MOVING OUR MONEY TO AUSTALIA
Our children are living in Australia and we plan on joining them. My concern is how do we move our investments (Investec bond, living annuity, PSG investment, and cash) We do have a bank account in Australia, but the interest rate we receive from that money is low. We have applied for a CPV sub-class 143 visa, which our agent has informed us will take about three years. My big concern is the continued weakening of the rand. I would like to move this money as soon as possible.
Name withheld
Pierre Puren, a financial adviser at PSG Jeffreys Bay, responds: You don’t mention whether or not you have put any formal plans in place to emigrate from South Africa. Irrespective of your long-term residential intentions, legislation in South Africa will have to be adhered to when moving funds out of South Africa to a foreign source.
In the case of your cash and voluntary investments:
◆ If not officially emigrating, you are permitted, as an individual, to take up to R1 million out of the country, which does not require South African Reserve Bank tax clearance. This is known as your single discretionary offshore allowance.
◆ If your discretionary investments exceed R1m, you can use an offshore allowance of up to R10m, for which you will need to obtain a tax clearance certificate (in respect of foreign investments) from Sars. This certificate must include the Sars logo and specified watermark and is valid only for 12 months from the date indicated on the certificate.
Be sure to calculate any capital gains that may arise from the selling of shares or participatory units in your voluntary investments prior to withdrawal.
Current legislation does not allow you to withdraw your living annuity in full. Apart from the allowable withdrawal rates (2.5% to 17.5%) a year, you will not be able to access the full amount. Even if you officially emigrate, your living annuity will remain “trapped” in South Africa.
You may increase the drawdowns on the anniversary of the policy to the maximum allowable rate of 17.5% and repatriate the funds to your Australian bank account.
In the case of endowment policies or fixed-term investments, enquire with the relevant administrator whether you have full access to your funds prior to specified restriction periods. Certain fixed investments allow no access, while others allow access at a specified fee deducted from the withdrawal amount, prior to the specified investment term.
Access to endowment policies in the first five years is limited to one interest-free loan and one withdrawal. Each is limited to a maximum of the capital amount you invested plus 5% interest. After the initial five-year restriction period, you’ll have 100% access to your capital.