Ever daydreamed about getting an unexpected cash windfall after the death of a distant relative? If you haven’t, now is a good time to start. In case you hadn’t heard, last year South African financial companies located the owners of unclaimed policies and investments to the value of R8.1 billion, however, the beneficiaries of more than 147,000 policies and unit trusts have still not been found. That means that there’s around R17.1 billion in unpaid policies just sitting there, waiting to be claimed.
Could you be a recipient of an unclaimed inheritance in South Africa? If you have family back home, chances are you’re going to inherit something from someone.
Here’s what you need to know about South African inheritances when you’re living overseas.
If you’re living overseas, you’re going to want to get your inheritance transferred abroad, which will require you to research and think carefully about your status as an emigrant (which determines the nature of your relationship with the South African Reserve Bank), as well as the limitations on how much money you can transfer in terms of exchange control rules. If you’re currently living it up (or working it up) abroad, you’ll fall into one of the following categories, from an exchange control perspective according to SARB:
- You are not a South African citizen because you were born abroad. You have never had a South African ID.
- This is the simplest category to fall into because you’re not subject to tax or exchange controls within South Africa.
- To transfer your inheritance funds overseas, you’ll only need a certified copy of your current ID or passport and proof of your address overseas.
2. Financially emigrated
- Formal emigration is when you stop being a South African exchange control resident by submitting a form (an MP 336(b) to the Reserve Bank.
- If you’ve completed formal emigration, SARB will now see you as an emigrant. To transfer your inheritance abroad under this category, you’ll need to provide proof of emigration from South Africa.
- If you don’t have proof of your emigration, you can request these from SARB and when you have this, you’ll be able to transfer your funds abroad.
A South African who has not recorded their financial emigration remains a SA exchange control resident and is considered by the Reserve Bank to be a SA resident temporarily abroad.
3. South African resident temporarily abroad
- With so many exciting career prospects abroad, most South Africans fall into this category.
- Even though you’re living abroad, you’re still considered a South African resident for exchange control purposes.
- This means you will be subject to the same laws and financial regulations as people currently living in the country.
If you have your South African green barcoded or new smart card ID, you can transfer R1 million using your annual allowance, and an additional R10 million , provided you apply for a tax clearance certificate from the South African Revenue Service (SARS) first.
Will I have to pay foreign inheritance tax on my South African inheritance?
In South Africa, there’s no tax on the proceeds of an inheritance, nor will you be required to pay Capital Gains Tax. This is because all of the necessary taxes would have been covered by the deceased estate in the form of an estate duty, which currently amounts to 20% for estates larger than R3.5 million.
How do I transfer a South African inheritance overseas?
If you’ve already left South Africa without financial emigration, or if you have a blocked Rand bank account in South Africa as a result of successful emigration, your money can be paid to you locally into a South African bank account, after which you can move the funds abroad by means of foreign investment allowances without any personal tax consequences. If you don’t have a blocked Rand account (now referred to as an Emigrant’s Capital Account) in South Africa, you can either use your annual foreign investment allowance to take the funds offshore, or you can apply for financial emigration in order to transfer your money out of South Africa, once you’ve received approval.
FinGlobal: Financial emigration specialists
If you need guidance on how to claim your South African inheritance money and have the proceeds transferred to you overseas, we’ve got everything you’ll need to get it done, in-house. Our team will handle every aspect related to the transfer, such as filing a belated emigration application on your behalf, checking your status with the SARB, requesting proof of emigration if necessary and sending your money where it needs to go.
How can we help you?
We provide seamless financial emigration solutions to help South Africans who need to transfer funds from South Africa. We can help you consolidate, unlock and access your funds globally.
Our services include:
- Early retirement annuity surrender
- Unclaimed policy search
- Foreign exchange transacting
- Tax compliance, consulting and refunds
- Inheritance transfers
- Financial migration planning
- Bank accounts