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.
