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What is financial emigration (formal emigration)?

By March 10, 2014October 24th, 2023Retirement annuities

What is financial emigration (formal emigration)?

March 10, 2014

By Mariette Janse van Rensburg
Hundreds, if not thousands, of South Africans living abroad who are gainfully employed, paying their taxes, holding social security numbers and enjoying other local benefits courtesy of their work permits, have never formally emigrated from South Africa.

When asking ‘why?’ I hear two reasons…

1. Confusion!
The term formal emigration is generally misunderstood. People mistakenly believe they’ve emigrated when they left the country. In reality, however, they’re still South African residents because they’re yet to go through the formal emigration process –also referred to as financial emigration.
Formal emigration, in plain English, is an agreement between you and the Reserve Bank confirming the finalisation of your financial affairs in South Africa. In this blog I’ll explain the two purposes of emigration.
– Emigration for tax purposes requires you to be e.g. a permanent Australian resident able to demonstrate a physical presence in the country. Evidence hereof confirms you’re no longer liable to pay tax in South Africa. When living in a country that’s in double tax treaty agreement with South Africa you’ll be protected from twice paying tax on the same income.
This version of emigration may give rise to capital gains tax payable on South African assets e.g. fixed property, shares and interest in companies and close corporations. Given appreciation in asset value over time, capital gains tax is inevitable and be prudent to seek advice from a cross border specialist.
– Emigration for exchange control purposes, on the other hand, serves to inform the South African Reserve bank of your intention to permanently leave the country, where after your personal status will change from South African resident tonon-resident and you’re free to move your money and other financial assets to Australia.
As a non-resident you’ll be able to withdraw and transfer the full value of your retirement annuities to your new country of residence, irrespective of your age. As always, time is of the essence. Take heed and make sure to surrender your policy before your 55th birthday, otherwise you’ll be locked in to receiving Rand denominated pension payments from South Africa in your retirement!
A retirement annuity insurance policy never lapses and presents emigrants an unexpected, but welcome, bonus. Please ensure you did not leave any money in South Africa by means of a FREE report.
Emigration for exchange control can have significant impact on your future inheritance income from South Africa and advisable to plan ahead to protect beneficiaries’ interests. As each person’s situation is unique it’s wise to prepare for the inevitable by talking to a financial and tax advisor, specialising in this field.

2. Fear.

Presents a valid reason for South Africans’ reluctance to emigrate. People are scared of losing their birthright, citizenship and South African passport, which factually is not the case!
Once a South African always a South African – when accepting citizenship of a new country you simply need to apply for dual citizenship, which is a permissible practice. Formal emigration offers peace of mind with regards to your finances / assets in South Africa and it will not have an effect on your citizenship.

Last word.
Time zones and distance between South Africa and your new country could make DIY Formal Emigration almost impossible. The time and effort spend might not be worth your while… as the saying goes: “time is money”.

It’s a technical and time-consuming process, best facilitated by a trusted 360° full service brand comprising certified financial planners, chartered accountants, emigration and cross-border tax specialists with relevant experience and holding strategic relationships at insurance and investment companies, international banking, Revenue Services and Reserve bank levels. is a licensed South African Financial Services Provider FSP # 42872 and internationally accredited PPS advisor specialising in servicing South African expat communities of the world. For more information go

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