Maximize your 401k in USA by using your South African funds

If you have settled in the USA and hope to get your 401k or any other defined contribution plan on track for retirement there is a new route that has opened to you. The maximum contribution on 401k for 2012 is $17,000, or $22,500 if you're 50 or older. At the current exchange rate of 8.3 this is about R141,000 or R186,750 that you could invest in America, not be exposed to currency or political risk in the future, and get the tax refund. Thus the refund in on your US pension investment can recoup most if not all tax and fees paid in SA.

If you have funds tied up in retirement annuities in South Africa, an amendment to the Income Tax Act in 2008 now makes it possible to withdraw the value in full, before retirement age. This requires that your emigrant status to be recorded with the South African Reserve Bank. When recording such status you do not relinquish your South African citizenship and can retain your South African passport.

You will also require an active up-to-date tax record, various tax clearances and directives from SARS, a blocked rand bank account with an authorised dealer in South Africa, policy surrender paperwork and certain specific documents from your local tax authorities.

Blocked rand account: this is the vehicle via which all capital transfers out of South Africa must flow for exchange control purposes, once your emigrant status has been recorded with the Reserve Bank. Acquiring such status will allow you to utilise emigration allowances which are currently R4 000 000 for an individual and R8 000 000 for a family unit. Higher amounts can be withdrawn with additional permission fro the SARB. As an emigrant you may also surrender retirement annuities and transfer the proceeds to your bank account in Canada.

Inheritance from South Africa

If you live overseas and are likely to be the beneficiary of an inheritance consideryour status from the perspective of the South African authorities, given the potential impact of exchange control regulations. Without some advance planning there is a risk that payments due to you from an inheritance cannot be effected without making retrospective application to the Reserve Bank.

If you have formally emigrated from South Africa:

In regard to inheritances (i.e. legacies and distributions from estates in South Africa) accruing to each non-resident or emigrant beneficiary:

·         The first amount of R500 000 is freely remittable

·         The balance may be remitted upon application to the Reserve Bank, which is   
           straightforward process

If the beneficiary of an inheritance is an emigrant, it is important to note that such inheritance may only be remitted offshore if the date of their emigration precedes the date of death of the individual concerned.

So don’t delay.  Get your financial affairs in order in South Africa, maximize your retirement planning and rest easy that your inheritance will reach you there.

For more information regarding Global Financial Migration contact Lizette at the North American Division of cashkows.com. Our website www.cashkows.com or email lizette@cashkows.com. 

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Maximize your Canadian RRSP by using your South African funds

If you have settled in Canada and hope to get your RRSP on track for retirement there is a new route that has opened to you. The maximum RRSP contribution limit 2012 is $22,970. At the current exchange rate of 8.3 this is about R190,650 that you could invest in Canada, not be exposed to currency or political risk in the future, and get the tax refund in Canada. Thus the refund in Canada can recoup most if not all tax and fees paid in SA.

If you have funds tied up in retirement annuities in South Africa, an amendment to the Income Tax Act in 2008 now makes it possible to withdraw the value in full, before retirement age. This requires that your emigrant status to be recorded with the South African Reserve Bank. When recording such status you do not relinquish your South African citizenship and can retain your South African passport.

You will also require an active up-to-date tax record, various tax clearances and directives from SARS, a blocked rand bank account with an authorised dealer in South Africa, policy surrender paperwork and certain specific documents from your local tax authorities.

Blocked rand account: this is the vehicle via which all capital transfers out of South Africa must flow for exchange control purposes, once your emigrant status has been recorded with  theReserve Bank. Acquiring such status will allow you to utilise emigration allowances which are currently R4 000 000 for an individual and R8 000 000 for a family unit. Higher amounts can be withdrawn with additional permission fro the SARB. As an emigrant you may also surrender retirement annuities and transfer the proceeds to your bank account in Canada.

Inheritance from South Africa

If you live overseas and are likely to be the beneficiary of an inheritance consider your status from the perspective of the South African authorities, given the potential impact of exchange control regulations. Without some advance planning there is a risk that payments due to you from an inheritance cannot be effected without making retrospective application to the Reserve Bank.

If you have formally emigrated from South Africa:

In regard to inheritances (i.e. legacies and distributions from estates in South Africa) accruing to each non-resident or emigrant beneficiary:

• ·   The first amount of R500 000 is freely remittable
• ·   The balance may be remitted upon application to the Reserve Bank, which is straightforward process

If the beneficiary of an inheritance is an emigrant, it is important to note that such inheritance may only be remitted offshore if the date of their emigration precedes the date of death of the individual concerned.

So don’t delay.  Get your financial affairs in order in South Africa, maximize your retirement planning and rest easy that your inheritance will reach you there.

For more information regarding Global Financial Migration contact Lizette at the Canadian Division of cashkows.com. Our website www.cashkows.com or email Canada@cashkows.com. 

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Financial emigration

(A recent article in Merise Magazine in Australia)

To emigrate doesn’t mean you lose your citizenship- it means you give formal notice to the South African government that you are no longer liable to pay tax.

There are many South Africans currently living abroad who are blissfully unaware that they left behind an investment or two, and that this money is legally owed to them. Are you one of these lucky fishes?

Back in the day, there was a magazine column called: Vra maar, Anna Malan sal help ( Just ask, Anna Malan will help). Well, I’m not her, but in the next few issues of Merise I will help you find out if you are one of those fortunate souls that have a little nest egg tucked away, long since forgotten but ready to hatch and call you ‘mommy’. I will also explain what you can do to incur the least possible expenses, to minimise taxes or how to avoid unnecessary risks.

Did you know that you can terminate and cash out your South African retirement annuity before the age of 55? Do you have a paid-up annuity that has actually become liquid? Few people are aware that the South African legislation changed in 2008, allowing you to benefit from your annuity investments sooner than you could before.

Most immigrants are somewhat sceptical about formally emigrating, but this is simply due to ignorance. To emigrate doesn’t mean you lose your citizenship – it means you give formal notice to the South African government that you are no longer liable to pay tax. And really, who wants to incur taxes in two countries?

There are several good reasons why you should officially emigrate. Before you take the plunge, ensure you get sound professional advice pertaining to your specific financial situation, for example:

Inheritance: This  is a source of income you don’t really look forward to or depend upon, as it has to do with the loss of loved ones. However, it does make sense to get clarity on your tax status in order to avoid the unpleasant reality of estate tax and administration fees, never mind the annoyance of the inevitable exchange rates and bureaucratic red tape! It is crucial that you get your affairs in order as soon as possible to avoid the possibility of a ‘frozen’ inheritance and unnecessary tax liability.

Inheritance planning is a bird of another feather entirely- for both the testator as well as the beneficiaries living outside the country’s’ borders. This is a discipline on which I will focus more fully in future issues. In the meantime, please think carefully about your own situation- keep your emotion out of it as a way of respecting the testator’s last wishes.

It is just one of those things that life insurance in South Africa costs much more than it would cost in Australia, and that it takes a big bite out of your earnings. Make sure you seek professional advice on this topic- it is in your own best interest.

Food for thought: Your Australian testament has no influence or control over your South African assets.  The simple solution? A separate testament for each country. Just beware of the inheritance tax trap!  Your options?  Remember- an Australian inheritance doesn’t pay inheritance tax and offers significant cost benefits. The inheritance benefits for beneficiaries is limitless- both from a financial, as well as an emotional point of view.

Members of PPS (Professional Provident Society) should think twice before they cancel their investments and provisions, as there is the decisive matter of the division of surplus.  Such a termination can result in significant financial losses for you and your family.  The solution?  Seek professional advice regarding your specific situation.

A former employer could have entitled you to pension fund-surplus payments, but how would you know this?  Previously, employers had the right to retain their contributions to your pension fund if you resign before retirement.  New legislation now makes it compulsory for surpluses to be paid out retroactively, even if you are no longer in the company’s employment. In the next issue of Merise we’ll discuss the possible monies due to you by insurance companies.

One last word: never make financial decisions without first seeking the advice of a professional financial advisor. There is simply too much at stake, and no one wants to suffer unnecessary financial losses. 

For free financial advice, and relevant overview of your specific situation, contact australia@cashkows.com.

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Finansiële emigrasie

Om te emigreer, beteken nie dat jy jou burgerskap verloor nie. Dis net ‘n formele kennisgewing aan die Suid-Afrikaanse regering dat jy nie meer belastingpligtig is nie.

Daar is baie Suid-Afrikaners wat deesdae in die buiteland woon,salig onbewus van die feit dat hulle ‘n belegging of twee agterlaat het en die geld wettig aan hulle verskuldig is. Is jy een van daardie gelukkige visse?

Onthou jy nog die laaste woorde op jou lang to do-lysie voor jy die land uit is? Mop al die klein goete op. En toe jy hier aanland, is jou nuwe land se lysie so lank dat jy al lankal van die mop vergeet het.

In toeka  se dae was daar ‘n tyskrifrubriek, Vra maar, Anna Malan sal help. Wel ek’s nou nie sy nie maar in die volgende paar uitgawes van Merise gaan ek jou help om uit te vind of jy een van die gelukkiges is wat ‘n vergete neseiertjie het wat na jou verlang. Ek verduidelik ook hoe mense te werk moet gaan om nie te veel kostes aan te gaan, belasting te betaal of enige risiko’s te loop nie.

Het jy geweet dat jou Suid-Afrikaanse uittree-annuïteit nou voor die ouderdom van 55 kan uikeer en oorbetaal? Het jy dalk ‘n opbetaalde annuïteit wat eintlik likied is? Min mense weet dat Suid-Afrikaanse wetgewing in 2008 aangepas is en nou voorsiening daarvoor maak dat jy nou vroeër voordeel uit annuïteitbeleggings kan trek.

Die meesete migrante is skepties om formeel te emigreer, maar dis uit onkunde. Om te emigreer, beteken nie dat jy jou burgerskap verloor nie. Dis net ‘n formele kennisgewing aan die Suid-Afrikaanse regering dat jy nie meer belastingspligtig is nie. Wie wil nou in twee lande aangeslaan word vir belasting?

Daar is heelparty goeie redes om amptelik te emigreer. Maak net seker dat jy die regte advies kry wat spesifiek betrekking het op jou situasie, byvoorbeeld:

Erfporsies: Dit is ‘n bron van inkomste waarna ‘n mens nie regtig uitsien of waarop jy staatmaak nie, want dit hou verband met die verlies van dierbares en geliefdes. Dit is egter sinvol om jou belastingstatus agtermekaar te kry om die onaangename realiteit van boedelbelasting en beredderingskostes te vermy. Dan praat ons nie eens van die ergerlikheid van die onvermydelike valutabeheer en burokratiese frustrasie nie. Dit is belangrik om jou sake vroegtyding in orde te kry en sodoende die moontlikheid van ‘n ‘bevrore erfporsie’ en onnodige belastingverpligting te voorkom.

Boedelbeplanning is ‘n voël van ander vere- vir sowel die testateur as die bevoordeeldes wat ‘buite die landsgrense’ woon. Hierdie is ‘n dissipline op sy eie wat ek in ‘n latere uitgawe sal uitklaar. Dink intussen solank aan jou eie situasie, sonder ‘n gewete-eerder uit respek vir die testateur se laaste wense.

Dis nou maar net so dat ‘n lewensdekking in Suide-Afrika baie meer kos as in Australië en sommer ‘n groot hap uit jou rande vat. My voorstel? Maak ‘n punt daarvan om professionele advies te kry. Dit is in jou eie belang.

Stof tot nadenke: Jou Australiese testament het geen invloed of beheer oor jou Suid-Afrikaanse bates nie. Die eenvoudige oplossing? ‘n Testament vir elke land. Pas egter op vir die boedelbelastingstrik! Jou opsies? Onthou, ‘n Australiese boedel betaal nie boedelbelasting nie en bied geweldige kostebesparings. Die inherente voordele vir ergename is eindeloos – vanuit ‘n finasiële sowel as ’n emosionele perspektief.

PPS-lede (Professional provident Society) moet twee keer dink voordat hulle hul dekking en beleggings kanselleer, want daar is die kwessie van surplusverdelings. So ‘n kansellasie kan groot verliese vir jou en jou familie inhou. Die oplossing? Kry professionele advies rakende jou spesifieke situasie.

‘n Vorige werkgewer kon persioenfonds-surplusuitbetalings aan jou gemagtig het, maar hoe sou jy dit weet? Vroeër jare het werkgewers die reg voorbehou om hul bydrae terug te hou indien jy voor aftrede sou bedank. Wetgewing maak dit nou verpligtend vir surpluses om terugwerkend uitbetaal te word, selfs al is jy nie meer in diens nie. In ‘n volgende uitgawe sal ons gesels oor die versekeringsmaatskappye wat moontlik geld verskuldig is aan jou.

Die laaste woord: Moet nooit finasiële besluite neem sonder om ‘n professionele persoon te raadplaag nie. Daar is eenvoudig te veel  op die spel en niemand wil finansiële verliese ly nie.

Vir gratis professionele advies en ‘n relevante oorsig van jou spesifieke posisie, kontak

australia@cashkows.com .

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