What to do when emigrating from South Africa

 ·24 Dec 2023

Amidst the challenging domestic environment and the high global demand for skills, many South Africans are looking at emigrating.

However, emigrating needs a planned roadmap and exit strategy, Roxanna Naidoo from Tax Consulting SA said.

With more leaving the country, the South Africa Revenue Service (SARS) is increasingly looking at offshore assets and foreign income disclosures among, fueling anxiety for those looking to move.

“Beyond choosing the perfect destination and timing for relocation, comprehensive tax and financial planning are crucial elements in minimising uncertainty and anxiety,” Naidoo said.

“Crafting a clear roadmap and strategy empowers those potentially making the big move with a full and clear understanding of their options, along with the associated the risks and benefits.”

Strategic Planning for the Future

  • When to move

The decision of when to move can often prove as important as choosing where to go. As the tax year starts from 01 March to the end of February each year, the timing of the move will determine how the tax year is impacted.

  • Severing tax ties

The Income Tax Act states that a tax resident is someone who is “ordinarily resident” in South Africa.

If the person has already formalised their non-residency in this way, they could become a tax resident again in terms of the “physically present” test if they spend large amounts of time in South Africa.

“A clear roadmap aids in navigating the question of tax residency, cessation, and relevant exemptions. By preparing for potential obstacles and challenges, individuals gain insight into various options such as offshore investment, purchasing properties abroad, and setting up companies and offshore trusts,” Naidoo said.

  • Transition of wealth

There are often complication in terms of the transfer of wealth out of South African when one stops being a tax resident.

“Central to this is the Approval International Transfer (AIT) Tax Compliance Status PIN generally required by SARS to obtain permission for foreign remittances. For these reasons, one’s roadmap should also incorporate strategic planning for remitting funds offshore and structuring them abroad optimally,” Naidoo said.

“Navigating fund remittances without proper guidance may result in obstacles and SARS rejections, impacting emigration planning adversely and, at times, indefinitely.”

A Clean Break for Closure

She added that the uncertainty of when and how to formalise the cessation of one’s residency status is often a common stumbling block, which leads to misguided decisions and naivete in getting the wrong advice.

“A comprehensive roadmap ensures individuals and their families have a clear plan of action to follow, alleviating uncertainty or anxiety associated with such a big move. This allows a focus on the positive aspects, making the transition as stress-free as possible for you and your loved ones.”

Read: The one thing that could hold the SARB back from cutting interest rates in South Africa

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