{"id":470922,"date":"2021-02-25T10:03:58","date_gmt":"2021-02-25T08:03:58","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=470922"},"modified":"2021-02-25T10:03:58","modified_gmt":"2021-02-25T08:03:58","slug":"retirement-tax-changes-planned-for-south-african-expats","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/470922\/retirement-tax-changes-planned-for-south-african-expats\/","title":{"rendered":"Retirement tax changes planned for South African expats"},"content":{"rendered":"

National Treasury has confirmed it is looking to make retirement and tax changes for people who emigrate from South Africa.<\/p>\n

The proposed changes relate to the cashing out of retirement savings when leaving the country, and when specific taxes are applied.<\/p>\n

As the tax laws currently stand, a retirement fund member who cashes out their retirement savings and emigrates from South Africa – and is thus no longer tax resident – is subject to tax in South Africa using the retirement fund withdrawal table.<\/a><\/strong><\/p>\n

If the member defers accessing the funds until after they actually retire, they are only subject to retirement tax at that stage.<\/p>\n

However, Denver Keswell, senior legal advisor for Nedgroup Investments, said that Treasury has concerns with this structure: specifically, expats who become tax resident in another country where a double tax agreement with South Africa is in place.<\/p>\n

In this situation, these individuals will instead pay tax in that country, and South Africa forfeits its rights to tax the former South African resident, losing out on money owed.<\/p>\n

To overcome this, Treasury intends to tax a retirement fund member when they no longer qualify as a South African tax resident, Keswell said.<\/p>\n

Their retirement fund interest will thus be subject to tax using the withdrawal table the day before they no longer qualify as a tax resident.<\/p>\n

Keswell said that if these people choose to leave their retirement benefit in South Africa, then any tax payable will be deferred until they access their retirement interest.<\/p>\n

“This will ensure that South Africa receives tax due. Treasury will use the relevant retirement tax table at the time of access and provide a tax credit on the calculated deemed tax,” he said.<\/p>\n

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Retirement fund transfers\u00a0<\/strong><\/p>\n

Currently, members of retirement funds who retire early and decide to transfer to another retirement fund will be taxed.<\/p>\n

“Treasury proposes allowing tax-free transfers for early retirees provided the transfer is to a similar or more restrictive fund,” Keswell said.<\/p>\n

Allowing members to use retirement interest to acquire annuities on retirement<\/strong><\/p>\n

“When a member retires, they can commute (take in cash) a portion of their benefit and use the rest to purchase a compulsory annuity,” Keswell said.<\/p>\n

He added that the annuity must be one of the following options:<\/p>\n