Emigration is not for the faint hearted…

Emotionally as well as financially, emigration is tough!

It is not only difficult to leave the family and friends behind; it is also tough to handle the guilt trips people dump on you. This can range from “you’re not a Christian if you emigrate due to security” to “you’re a racist” or “we’ll stay behind until the end, you run…” The fact is, we just want to do what is best for our family, no hidden agendas!

Strangely, over the last couple of years, sentiment has changed a great deal. So many people have told us that we are fortunate the have the opportunity and given the chance, they would do exactly the same! It still doesn’t make it easy.

There are so many uncertainties – how does the school system work? – will we be able to fit in their culture? – will we be able to maintain a good standard of living?

Talking about standard of living, what will our retirement look like? Luckily legislation changed two years ago and one can now withdraw your South African retirement annuity before the age of 55. In Africa nothing comes easy, and this process can feel worse than a bad year at the dentist. The documents you’ll be required to submit at SARS are: Tax clearance certificate, Tax directive, Proof of migration (of your tax status, not your citizenship), supporting documents, etc. You also need a blocked account and assistance with the forex transaction.

It just makes sense to get a professional to assist you in withdrawing your money from your South African retirement annuity. This person or institution should however be a tax specialist (for example a chartered accountant) as well as a registered financial planner in order to assist you with the tax issues involved as well as your insurance issues (retirement annuity, life policy, endowments, shares, etc). It also makes sense that these professionals have a South African footprint. A presence to sort matters out with SARS on a face to face basis is essential. Did I mention that the Reserve Bank must recognise your migration? Whew!!

Taking enough money with you when you are emigrating helps sort out many of the uncertainties, therefor you need to take all that you can. One of the reasons why you should take as much cash as possible with you is to give yourself the opportunity to manage your investments (and their return) which is very difficult to do if you are thousands of kilometres away from your investments.

Risks such as the strength of the currency as well as economic and political factors should also be taken in consideration.

Cashkows.com will take care of a lot of your headaches in the early withdrawal of retirement annuities in South Africa, one less uncertainty in your migration…

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South Africa: Taxation of Expatriates

Have you ever wondered how you will be taxed in South Africa, especially since you have left the country and are now residing somewhere else in the world? We often get questions about this subject matter as most people more often than not, choose to ignore the subject as the mere thought of tax gives you a good reason to adopt the ostrich strategy (putting your head in the ground and hoping that you will not be seen).

The facts about your physical offshore status are however as follows:
Since 2001, residents (called 'ordinarily resident') are taxed on their world-wide income, but non-resident persons continue to be taxed only on their South African source income.
'Ordinary residence' is not defined in the law, but has been described as involving some continuity of residence, or as being the place where a person's belongings are stored, and to which he means to return.

Expatriates on assignment are normally classified as 'temporarily resident', which is equivalent to non-resident from a tax perspective, although there might come a point at which this could be challenged if roots start to go down too deeply.

On departure, an expatriate may take away his savings, but needs to confirm that he has not emigrated from South Africa before.

South African-source (taxed) income includes earnings from employment, remuneration for services rendered in South Africa, rent from property assets located in South Africa, and interest from loans applied or used in South Africa. Dividends however are not taxed in the hands of a South African natural person

A person is resident in South Africa for tax purposes if he or she:
• spends 183 days or more in the country;
• is “ordinarily resident” in the country (i.e. has a permanent dwelling in South Africa, or has close family, business or social ties with South Africa); or
• is physically present in South Africa for more than 91 days in each of the current and the previous five tax years, and is physically present in South Africa for a period exceeding 915 days in aggregate.

So be aware and take note how you will be taxed in South Africa:
Resident individuals are taxed on their worldwide income; non-residents are taxed on their South Africa-sourced income only.

A good reason to consider your tax residency status in South Africa!

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Timing financial markets

At cashkows.com we’ve been receiving more and more enquiries over the past few months from South African expats around the world who want to surrender retirement annuities but are unsure about timing given the recent volatility in financial markets and also, but perhaps to a lesser extent, the Rand.

It is of course important to factor in these things when making your decision, however as any financial expert worth their salt will tell you, trying to “time the market” is a mugs game. If you look at data collected over the past 75 years it demonstrates clearly that no one can predict with accuracy and consistency, which way stock prices are headed. It doesn’t matter whose results you study – hedge fund gurus, mutual fund managers, academic researchers or even fortune tellers – they’re all guessing in one form or another and sooner or later their “theories” come undone.

That said, at cashkows.com we recognise and respect that fact that you want to have control over timing, when it comes to surrendering your policies and we have designed our process to provide you with exactly this: with us you decide when your policy is surrendered and you decide when the proceeds are converted from South African Rand to your local currency.

Before you may take either of these steps however it is essential to first record your emigrant status with the South African Reserve Bank - a process that cashkows.com is happy to facilitate on your behalf, retrospectively. As it takes between four to six weeks to record such status we recommend that you set the process in motion without delay as this will ensure that you are in a position to take action, from the earliest date possible. In short – emigrate, take stock (excuse the pun) and then surrender policies in your own good time.

Once your policies have been surrendered the proceeds can remain in your “blocked” account in South Africa until again, you decide the time is right to convert and transfer funds to your local bank account.

It is also perhaps worth mentioning that for those of you who are proposing to reinvest policy proceeds in your local currency, market volatility should not affect you provided that the switch between investments is actioned quickly. In fact the current economic situation may present an opportunity as the costs associated with switching between investments will be reduced when working on a lower base value.

If you are currently in the process of extracting and repatriating policy proceeds, or if you are considering engaging our services please do not hesitate to contact us if you have any questions around the issues covered in this article….we here to help you.

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There’s no place like home

“There’s no place like home… there’s no place like home…” The immortal words of Dorothy in The Wonderful Wizard of Oz, and never a truer word has been spoken. Whether home is in a quaint little tourist town on New Zealand’s South Island, a bustling metropolis in the US of A, a charming village in the English midlands, a laid back town on the Australian east coast, a chic-slick suburban setting in Canada or nestled on the southern tip of Africa there really is no place like home.

Funny thing is though, the exact location of where home is has become less significant than it used to be and certainly easier to adapt to than say, 50 years ago. Imagine living where you do now without email, the internet, Skype, TV, movies, big sports events, low cost airlines, laptops or cellphones? Some may argue that we would be living in a better world but the fact remains that technology has eased the challenges associated with living far from your place of birth.

There is a common thread that runs through all of us – and I use the word us loosely. The us that I speak of is the South African in us, but this could be the same for any society. The thread that makes us South African is woven from the fabric of knowing what a real braai smells like, of people who remember David Karmer’s rooi vellies, and his Agg please daddy won’t you take me to the drive-in, of biltong and chops, blatjang and potjies, it’s about understanding “eish”, “lekker” and “shweet bru”, knowing what “just now” means and remembering when Naas was Baas. It’s about recalling sunny skies and Chevrolet, Gerrie Coetzee, Michael de Morgan and Die Man van Staal. Having a connection to all of these things is what makes us South African, not where we live.

The fact is that no matter where you live in the world, you can easily tug on some of the common thread that makes us all us thanks in large to technology. Home is where the heart is and the things that remind me of being South African are never far from my heart.

Have a lekker day!

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