Emigrating? Ensure your tax affairs are in order

While local citizens temporarily working overseas are still subject to SA tax laws, individuals who wish to permanently emigrate must follow the correct steps to enable them to take their savings with them and avoid running up against unnecessary tax problems down the line.

Individuals who emigrate to new tax jurisdictions could face problems in withdrawing their retirement annuities (RA) if they wait too long before getting their tax affairs in order. One of the main problems is that withdrawing your RA requires up-to-date tax returns to be submitted. If you haven’t applied to the Reserve Bank (Sarb) to no longer be considered as a SA resident for exchange control purposes prior to emigration, and you subsequently don’t file SA tax returns for a number of years after emigrating, gaining access to your SA RA may prove difficult.

It’s vital for all SA citizens thinking about emigrating, to get all of their tax affairs in order. Ensure that your SA tax returns are up to date; Apply to Sars for an emigration tax clearance certificate; and Apply to Sarb to emigrate. The first two steps can be carried out by a tax advisor; the third step must be done by an SA bank. Individuals who choose to not leave permanently, need to still make it a priority to file their tax returns. If tax returns aren’t filed while you live and work abroad, it may prove to be difficult to get your SA tax affairs in order when you decide to become a permanent resident in a foreign country.

South Africans under 55 (unless the RAs worth R7 000 or less) won’t be able to withdraw funds unless they formally emigrate. If you don’t formally emigrate and leave your RA in SA, by only bringing it to your new country when you retire, there’s a good chance it would also have devalued due to a potentially weaker rand. Daniel Baines is a tax consultant at Mazars