Emigrants seek retirement reform

Many South African emigrants face financial challenges in their new countries as their South African living annuities fail to provide sufficient income because of the declining value of the Rand.

The intended retirement reform being discussed by Treasury of late, has dire implications for all SA expats whom have left the country and still have some form of retirement funding that was left behind. Although the intention of the proposed reform is to alleviate the State from the burden of caring for the aging population in future, this is not good news for SA expats intending to retire in a new home country other than SA.

In the last two years the Rand declined for example with 23% against the Australian dollar putting huge pressure on South African emigrants who rely on the income from their SA living annuities.

The value of a typical living annuity, assuming no growth,  worth R1 million in 2010 is only worth R770 000 today in Australia – this is after the Rand declined from R6.91 on November 2010 to R9.01 November 2012.

 “South African emigrants are not allowed to redeem their full South African living annuities or pension funds when they emigrate,” says Ryno Viljoen, managing director of cashkows.com who have assisted thousands of South Africans to emigrate financially. 

 Prior to formal emigration, legislation currently only allows a SA expat to surrender one third of the value of the fund in the form of a once off capital withdrawal, net of tax ranging from 18% to 36% on this amount. The balance of two-thirds must be invested in a South African based living annuity where the annuitant has a choice to withdraw between 2,5% and 17,5% income a year, which is taxed at the marginal rate.

“The income is paid by the product provider in Rand to the annuitants South African bank account. Once the annuitant has however recorded a formal emigration from South Africa, the income is usually freely reamittable offshore, which offers a solution to SA expats wanting to transfer their income to their new home country  ,” says Mr.Viljoen.  

This living annuity is treated differently to retirement annuities and provident funds where emigrants have since 2008 been allowed to cash in and move the total amount offshore prior to the age of 55. Up to 100% from the fund can be withdrawn on which tax is paid. 
The SA Revenue Services collects tax from an emigrant when a retirement annuity is early surrendered, based on the current resignations tax table. An emigrant redeeming a R1 million policy will pay R220, 986 once off, at an effective tax rate of 22%  
                                            .
The question is why the government doesn't allow the same redemption for living annuities as is applicable to retirement annuities? The SA Revenue Service will stand to gain millions of Rand in additional tax revenue from emigrants who is not the government’s responsibility anyway.

“Any weakness in the Rand has been offset by the underlying portfolio in South Africa which has been doing better than many overseas markets. It worked well over the years but it could be disastrous for an emigrant if both turn negative.

 “There is a huge mismatch if a South African emigrant in Australia’s living standards is determined by South African investments and living annuities. The discrepancy could be large and the risk should be removed by allowing emigrants to redeem their full living annuities,” says Richard Carter, director of Allan Gray Life.

 It does not make financial sense to rely on income and assets from your home country when you emigrate to a new country. It makes more sense to earn income and to hold the majority of assets in the currency where you are living – especially if you have moved from a developing country to a developed country.

“This removes factors like currency risk and inflation which is beyond our control and which have a big effect on our wealth and ability to support our living standards and lifestyles,” says Jason Garner, financial planning coach at ACSIS. 

The emigrant is exposed to draw down and longevity risks as the living annuity investor may erode the value of the capital of the living annuity by drawing a too high rate of monthly income and living longer than expected.

“This is correct that an emigrant cannot redeem a living annuity in full. The clients are advised to consult the rules of their specific preservation fund to ensure that they are allowed to access the value of the capital after the defined retirement date contained in the fund rules,” says Peter Dempsey, deputy CEO of the Association for Savings and Investment South Africa (ASISA).

This also exposes the financial advisor who sold the living annuity for South African circumstances and is subsequently managing the investment under overseas living conditions. The overseas circumstances change the risk appetite and needs of the investor as well as the advice given

A financial advisor must determine an appropriate investment strategy and income draw-down rate for a purchaser of a living annuity so as to minimize the probability of financial ruin. 

The financial advisors use mathematical models to determine draw-down rates and deciding on the asset allocation of the portfolio. These models make assumptions about parameters like investment return and expenses based on South African circumstances. 

The advisor's role is to match the solution to the client’s needs and the asset allocation should be driven by the client’s income requirements. This could be extremely difficult for a South African financial advisor to give advice to an emigrant based in a country the South African advisor does not know.   

“If the client emigrates the whole picture changes and the client should have the right to adjust the income annuity accordingly and transfer the annuity in full  to the new home country ,” says Viljoen.

What happens now is that many emigrants draw the maximum rate of 17,5% a year as the emigrant wishes to draw the living annuity down as quickly as possible. This is according to Viljoen in contrast with the intention of the product as a living annuity is supposed to produce a level of income that is sustainable for life. 

It also places the administrator in a precarious position who must ensure that the rate at which the annuity is currently paid can continue for at least the expected lifetime of the retiree. 
The language in the legislation suggests that a living annuity can be guaranteed but this raises a question if an annuitant emigrates to a country with higher living expenses where the income cannot be guaranteed for life, without proper annuitisation. 

The irony is that an emigrant can transfer the full amount of a provident fund to the new country after paying the same taxes as is applicable to a retirement annuity. The provident rules specifically allow for the full commutation or access to the full capital value of the investment at that date. 

One should consider these retirement options carefully if you want to move to a domicile outside South Africa. The option to bequeath, which is allowed in a living annuity, or a small tax benefit could be attractive but a disaster if a person. Decides to emigrate. 

For further information contact:

Ryno Viljoen      0828517384
Richard Carter   021-415 9963
Jason Garner     0825621878
Peter Dempsey  021 673 1620


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Pensioen pootjie emigrante

Emigrante van Suid-Afrika is onder groot druk in die buiteland weens die verswakking van die Rand en trek die maksimum inkomste of lyfrente uit hulle lewende annuïteite in Suid-Afrika om hulle lewensstandaard te handhaaf.

Baie van die emigrante is afhanklik van hul lewende annuïteite vir inkomste máár word volgens Suid-Afrikaanse wetgewing nie toegelaat om die lewende annuïteit ten volle tot niet te maak of na die buiteland oor te plaas nie.

Die verswakking van die Rand bring mee dat die maandelikse inkomste van Suid-Afrikaanse emigrante in byvoorbeeld Australië die afgelope twee jaar met 23% verswak het,  

“Die annuïtant word toegelaat om tussen 2,5% en 17,5% inkomste ’n jaar te trek en dit is opvallend dat emigrante deesdae dikwels die maksimum bedrag onttrek om hul lewensstandaard in die buiteland te handhaaf,” sê Ryno Viljoen, besturende direkteur van cashkows.com wat in finansiële emigrasie spesialiseer.

Dit kontrasteer met die gemiddelde onttrekking van lewende annuïteite in Suid-Afrika waar die onttrekkingskoers die afgelope jare beduidend gedaal en verlede jaar op ’n gemiddelde onttrekkingsvlak van 6,99% gestaan het, aldus Peter Dempsey, adjunk uitvoerende hoof van die Vereniging van Spaar en Beleggings van Suid-Afrika (ASISA).

Die groot onttrekkings van buitelanders is ook ’n doring in die vlees van Nasionale Tesourie wat tans die wetgewing oor aftreebeplanning ondersoek en sterk ten gunste van laer onttrekings uit lewende annuïteite is.

Die Nasionale Tesourie is veral bekommerd dat groot onttrekkings uit lewende annuïteite kan beteken  dat ’n polishouer se kapitaal opdroog en dat die persoon  van die staat afhanklik word.

 “n Emigrant se finansiële welsyn is nie die Suid-Afrikaanse regering se verantwoordelikheid nie. Die nuwe gasheerland het die verantwoordelikheid ten opsigte van die emigrant oorgeneem en dit geld ook sover dit die finansiële verpligtinge  betref,” sê Viljoen.

Uit besprekingsdokumente blyk dit ook dat Nasionale Tesourie meen dat die samestelling van ’n lewende annuïteit ’n komplekse polis is en dat keuse beperk moet word om die polishouers te beskerm. 

Aftreefondse val onder die Pensioenfondswetgewing en word deur ’n Raad van Trustees bestuur. Die voorstelle van Nasionale Tesourie is nou dat die Trustees van elke aftree-fonds sekere verpligte produkte moet identifiseer waarin die pensioenfondslede moet belê. Dit kan ook gewaarborgde produkte behels.

“Die implikasie is dat die trustees verpligte produkte kan kies wat die veiligste en maklikste is om in te belê. Dit sal heel moontlik groot beleggingshuise behels, waar die risiko versprei word en die beginsel van saamstorting (pooling) geld.

“Dit kan beteken dat die opbrengs van die produkte laer sal wees vanweë die laer risiko en dat meer Suid-Afrikaanse produkte pleks van globale produkte gekies sal word. Die emigrant behoort egter groter blootstelling te hê aan internasionale produkte of produkte van die gasheerland.

“ Wetgewing van die aard sal die tipiese emigrant verder blootstel aangesien die groei van sy kapitaal laer sal wees deurdat hulle verplig sal wees om in voorgeskrewe produkte of fondse te bele,” sê Viljoen.

Batebestuurders en ekonome verwag in die afsienbare toekoms opbrengste van tussen 5% en 10% volgens Dempsey en die risiko is dus klein dat plaaslike polishouers met onttrekkings van sowat 7%  hul kapitaal sal opgebruik, 

Dit is egter ’n ander situasie met emigrante wat genoop is om groter onttrekkings in die buiteland te maak. 

Die grootskaalse onttrekking deur emigrante bots ook met die algemene oogmerk van ’n lewende annuïteit naamlik om ’n volhoubare inkomste lewenslank te verskaf.

Die daling in die plaaslike onttrekkingskoers van lewende annuïteite skryf Dempsey grootliks toe aan die vorige verlaging in die amptelike onttrekkingskoers en groter ingryping van kliënte se finansiële adviseurs wat oor die algemeen laer inkomstevlakke kies.

Die finansiële adviseur se onttrekkingskoersvoorstel is dikwels gebaseer op Suid-Afrikaanse omstandighede wat ontoepaslik oorsee is. Dit is ook baie moeilik vir ’n plaaslike adviseur om ’n kliënt, wat intussen geëmigreer het, te adviseur oor ’n land waarvan hy moontlik min weet.

Syfers van ASISA toon dat die lewende annuïteitsmark geweldig groot is en dat R155,2 miljard verlede jaar in sowat 278 000 lewende annuïteite belê was. Die afgelope jaar is alleen  R23,9 miljard in lewende annuïte belê.

“Verbruikers wat nie genoeg geld vir hulle aftrede gespaar het nie, wend hulle ongelukkig om die verkeerde rede tot lewende annuïteite. Die onttrekking van hoër inkomste uit ’n lewende annuïteit kan iemand sonder genoeg aftreekapitaal in die vroeë jare help om ’n sekere lewensstyl te handhaaf. Ontbering sal egter volg sodra die kapitaal oor ’n kort tydperk uitgeput word,” sê Dempsey.

Die bespreking rondom aftree-hervorming bied egter die ideale geleentheid aan die regering volgens Viljoen om emigrante meer tegemoet te kom en hulle toe te laat om hul lewende annuïteite ten volle tot niet te maak net soos in die geval met voorsorgfondse. Dit sal risikofaktore buite emigrante se beheer soos valuta- en inflasierisko verminder.

“Dit sal ook die regering in staat stel om dadelik addisionele belasting van emigrante te verhaal. In plaas van die huidige regime waarop belasting verhaal word vanaf die annuiteit (inkomste) gedeelte oor die termyn van die lewende annuiteit, kan belasting eerder eenmalig verhaal word vanaf die kapitaal, wat ‘n beduidende inspuiting vir die fiskus sal wees. Dit is ‘n wen wen situasie vir die regering en vir emigrante wat beplan om in die buiteland af te tree,,” sê Viljoen.

Vir verdere inligting kontak:

Ryno Viljoen      0828517384

Peter Dempsey  021 673 1620


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Finansiële Emigrasie: Testamente en intestaat vererwing met emigrasie

Wanneer jy na Australië verhuis sal jy vind dat alles is dieselfde, net heeltemal anders . . . Ons weet almal hoe verskillend Engels geinterpreteer kan word: “traffic light” in plaas van “robot”, ‘n “bakkie” word ‘n “ute” genoem, ens. Boedelbeplanning is nie ‘n uitsondering nie, en soos die ou gesegde lui :”die enigste ding waarvan jy seker kan wees is die dood en belasting”. Jou testament is die beste manier om te verseker dat jou wense uitgevoer sal word in die geval van dood. ‘n Bestaande Suid-Afrikaanse testament sal heel waarskynlik nie geldig wees in Australië vir die afhandeling van jou boedel nie.

Indien ‘n persoon bates in Australië  besit en sonder ‘n geldige testament tot sterwe kom, sal sy boedel as intestaat beskou word. Die afgestorwe persoon se bates sal dan streng volgens statutêre reëls hanteer word; in sommige gevalle, in die afwesigheid van naasbestaandes, kan dit ‘n onbeplande en onbedoelde geskenk aan die Staat tot gevolg hê.  In die lig van die intestaat opvolgings reëls, sal die Staat ‘n administrateur aanstel om die bestorwe boedel te administreer en af te handel.  Die resultaat kan natuurlik dan wees dat die persoon wat in daardie rol aangestel is, die bates verdeel sonder dat dit 
noodwendig ooreenstem met die wense van
die afgestorwene.

Intestate afsterwe se praktiese uitvoering beteken dat, indien die afgestorwe persoon ‘n gade en kinders sou nalaat, die gade geregtig is op die eerste $100 000 uit die boedel, terwyl die restant dan gelykop verdeel sal word, 50% aan die gade en 50% aan die kinders. In die geval van minderjarige kinders (jonger as 18 jaar), sal hulle gedeelte deur die Publieke Trustee gehou word totdat hulle die ouderdom van 18 jaar bereik.

‘n Eenvoudige oplossing om jou risiko te verminder om intestaat te sterf, is om jou eie testament op te stel of ‘n standaard testament te koop in die vorm van ‘n “will kit” – veral as dit eenvoudig is in terme van beide die bates sowel as die begunstigdes. Ons beveel egter ten sterkste aan dat jy gebruik sal maak van ‘n regspersoon in hierdie verband.

Dit is uiters belangrik om te verstaan dat mense se omstandighede en wense verskil en jy moet veral ekstra versigtig wees indien jy geemigreer het met minderjarige kinders.

‘n Volledige testament in Australië moet veral die volgende drie aspekte aanspreek:

• Maak jou wense duidelik met betrekking tot jou bates in die geval van jou dood,
• Die aanwysing van ‘n Voog – ‘n Persoon wat deur jou aangestel word om jou minderjarige kinders se sake te behartig. Jy kan enige spesifieke faktore wat jy graag wil hê hierdie voogde in gedagte moet hou in die opvoeding en grootmaak van jou kinders  in ‘n aparte Memorandum van Wense stipuleer.
• Jou lewende testament bemagtig ‘n persoon om namens jou te handel indien jy ongeskik daartoe verklaar sou word (gewoonlik onverwags en baie jare voor jou dood)

In die meeste gevalle sal slegs jou bates in Suid-Afrika onderworpe wees aan boedelbelasting, ongeag jou residensie status. Sodra jou belasting emigrasie geaktiveer is sal jou buitelandse bates vrygestel wees van boedelbelasting, d.i. jou bates bv in  Australië .
Alhoewel boedelbelasting in Australië nie van toepassing is nie, moet kapitaalwins belasting egter in ag geneem word in jou boedelbeplanning.

Dit is dus uiters noodsaaklik om jou belasbare Suid-Afrikaanse boedel te skei van jou nie-Suid-Afrikaanse boedel (vrygestel van boedelbelasting). ‘n Geldige Suid-Afrikaanse testament kan jou erfgename beskerm teen ‘n lang en omslagtige proses om die Meester van die Hooggeregshof (in Suid-Afrika) te oorreed om nie net ‘n gesertifiseerde afskrif van jou Australiaanse testament te aanvaar nie, maar ook jou Australiaanse eksekuteur.

Die Meester mag die Australiaans aangestelde eksekuteur aanvaar sonder om die normale prosedures te volg, op voorwaarde dat die afgestorwe persoon nie in Suid-Afrika woonagtig was nie en dat daar nie in sy/haar boedel Suid-Afrikaanse vaste eiendom ingesluit is nie. Die buitelandse eksekuteur is verantwoordelik (soos in alle gevalle) om ‘n finale belasting opgawe en boedelbelasting opgawe in te dien.

‘n Uittredings annuiteit in Suid-Afrika vorm nie gewoonlik deel van jou wense in jou testament nie. In sekere gevalle kan die trustees van die betrokke fonds besluit oor die begunstigdes en moontlik selfs  jou wense verontagsaam , veral indien jy getroud is en in die geval van minderjarige kinders. Soos in ‘n vorige uitgawe bespreek, beveel ons sterk aan dat alle eks Suid-Afrikaners navraag behoort te doen en uit te vind of hulle nog uittredings annuiteite in Suid-Afrika het. Vir verskeie redes mag dit tot jou voordeel wees om hierdie fondse te onttrek en oor te plaas na Australië .  Jy het nie nodig om  aftree ouderdom (55 jaar en ouer) te bereik nie, verder benodig jy ook nie permanente verblyfsreg of burgerskap in Australië  nie.

Jou testament (beide in Australië en/of Suid-Afrika) behoort gereeld hersien te word en op datum gebring word om jou veranderde omstandighede in ag te neem. Jou testament is seker die belangrikste regsdokument wat die gemiddelde persoon ooit kan teken.Sonder een sal die hof  - en nie jy nie – besluit wat gebeur met jou bates.  Hulle kan selfs besluit wat gebeur met jou kinders.

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Financial emigration: Wills and intestate succession when you emigrate

When you move to Australia everything is the same, just totally different . . . We all know how different English can be interpreted; traffic light instead of robot, “ute” instead of “bakkie”, etc.

Estate planning is no different situation, as the old saying goes, the only thing that you can be sure of, is death and taxes . . . Your will is the best way to ensure that your wishes will be carried out with regards to the distribution of your assets following your death. 

An existing will in South Africa may not be valid in Australia for the purpose of winding up a deceased estate. 

If a person own assets in Australia and dies without an Australian will, the deceased estate will be deemed to be intestate.The deceased’s property will then be dealt with in strict accordance with certain statutory rules; in some cases, in the absence of relatives may through inertia create an unplanned and unintended gift to the State government. In lieu of an intestate succession rules, the State appoints an administrator whom is tasked to wind up the deceased estate. It follows that the person who is appointed in that role and the actual distribution may thus not reflect the deceased’s true wishes.

Intestate succession practically means that if a deceased had a spouse and children, the spouse would be entitled to the first $100,000 from the estate and the remainder of the estate would be divided equally, 50% to the spouse and 50%to the children.In a case where the children are minors (under 18 years) their share would need to be kept by the Public Trustee until they reach the age of 18.

A simple solution to mitigate the risk of dying intestate is to draw up your own will or using a standard form purchased from a stationer found in a will kit – especially if the estate is simple in terms of both assets and beneficiaries.However, we strongly suggest that you use the services of a solicitor in this regard.

It is important to understand that people’s circumstances and wishes differ and special care should be taken if you have emigrated and you have minor children. 

In Australia a proper will consist of at least three elements/documents that need proper consideration: 

• Making your wishes clear with regards to your assets in the event of your death, 
• Appointment of a Guardian - A person appointed by you to care and manage the affairs of your minor children. You can outline any specific factors you wish your guardians to consider in raising your children in a separate Memorandum of wishes.
• Your living will/ enduring power of attorney - empowering someone to act on your behalf if you should become incapacitated (possibly unexpected and/or many years before actual death)

In most instances only South African based assets will be subject to estate duty in South Africa.  Those of us who are still “resident” in South Africa (i.e. not formally emigrated) will therefor be liable for estate duty on all assets, including foreign held assets. 

Although estate duties were mainly abolished in Australia, CGT in Australia must be taken in consideration when you do your estate planning.

Preparing a South African will could go a far way to separate your dutiable South African estate from your non-South African estate (exempt from South African estate duty). Having a South African will could protect your legatees against a long and cumbersome process to have the Master of the High Court (in South Africa) accepting not only the certified copy of the Australian will but also the acceptance of the Australian executor.

The Master may accept the Australian appointed executor without following the normal procedures, on condition the deceased did not reside in South Africa and the estate does not include immovable South African properties.  The foreign executor will (as in all cases) be called upon to file a final tax return and estate duty tax return. 

A retirement annuity in South Africa does not usually form part of the wishes in your will.The trustees of the fund can override your wishes, especially if you are married and in the case of minor children. As discussed in previous issues, I urge all ex South Africans to check if you have retirement annuities left in South Africa, as well as the values thereof.  It might be to your benefit to cash in these retirement annuities and transfer the money to Australia.  You don’t need to be at retirement age (55 or older), nor do you need permanent residence or citizenship in Australia.

Your will (both in Australia and/ or in South Africa) should be reviewed from time to time, and brought up to date if necessary, in order to reflect changed circumstances.Your will is perhaps the most important legal document the average person will ever sign. Without one, the courts – and not you – decide what happens to your assets. They can even decide what happen to your children.

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Tax-free transfer of residential properties from a company or trust in South Africa – the clock is ticking…..

Your tax accountant in your newly adopted country was horrified to learn about the house/ property owned by your South African trust? It gets even more complicated if the property is registered in a close corporation (CC)/ company which is owned by that trust.

Have you been stung by the not-so-friendly double tax agreements, which allow you to be taxed on the rental income in two countries but denies you any tax credit?

Historically, some individuals acquired their residence in a company, CC or trust, primarily to avoid transfer duty and ultimately, one day, estate duty. You now live in a new country where estate duty is much less of a concern and the current layered corporate structure in South Africa is now probably no longer worth retaining.

Worst is, from an international tax point of view, you probably regret having set up the South African trust structure which in the current property market globally, does not really allow you to sell off and unwind this now seemingly inappropriate structure.

With recent developments in South Africa and the introduction of new corporate rules, the former close corporation is now treated very much like a private company held by closely linked individuals. The question is, do you convert the CC, close the trust or just leave all as is?

A concession has been enacted by the South African Revenue Services that allows for the tax-free transfer of a residence from a company or trust into the hands of shareholders or beneficiaries of the company or trust who are natural persons. Where the concession applies, the transfer is free from CGT, dividend tax and transfer duty. The entity or entities (in a multi-tier structure) out of which the residence is transferred must however be revoked, de-registered or liquidated.

The main requirements for the application of the concession are that the residence must be:

• mainly used for domestic purposes during the period from 11 February 2009 to the date of disposal;
• by one or more natural persons  who are connected persons in relation to the company or trust  that owns the residence:
• in simple English: a shareholder holding of 20% or more of the shares in a company is a connected person in relation to the company;
• any member of a CC is a connected person in relation to a CC;
• any beneficiary of a trust is a connected person in relation to the trust; and
• where a CC is trust owned, a connected party to the trust is a connected party to the CC yet not always a connected party to all companies owned by the trust. To be connected to a company the trust beneficiary should effectively be a 20% indirect shareholder of the company, once the trust layer is ignored.
• the residence must be disposed of on or before 31 December 2012

South Africans living abroad should understand that they need to obtain advice from a tax specialist, an attorney or other registered advisor to understand not only the benefits, but also to ensure that they truly meet the requirements for the relief, prior to them incurring any professional fees. It is also advised that you properly understand both the South African tax implications and exchange control requirements as well as the relevant tax position in your newly adopted country.

In terms of South African tax law, the qualifying connected member/shareholder/beneficiary or transferee, effectively "takes over" the property at the original base cost of the residence. In this case it is either the 2001 valuation price, or the time apportioned base cost plus the cost of improvements and the associate cost of disposal, be it a fresh valuation or cost to sub-divide.

There are many pitfalls that one should however consider, such as donations tax, the fact that you are a tax non-resident and CGT withholding taxes may apply to property held in your personal name.

The lawyers’ fees or conveyance and mortgage cancellation and registration fees remains due and payable at the current market value. The existing mortgage bond may be passed on, yet it is important that approval of the bond in the name of the new owner’s name be approved prior to 31 December 2012 as the transaction or agreement needs to final and binding by 31 December 2012.

What do you do should you be interested to explore this opportunity? Contact us at www.cashkows.com or send us an email to taxinfo@cashkows.com.

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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. 

www.cashkows.com

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