South Africans living overseas will have to amend their tax residency status when accessing their retirement savings. <\/p>\n\n\n\n
According to Roxanna Naidoo and Khutso Makgoka from Tax Consulting SA, legislative and procedural in recent years have left expats confused over the processes for post-cessation encashment and remittance of those funds abroad.<\/p>\n\n\n\n
The issue of tax residency is key, and South Africans fall into two categories: resident and non-resident. <\/p>\n\n\n\n
Each category affects the individual’s tax and exchange control treatment, meaning that tax residency is key to the encashment of retirement savings despite not reaching retirement age year. <\/p>\n\n\n\n
“A common misconception among expats is that merely exiting South Africa or penning a farewell note to SARS will be enough to confirm one\u2019s non-resident status,” the experts said. <\/p>\n\n\n\n
Declaring tax non-resident status is a far more formal process and needs clear documentary evidence to support staying abroad submitted to SARS. <\/p>\n\n\n\n
“However, this further impacts the exchange control treatment applicable to the individual, which means that alignment with the South African Reserve Bank (SARB) and relevant authorised dealers (banks) is also necessary,” the experts said, <\/p>\n\n\n\n
The administrative process is concluded by confirming non-residency status from SARS, formally known as a Notice of Non-Resident Tax Status letter. <\/p>\n\n\n\n
This letter is critical for safeguarding foreign income and assuring non-resident status, comprising a crucial basis for retirement fund encashment.<\/p>\n\n\n\n
The experts noted that the residency cessation process is administratively onerous, as individuals must confirm their intention to remain abroad with regard to objective factors and supporting documentation. <\/p>\n\n\n\n
It is common for a Tax Residency Certificate (TRC) from the current country of residence to be provided to prove that one’s physical presence is abroad. <\/p>\n\n\n\n