Right now you’re probably just a South African living abroad but because death is inevitable, you know that there’s the possibility of an inheritance back home in your future. Another fact of life that is as inevitable as death? Taxes. So whether you’ve just discovered that you’re the beneficiary of a South African inheritance, or you know it’s on the horizon, it’s in your best interest to know what to expect. Inheritance and tax can get complicated, so we’re here to clear up any misconceptions, answer those big questions, and lay down some hard facts about your tax obligations.
Is there a tax on an inheritance in South Africa?
So, what do you do if you discover that you’ve got an inheritance waiting back home for you? Whatever your circumstances, you’re more than likely sitting somewhere far away from those funds, and so you’re wondering what happens now. From the outside, it might seem like there’s a long, arduous process involved, but it’s actually relatively simple – and can work out quite nicely in your favour.
The good news? As the recipient of an inheritance, by law, you won’t be taxed. The reason for this is because an inheritance isn’t seen as a form of income, and so it cannot be taxed in the same way as donations, or any other form of income. However, because an inheritance is referred to as receipt of capital, the possibility exists that it could be subject to Capital Gains Tax (CGT) which falls to the deceased’s estate back home in South Africa. This will have no affect on the person receiving the inheritance.
Do I need to financially emigrate to access my inheritance?
Of course not! That money belongs to you by law and will be paid into your South African bank account. You can then easily transfer it offshore without being taxed on it using your SDA (Single Discretionary Allowance) or FIA (Foreign Capital Allowance – previously referred to as Foreign Investment Allowance). This is available to South African residents and residents temporarily abroad who have not formalised their financial emigration. Please note you must have a green bar-coded South African identity document or a Smart identity document card.
What is financial emigration and why do I need it?
Financial emigration from South Africa is the formal process of informing the South African Reserve Bank (SARB) that you have financially permanently left the country. For exchange control purposes, this then changes your status with the South African Reserve Bank (SARB) from resident to non-resident. This is not an automatic process, even if you have physically emigrated from South Africa and it does not change your tax residency status in South Africa. Once you’ve financially emigrated, you’ll still hold onto your South African citizenship – that can never be taken away from you.
Financial emigration from South Africa is a personal choice and is based on your unique circumstances. Some of the advantages of financial emigration is:
- It simplifies the remittance of your South African inheritance immensely.
- It’s easier to access and transfer your South African capital and income if you live in another country.
- It’s your only chance to access and transfer any retirement annuity belonging to you (including pension, provident and preservation fund savings) before the maturity date.
FinGlobal exists to make it all much easier!
Need some advice on getting your hands on your South African inheritance? We can handle it. FinGlobal can assist you with transferring your money by means of the Single Discretionary Allowance or the Foreign Capital Allowance, and we can even help you with financial emigration if you choose to do so, handling the whole process for you. We do all the hard work, and present you with all the forms and paperwork, ready for your signature.
We pride ourselves on fast, efficient and convenient service, and we’re ready to help you with all your foreign exchange, tax clearance and financial emigration requirements. Whether it’s by phone or email, we’re waiting for you to contact us today.