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Have you heard the latest news regarding the Draft Taxation Laws Amendment Bill that will change the way SA expats access their retirement annuity funds when emigrating from the country? Let’s talk about financial emigration and what happens to the money in your South African retirement annuity when you leave the country…

If you have been doing your homework in the lead up to your own emigration, you might have heard that South Africans emigrating for exchange control purposes are able to withdraw lump sums from their retirement funds – if they financially emigrate in accordance with the process prescribed the South African Reserve Bank (SARB). This information has been correct, but as it turns out, it’s not going to be a convenience available to SA expats forever.

Most people think that their accrued retirement annuity will help fund their emigration and while that has been the case for many years, it’s unfortunately not going to be an option for much longer. The very recent Draft Taxation Laws Amendment Bill has seen to that. Up until now, most people who leave the country tend to formalise their financial emigration and then transfer their South African retirement annuity funds into their bank account abroad. The main objective of this is so that they can invest in more stable economies or help fund their actual emigration. If you have been thinking of doing this too, it’s time to pay attention as there’s a very small window of time left in order to get this right.

Draft Taxation Laws Amendment Bill 2020

New Law Regarding Financial Emigration & Withdrawing Retirement Annuity Funds Confirmed in October 2020

As proposed in the Draft Taxation Laws Amendment Bill in July 2020, expats with South African retirement annuities will no longer be able to immediately withdraw their accrued funds when they finalise their financial emigration. Instead a 3-year lock-in will apply to those funds. There’s no need to panic as this only means that funds are locked-in for 3 years, but thereafter will be available to you.

It’s safe to say that the National Treasury has officially laid down the law regarding the withdrawing of retirement annuity funds when leaving the country. The decision was finally come to on the 13th of October 2020 in Parliament when National Treasury and the South African Revenue Service representative appealed to the Standing Committee on Finance to bring about a variety of amendments to legislation with regards to financial emigration from the country. While this is not something everyone agrees with, it must be noted that there is nothing to fear. That being said; it’s best for those who have already emigrated from South Africa or plan to in the near future, to finalise their financial emigration before the 1st of March 2021 if they want their accrued funds to be immediately available to them.

You might be wondering what on earth brought on this change to the law and that’s a fair and valid question.

To answer that question, the Treasury has.  said in a statement “The 3-year rule is a mechanism to ensure that there is sufficient lapse of time for all emigration processes to have been completed with certainty”.

Of course, the legislation amendments have been met with many verbal and written arguments from stakeholders, yet The Treasury still confirmed that the 3-year lock-in and various other amendments will apply as of 1 March 2021. Expats or would-be expats have around 4 months to get the ball rolling on their intended financial emigration, if they want to make the cut off and avoid being impacted by the 3-year lock-in.

Get the Ball Rolling on Your Financial Emigration with the Help of FinGlobal

At FinGlobal, we have been working with financial emigration for South African expats for almost a decade. Over the years, we have become attuned with the ins and outs of the industry. It is this experience that puts us in the best possible position to assist you with your financial emigration, whether it be before the 1st of March 2021 cut-off for the 3-year lock-in, or thereafter. We understand the implications of both tax emigration and financial emigration and we provide a premier advisory and guidance service to ensure that South African expats the world over have access to affordable services that get their tax and financial emigration sorted out, quickly and effectively.

If you would like some professional assistance and guidance with regards to formalising your financial emigration, simply contact us today. You can give us a call at your convenience, or send us an email detailing your current situation. One of our friendly consultants will be more than happy to assist you.

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