royalty having been paid.
  4. Requests by South African resident individuals and/or corporates to license South African IP to related party non-resident for a fair and market related royalty must be submitted to EXCON via an Authorised Dealer, but may on application be approved for the term of the agreement. A condition of the approval would be that all royalties must be repatriated to South Africa and be converted to Rand within 30 days of such royalty having been paid

 

Private individuals (natural persons)

Foreign Investment Allowance (FIA) – once a life time R2million per taxpayer 18+ years old

Outside Common Monetary Area (CMA)  – Cash, land, equity  – provided no loop is created – so called R2m FIA

18+ year old tax-payers in good standing may invest up to of R2 million outside the CMA, once an electronically completed "TAX CLEARANCE CERTIFICATE (IN RESPECT OF FOREIGN INVESTMENTS)" were  issued by the South African Revenue Service (SARS) are presented to the bank.The tax clearance certificate is applied for on SARS form FIA001 or FIA002, provided the taxpayer is registered (SARS Form IT77).

There is no absolute requirement that the taxpayer need to be tax resident in South Africa. So called Excon residents temporarily aboard may also apply for the R2m FIA and indeed for their R500 000 discretionary (previously the travel allowance) on departure provided they give a written undertaking not to use their SA credit card whilst aboard. 

Travel Allowance – now referred to as the discretionary allowance is not a permissible long term foreign investment option, it is intended to cover actual expenses and create no foreign assets. South Africans advancing their annual R500 000 to non-residents are therefore presumably creating a local Rand denominated asset i.e. the loan agreement may not be entered into in a foreign currency or if denominated in a foreign currency, the repayment terms must refer to a repayment to South Africa i.e. it is a short term foreign asset. Taxpayers are reminded that these R500 000 advanced on loan account or in fact our right donated to foreigners may result in the subsequent income being attributed back to South Africa. In additions said donations (excluding the interest free element) will be subject to normal donations tax rules.

SADC Countries –increased FIA – no upper limit of immovable property

In addition to the R2m FIA, SARB Exchange Control  (Excon) is prepared to consider applications by private individuals to invest in fixed property in SADC member countries which is not part of the CMA), against submission of a (further) Tax Clearance Certificate. Mauritius and Seychelles are now both members of the SADC, which allows South Africans to invest in the so-called IRS properties in Mauritius (MRU)

CMA properties are bought using ZA Rand and therefore not subject to Excon control, however the income may remain subject to SARS reporting

Foreign Earned Income & Capital (Excon Regulation B.02(H) whish in effect increases the R2m FIA allowance)

Income earned abroad and own foreign capital (FEI) introduced into the Republic on or after 1997-07-01 (e.g. a foreign inheritance or income earned after 1997-07-01) and provided the Authorised Dealer concerned is satisfied that the income and/or capital had previously been converted to Rand (by either having done their client the favour to retain the necessary deal sips or by viewing documentary evidence confirming the amounts involved) MAY be re-transferred abroad or remitted into a foreign currency without the FIA R2m being reduced accordingly.

Specifically excluded from the FEI permission, is he sale proceeds local in situ assets received from non-residents and the indirect export or retention of said proceeds, in a foreign currency or offshore bank account.  Furthermore in situ South African assets brought back in terms of the the  five percent tax and excon amnesty  levy (2003 to 2005) may also not be retransferred abroad.

Loops – some relation on listed inward investments?

SA residents, including a local corporate may not invested their approved funds abroad through any structure or medium which will allow for re-invested directly or indirectly back into the CMA for any purposes whatsoever. Recent changes however saw the SARB providing specific permission that such funds may, however, be used to invest in approved inward listed instruments on locally approved the bond and securities exchanges.

South African residents may, furthermore, invest domestic funds in certain listed instruments without restriction. These listed instruments are defined as products that offer South African investors exposure to offshore referenced assets. These assets may be Rand reported provided they are listed on the JSE Limited or the Bond Exchange of South Africa. Very importantly, any securities issued by local entities in the offshore market, whether priced in Rand or foreign currency are deemed as a foreign asset for Exchange Control purposes. See our comments under hedging below

South African Corporate investing abroad 

         including mandated parastatals (Schedule 2 of the Public Finance Management Act, No. 1 of 1999) private, listed and unlisted public companies

New  Foreign Direct Investments (FDI) not exceeding R50 million per applicant company per calendar year

    • Norms applied and factors considered during the FDI process
      The current application process for approval for SARB’s Exchange Control (Excon) prior to the entity  undertaking new foreign direct investment has been removed for company transactions below R50 million per applicant company per calendar year, has been removed, the authorised dealer may now process the application through strict compliance with the 2008 guidelines issued. Accordingly, hence forth your commercials bank (being an Authorised Dealers) shall  be able to adjudicate your  applications and grant you the required  approval once
      the minimum requirements are met.    The minimum equity interest was reduced to 10% i.e. the foreign entity will no longer be Controlled as a “subsidiary”.
    • Guidelines for new applicants
      Specific reference is made to point (c) of the Guidelines : South African Institutional Investors document which states that "It should be noted that compliance with the exchange control limits on foreign portfolio investment does not preclude an institution from also having to comply with any relevant prudential regulations as administered by the Financial Services Board."   This would entail, enter alia, the permissibility of the investment as well as ensuring that the institution is registered with the Financial Services Board.Should the investor be subject to Financial Services Board (FSB / FAIS) regulation, the relevant requirements  must be met prior to the proposed  investment offshore, including Rand denominated instruments, may be made.
    • Investment into newly established and newly acquired foreign companies
      – The local applicants may not change or allow their approved equity interest and voting interest in the offshore company,  to be diluted below 10%.  – The nature of the foreign business operations may also not be changed without Exchange Control’s specific prior approval;                                                                                                                                                                                                                               -the transfer of any additional working capital from South Africa is subject to a fresh application being submitted to Exchange Control.
    • The approved offshore “subsidiary” entities (held through a voting and equity control of at least 10%) may not acquire any assets or make loans to entities within the CMA, provided that SADC entities may re-invest into SADC assets not based in the CMA
    • Dividends earned vs. interest earned on working capital loan accounts to foreign investee
      Interest on loan accounts and the repayment of the loan account must be repatriated to South Africa, however specific permission, effective from 2004-10-26, now allows SA investors receiving dividends from approved offshore FDI investee companies may accordingly retain such dividend proceeds offshore and use it for any purpose provided the application of such dividends does not create any recourse to South Africa. The transfer of any additional working capital from South Africa is subject to a fresh application being submitted to Exchange Control (not merely to the commercial bank!). Similarly any dividends that in future are repatriated to South Africa may be retransferred abroad at any time and be used for any purpose, provided that no further recourse to South Africa is created and no so called loop investment (see above) is created
    • Nature of trade – investee
      The SA investor and the investee must be trading within the line of business  or in a supporting or complimentary industry and accordingly the nature of the foreign business operations may not be changed without specific prior approval
    • Excon recourse, continued and future compliance duty to Excon via authorised dealer
      On an annual basis the Authorised Dealer having initially approved the FDI, must together with an outline of the benefits to South Africa,  submit the annual Financial Accounts including Income and Expenditure Statements and balance sheets  (of approved investee). Where this any other of the above listed criteria as set out above are not adhered to Exchange Control reserves the right to call upon the foreign investment to be disposed of and for the proceeds to be repatriated to South Africa.

 

Hedging

Institutional investors and private individuals (subject to strict derivative investment criteria) may “hedge” the currency exposure pertaining to inward and outward transfers and future FIA investment by individuals – see the comments below Loops above

Foreign Permissible Investment (FPI) by South African residents

 

Foreign Permissible Investment (FPI) by South African

General Exchange Control Comments & Updated Policy:

In is important to note that no locally owned Intellectual Property (IP) may be transferred  directly or indirectly, without the prior approval of Exchange Control.

The word “transferred” is interpreted to include a alienation or transfer by way of a sale, assignment or cession and/or the waiver of rights in favour of non-residents in whatever form.

Making it available subject to a recurring fair and reasonable revenue stream (be it a license fee, royalty payment none of which may be in the form of a lump sum) appears to be permissible, provided full effective ownership and further development rights are retained in South Africa.

The SARB policy updated April 24th is as follows:

The Exchange control department of the South African Reserve Bank (EXCON) issued the following policy in respect of intellectual property (IP):

  1. Requests by South African resident individuals and/or corporates to sell, cede or transfer IP to unrelated third party non-residents for a fair and market related price must be submitted to EXCON via an Authorised Dealer.
  2. Requests by South African resident individuals and/or corporates to sell, cede or transfer IP to related non-resident parties (i.e. family or a parent company, associate company or a subsidiary company) for a fair and market related price will be declined by EXCON.
  3. Requests by South African resident individuals and/or corporates to license South African IP to unrelated third party non-residents for a fair and market related royalty do not require the prior approval of EXCON, but if an application is received, EXCON may approve it for the term of the agreement. A condition of the approval would be that all royalties must be repatriated to South Africa and be converted to Rand within 30 days of such royalty having been paid.
  4. Requests by South African resident individuals and/or corporates to license South African IP to related party non-resident for a fair and market related royalty must be submitted to EXCON via an Authorised Dealer, but may on application be approved for the term of the agreement. A condition of the approval would be that all royalties must be repatriated to South Africa and be converted to Rand within 30 days of such royalty having been paid

 

Private individuals (natural persons)

Foreign Investment Allowance (FIA) – once a life time R2million per taxpayer 18+ years old

Outside Common Monetary Area (CMA)  – Cash, land, equity  – provided no loop is created – so called R2m FIA

18+ year old tax-payers in good standing may invest up to of R2 million outside the CMA, once an electronically completed "TAX CLEARANCE CERTIFICATE (IN RESPECT OF FOREIGN INVESTMENTS)" were  issued by the South African Revenue Service (SARS) are presented to the bank.The tax clearance certificate is applied for on SARS form FIA001 or FIA002, provided the taxpayer is registered (SARS Form IT77).

There is no absolute requirement that the taxpayer need to be tax resident in South Africa. So called Excon residents temporarily aboard may also apply for the R2m FIA and indeed for their R500 000 discretionary (previously the travel allowance) on departure provided they give a written undertaking not to use their SA credit card whilst aboard. 

Travel Allowance – now referred to as the discretionary allowance is not a permissible long term foreign investment option, it is intended to cover actual expenses and create no foreign assets. South Africans advancing their annual R500 000 to non-residents are therefore presumably creating a local Rand denominated asset i.e. the loan agreement may not be entered into in a foreign currency or if denominated in a foreign currency, the repayment terms must refer to a repayment to South Africa i.e. it is a short term foreign asset. Taxpayers are reminded that these R500 000 advanced on loan account or in fact our right donated to foreigners may result in the subsequent income being attributed back to South Africa. In additions said donations (excluding the interest free element) will be subject to normal donations tax rules.

SADC Countries –increased FIA – no upper limit of immovable property

In addition to the R2m FIA, SARB Exchange Control  (Excon) is prepared to consider applications by private individuals to invest in fixed property in SADC member countries which is not part of the CMA), against submission of a (further) Tax Clearance Certificate. Mauritius and Seychelles are now both members of the SADC, which allows South Africans to invest in the so-called IRS properties in Mauritius (MRU)

CMA properties are bought using ZA Rand and therefore not subject to Excon control, however the income may remain subject to SARS reporting

Foreign Earned Income & Capital (Excon Regulation B.02(H) whish in effect increases the R2m FIA allowance)

Income earned abroad and own foreign capital (FEI) introduced into the Republic on or after 1997-07-01 (e.g. a foreign inheritance or income earned after 1997-07-01) and provided the Authorised Dealer concerned is satisfied that the income and/or capital had previously been converted to Rand (by either having done their client the favour to retain the necessary deal sips or by viewing documentary evidence confirming the amounts involved) MAY be re-transferred abroad or remitted into a foreign currency without the FIA R2m being reduced accordingly.

Specifically excluded from the FEI permission, is he sale proceeds local in situ assets received from non-residents and the indirect export or retention of said proceeds, in a foreign currency or offshore bank account.  Furthermore in situ South African assets brought back in terms of the the  five percent tax and excon amnesty  levy (2003 to 2005) may also not be retransferred abroad.

Loops – some relation on listed inward investments?

SA residents, including a local corporate may not invested their approved funds abroad through any structure or medium which will allow for re-invested directly or indirectly back into the CMA for any purposes whatsoever. Recent changes however saw the SARB providing specific permission that such funds may, however, be used to invest in approved inward listed instruments on locally approved the bond and securities exchanges.

South African residents may, furthermore, invest domestic funds in certain listed instruments without restriction. These listed instruments are defined as products that offer South African investors exposure to offshore referenced assets. These assets may be Rand reported provided they are listed on the JSE Limited or the Bond Exchange of South Africa. Very importantly, any securities issued by local entities in the offshore market, whether priced in Rand or foreign currency are deemed as a foreign asset for Exchange Control purposes. See our comments under hedging below

South African Corporate investing abroad 

         including mandated parastatals (Schedule 2 of the Public Finance Management Act, No. 1 of 1999) private, listed and unlisted public companies

New  Foreign Direct Investments (FDI) not exceeding R50 million per applicant company per calendar year

    • Norms applied and factors considered during the FDI process
      The current application process for approval for SARB’s Exchange Control (Excon) prior to the entity  undertaking new foreign direct investment has been removed for company transactions below R50 million per applicant company per calendar year, has been removed, the authorised dealer may now process the application through strict compliance with the 2008 guidelines issued. Accordingly, hence forth your commercials bank (being an Authorised Dealers) shall  be able to adjudicate your  applications and grant you the required  approval once the minimum requirements are met.    The minimum equity interest was reduced to 10% i.e. the foreign entity will no longer be Controlled as a “subsidiary”.
    • Guidelines for new applicants
      Specific reference is made to point (c) of the Guidelines : South African Institutional Investors document which states that "It should be noted that compliance with the exchange control limits on foreign portfolio investment does not preclude an institution from also having to comply with any relevant prudential regulations as administered by the Financial Services Board."   This would entail, enter alia, the permissibility of the investment as well as ensuring that the institution is registered with the Financial Services Board.Should the investor be subject to Financial Services Board (FSB / FAIS) regulation, the relevant requirements  must be met prior to the proposed  investment offshore, including Rand denominated instruments, may be made.
    • Investment into newly established and newly acquired foreign companies
      – The local applicants may not change or allow their approved equity interest and voting interest in the offshore company,  to be diluted below 10%.  – The nature of the foreign business operations may also not be changed without Exchange Control’s specific prior approval;                                                                                                                                                                                                                               -the transfer of any additional working capital from South Africa is subject to a fresh application being submitted to Exchange Control.
    • The approved offshore “subsidiary” entities (held through a voting and equity control of at least 10%) may not acquire any assets or make loans to entities within the CMA, provided that SADC entities may re-invest into SADC assets not based in the CMA
    • Dividends earned vs. interest earned on working capital loan accounts to foreign investee
      Interest on loan accounts and the repayment of the loan account must be repatriated to South Africa, however specific permission, effective from 2004-10-26, now allows SA investors receiving dividends from approved offshore FDI investee companies may accordingly retain such dividend proceeds offshore and use it for any purpose provided the application of such dividends does not create any recourse to South Africa. The transfer of any additional working capital from South Africa is subject to a fresh application being submitted to Exchange Control (not merely to the commercial bank!). Similarly any dividends that in future are repatriated to South Africa may be retransferred abroad at any time and be used for any purpose, provided that no further recourse to South Africa is created and no so called loop investment (see above) is created
    • Nature of trade – investee
      The SA investor and the investee must be trading within the line of business  or in a supporting or complimentary industry and accordingly the nature of the foreign business operations may not be changed without specific prior approval
    • Excon recourse, continued and future compliance duty to Excon via authorised dealer
      On an annual basis the Authorised Dealer having initially approved the FDI, must together with an outline of the benefits to South Africa,  submit the annual Financial Accounts including Income and Expenditure Statements and balance sheets  (of approved investee). Where this any other of the above listed criteria as set out above are not adhered to Exchange Control reserves the right to call upon the foreign investment to be disposed of and for the proceeds to be repatriated to South Africa.

 

Hedging

Institutional investors and private individuals (subject to strict derivative investment criteria) may “hedge” the currency exposure pertaining to inward and outward transfers and future FIA investment by individuals – see the comments below Loops above

Latest Blog (April 16th) & Previous Blogs

 

 

General Exchange Control Comments:

 

It is election time in South Africa and suddenly there is an increase in the requests for formal Excon Emigrations.

Feel free to page to my other pages and read my comments on the benefits / process of formal Excon emigration

 

April 2009 Tax Diary

    1.                  Turnover Tax for Small Business

    Applicable to all small businesses with a turnover R1m and less (see full guide on TO Tax)

1.1               Apply before end April 2009
1.2               for tax year ending on the last day of February 2010
2.                  E@syfile  Paye (All Employers Take Note)
2.1               Commence April 1st, ends on May 30th
2.2               Download new software before you start
3.                  Stamp Duty Comes To And End
3.1               Claim refunds here
3.2               Replaced by the new STT (Security Transfer Tax) system –  read more here
4.                  New Comprehensive CGT Guide

  SARS web page or right click and download from here

5.                  New And Re-Issue of (Draft) Interpretation Notes
5.1               Income Tax
5.2               VAT
5.3               Other
 
oOo

Tax Update 2009

Previous Blogs

2008 / 2009 Tax Update

1.                  Living Annuities

1.1              Buyer

1.1.1        Previous fund member or his/her

1.1.2        Dependants; or his/her

1.1.3        Nominees; using

1.1.4        Funds from one or more other funds

1.2              Provider

1.2.1        Provider

1.2.2        On of after retirement date; when

1.2.3        Said date is deformed by fund rules and not by age.

1.3              Other Requirement

1.3.1        Value of benefits not guaranteed

1.3.2        Benefits are a sum of assets and income.

1.3.3        Lump sum termination once assets drop below certain levels.

1.3.4        Upon death, lump sum to estate or nominee, second life.

2.                  Lump Sum Tax Rates

2.1              Tax Free Amount

 R300 000 once a life time

2.2              Taxable Value

2.2.1        < R300 000                  R0                + 18%

2.2.2        R301 000 – R600 000  R54 000       + 27% excess over R300 000

2.2.3        R601 000 +                  R135 000      +36% On Excess Over R600 000

3.                  Other Important Requirement

3.1              Death

3.2              Divorce

3.3              Emigration

3.4              Combine funds

3.5              Preservation  fund – multiple withdrawals based on multiple contributions

3.6              Preservation fund – closed fund iro monthly contributions only

4.                  Resignation From Funds – taxation of retirement savings

4.1              Other Deduction allowed to increase R22 500

4.1.1        Unclaimed distribution

4.1.2        Fund to fund transfer

5.                  Micro Business Turnover Tax

6.                  Taxation Of Dividends

5.                  Penalties

9.1              Note the per month rule – the cheap penalties are indeed expensive as they can run up for 47 months

9.2              Failing to update SARS on your address is R250 per month from the date you moved until the date they found / traced you. Add to this the non-filing or late payment penalties ….it is no longer worth the fun! See (b) below!

oOo

How can Hugo assist me in legally extracting my assets from South Africa?

13 October 2008

Formal Emigration / Excon Exit Check-list 

Hugo van Zyl, working in close corporation with other intermediaries, smaller and medium sized audit and or law firms, will gladly assist in analysing the feasibility of a formal emigration. Once the expat or emigrant to be is ready, we will assist with all formalities and the submission of the required documents at either or both SA Reserve Bank (SARB) and the South African Revenue Services (SARS).  

Formal Emigration is indeed a SARB and SARS event and there is no reason to give up your SA citizenship, in fact we encourage all South African passport holders to protect their current passport. The SARB formal emigration is however subject to clients having the necessary immigration status in their new home country. Although we provide general guidance, based on SARB or Exchange Control (Excon) guidelines however all clients will have to appoint their own immigration agent or lawyer in their chosen home country.

Tax emigration is often partly completed prior to the financial emigration from our Excon system; however clients should also ensure they have appointed a tax accountant in their new home country to ensure the transfer of asset values is correctly processed. Certain immigration jurisdictions allow immigrants to exit the SA system and gradually enter the new tax system. The most well known is probably England and it’s NDR system yet more recently New Zealand and Australia announced certain tax deferment options. Hugo has a working knowledge of these rules however specialist advice should be obtained locally in the immigrant’s new home country.

Before we can assist, we require the following information:

1.                  Initial Analysis – minimum documents required

1.1              FIC Act documentation (www.fic.gov.za); i.e.

1.1.1        SA ID document – certified

1.1.2        SA Passport – certified

1.1.3        SA utility bill reflecting residential address or acceptable alternative

1.1.4        SA Tax number and copy of last tax return filed alternatively a newly completed SARS IT77 form; and

1.2              An acceptance of our standard terms of business, based on the  SAICA proposed mandate letter – refer to our webpage;

1.3              SARS limited Power of Attorney – as per SARS web page

1.4              Tax reference number in new country

1.5              New Passport, work permit, permanent residence permit or green card (USA).

1.6              Latest balance sheet as filed with either SARS and or SA bankers. For a family unit we require a separate balance sheet per person;

1.7              Summary of pension funds, retirement annuities and life cover as separate summaries;

1.8              Short summary on the family’s background i.e. source of funds, family structure and an indication of the assets to be externalised vs. assets to be left in SA as blocked assets?

2.                  Our Initial Analysis

Based on the above check-list and any other information Hugo may require;

2.1              An initial analysis is provided to the client or the referral firm or intermediary; where after

2.2              The client must sign and confirm our analysis as true and correct as this document will be relied upon by the local advisors (bankers, insurance brokers and auditors) as well as the new advisers in the new home country.

3.                  Client Elects To Proceed / Place Application On Hold

Consider alternative or more appropriate options such as FIA (R2m per person)  or FDI where the emigrant is required to expand his SA business formally into new country but do note neither the FDI nor the FIA are emigration options!

3.1              Update the tax status of the client, his spouse and that of his children to be included on the family emigration form. We normally rely heavily on the client’s existing relationship as they will best know the answers to all questions following the

3.2              Tax clearance application; which entails the following information / decisions:

3.2.1        Market value analysis of life cover and retirement funding;

3.2.2        Name and address of local SA agent taking responsibility for the filing and payment of future taxes;

3.2.3        Updated market value balance sheets per taxpayer as well as consolidated family unit balance sheet; where after

3.3              A client meeting or telecon (using Skype) can be arranged to ensure the client has a correct understanding of the process, the implication and the cost of such an application which includes:

3.3.1        Our fees and the fees of other family advisors;

3.3.2        CGT on the sale or deemed sale of SA assets;

3.3.3        The fees to be charged by the chosen authorised dealer i.e. obtain details of chosen bankers (authorised dealer where client and or spouse have account at various different banks) where after contact should be made with the non-resident or cross border branch of the elected authorised dealer.

3.3.4        Excon Exit Levy – the rate, how it is calculated and when it is payable;

3.3.5        Cost of a failed emigration where clients return to SA within 5 years and there after.

3.4              Present at the meeting, be telecon or through file notes as the clients, their tax advisor and accountant if not same and any other advisors such as corporate trustee

4.                  The SARB Emigration Application M.P. 336(b)

The following information and documentation are to be presented to Excon through the authorised dealer:

4.1              Documentary proof of permission to live in the new country, i.e. certificate of citizenship, proof of residency etc. or new passport;

4.2              Copies of tax advice taken in the country that they are emigrating to. 5

4.3               Proof of any remaining Foreign Investment allowance available for the family.

4.4              New consolidated balance sheet of the family unit using the heading as reflected on the said MP336(b); and client to indicate

4.4.1        Assets to be transferred within the next 3-5 years;

4.4.2        Assets to be retained in SA as so called blocked assets. Each class of asset has different requirements before they are effectively placed under control of the authorised dealer.

4.5              Where there was any donations made or received within the last 3 years:

4.6              Where there is any trust obtain the following:

4.6.1        Trust deed;

4.6.2        Last 3 years annual financial statements

4.6.3        List of any capital distributions (awards or donations) from a trust in previous 3 years

4.6.4        History on the funding and formation of the trusts. The client should be made aware of the fact that there is an Excon differentiation between an inter vivos and mortis cause (or will) trust; and

4.6.5        Undertaking to ensure trust’s board of trustees are mainly or in the majority, resident in SA

4.6.6        Completed forms M.P.1330(a) and M.P.1331 iro income remittances post emigration from the trust based on last Audited financials or Pro-forma for the Financial year end. No post emigration income can flow until submitted and approved – yet no capital may leave without the 10% Excon exit levy i.e. the trusts’ annual accounts must be filed regularly post emigration

4.7              Obtain full details of Insurance policies, Living and Retirement Annuities (including history i.e. age and amounts contributed), Pension Funds ; which sahell include

4.7.1        Contact details of FSB approved broker;

4.7.2        Original policy documents which has submitted to the Authorised Dealer as so called blocked assets although annuity and pension may normally be remittable once emigration is completed;

4.8              Name and address of share dealer / stock broker / wealth manager iro of the all the family units as well as the associated trusts; and where client so wish

4.8.1        Unlisted shares retained:  Obtain share certificates, loan certificates and last 5 years annual financial statements should be filed with the Authorised dealer. Client should be made to understand borrowing limitation may now apply;

4.8.2        Listed shares: Letter of undertaking from the broker / wealth manager

4.9              List of all credit cards to be cancelled or retained as debit cards as well as all other bank accounts to be consolidated and closed in favour of the single blocked account operated by the non-resident centre / cross border branch of the chosen authorised dealer;

4.10          List of all known liabilities which includes:

4.10.1    Immediately due and payable income tax and removal costs;

4.10.2    Post emigration expenses of liabilities such as cost to maintain family’s holiday home, cell phones etc. As guideline we provide the following amounts which may be taken from blocked funds: R75 000 living allowance for periods spent in SA, R100 000 annual donations, R100 000  property maintenance, all medical expenses but note that the post emigration tax liability must be funded from post emigration income which is normally  remittable funds.

4.11          Detailed information on all fixed property, share block and time share assets:

4.11.1    Require a reasonable valuation of property at date of departure, although there is no SA CGT until the immovable property is sold;

4.11.2    Valuation used for both the M.P. 336(b) and for CGT in new country of residence;

4.11.3    Warn client on the new CGT withholding tax rules now applicable to non-resident taxpayers; and finally

4.11.4    Obtain original Title deeds or where necessary a certificate and letter of undertaking from the mortgage holder

4.12          Debtors and other amounts collectable i.e. funds held in trust by transferring attorney:

4.12.1    Need certificate of balance in required format from each debtor (including loans receivable); and

4.12.2    Letter of undertaking re payment into blocked accounts

4.13          Other assets – Timeshare, motor vehicles, furniture, personal effects etc not exported.

4.13.1    Once again valuation and Certificate of Title where applicable; together with

4.13.2    Letter of undertaking in prescribed format;

But excludes any of the following, all of which can leave without a 10^% Excon Levy up to a maximum of R1m (which is subject to review):

4.13.3    Chattels, yachts; personal effects and any other assets to be sent out on form NEP (No Export Proceeds Form); therefore

4.13.4    Separate NEP for each class of assets i.e. furniture going by ship vs. coins and jewellery being carried out as hand luggage. NEP must be pre-stamped by Authorised Dealers

4.14          Liabilities

All current and future liabilities need to be accounted for, including CGT on assets disposed of or retained but deemed as disposed, professional fees and removal / relocation costs. As these liabilities will be settled from blocked funds certificate of balance may be required / loan certificate where it is an intra-group loan to trust or private company