No matter where you are in your expat journey, it’s important to ensure you are managing your expat earnings and your financial status – back home and abroad – in order to maximise your earnings. Travelling and working abroad is an exciting time and brings with it many opportunities and challenges – including managing your finances. So here are some tips to help you make the best of your financial situation.
Consider your financial jurisdictions
A change in your working location will have an impact on your financial commitments, assets and sources of income. Dealing with finances in more than one financial jurisdiction will mean you have to deal with different currencies on a regular basis and how you manage your retirement plans and tax obligations across borders. While you may be good at adapting to a different environment, your wealth and financial planning may need to adapt as well to manage risk and currency fluctuations.
Stay on top of your tax
Tax planning can be difficult when you are a resident in your home country and working in another. One of the most important things to ensure is that you don’t pay tax twice on the same income unnecessarily. It’s also equally important that you understand your tax obligations. Fiscal residency, also known as tax residency, is an important concept for all taxpayers living and working abroad and determines how you are treated with regard to taxation in a specific country. It is possible to be a tax resident in several countries during the same period. However if these countries have entered into a Double Taxation Avoidance agreement, this usually ensures that the individual is considered a fiscal residence in only one of these countries.
South Africa’s tax laws
Tax laws differ from country to country and it’s important you understand your tax situation with regard to South Africa. South Africa has recently revised its laws when it comes to South African citizens living abroad. In September 2017 the South African National Treasury confirmed in Parliament that if a South African residence is living abroad, the first R1.25 million of foreign remuneration will be exempt from tax in South Africa if the person is outside of the Republic for more than 183 days as well as for a continuous period of longer than 60 days during a 12 month period. The effective date for this proposal has been extended to the 1st of March 2020.
South Africans living abroad will continue to be taxable in South Africa on interest, dividends, rental income and capital gains incurred within South Africa during their time abroad.
Grow your wealth abroad
Living internationally can expose you to many financial opportunities that you might not have had back in South Africa. If you have financially emigrated, you can access your South African retirement annuity – even before the age of 55 – and use these funds to invest in financial products that will give you more growth.
For more information about how you can manage and maximise your expat wealth through financial emigration, accessing your South African retirement annuity and our tailor-made tax solutions for South Africans around the world, contact FinGlobal today.