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Death of our loved ones isn’t something we like to think about, especially in the middle of a pandemic. We have to be realists, however, and accept that as South Africans living abroad with family back home there is a chance that we will feature in a loved one’s last will and testament at some point in the future. Dealing with bureaucracy back home can be a frustrating and lengthy process, so it pays to be prepared beforehand so you know how to minimise the stress and hassle of claiming your inheritance from South Africa.

South African exchange control changes in 2021

Cross-border inheritances

Along with phasing out the concept of formal emigration through the Financial Surveillance Department of the South African Reserve Bank (FinSurv), thanks to changes made to tax law, all new emigration applications from 1 March 2021 onwards will be processed by the South African Revenue Service instead. Using a new compliance verification-based system, SARS will examine whether an individual has ceased to be a resident for tax purposes, in order to achieve tax emigration. 

Outdated, complicated exchange control procedures have been replaced by the uniform application of a positive list framework in terms of which all cross-border transactions are permissible except those subject to capital flow control measures or transactions that pose a high risk of being illegal.

Furthermore, amendments have been made to Section B.2(J) of the Currency and Exchanges Manual for Authorised Dealers, that changes how forex providers must handle private individuals who cease to be South African tax residents. According to this updated section natural person, emigrants and natural person residents are now to be treated the same, but the distinction between South African resident assets and non-resident assets remains unchanged.

What does this mean if you’re an expat living abroad with an inheritance claim in South Africa?

Authorised Dealers are now permitted to move inheritance money out of South Africa on confirmation that the individual has ceased tax residency status with SARS.

Time-saver tip: These are the documents you must provide to the Authorised Dealer handling the transfer of your inheritance money from South Africa:

  • Death certificate
  • The Last Will and Testament of the deceased
  • Liquidation and Distribution Account
  • Letter of Executorship

Where the total assets of the South African resident deceased estate are less than R250 000, inheritance money that is due may be transferred abroad to you, but the bank handling your transfer will need to be provided with the Last Will and Testament and Letter of Executorship or Authority to prove the source of these funds is in fact an inheritance. If you don’t already have one, you will need a Non-Resident Bank Account in South Africa, through which your money will be sent offshore. Here’s what you need to know about these expat bank accounts.

Tips on how to transfer money out of South Africa, once you have received your inheritance funds:

  • Authorised Dealers can facilitate the transfer of up to R10 million in total per calendar year per individual who ceased tax residency in South Africa.
  • For transfers above R10 million, a TCS PIN will have to be obtained from SARS.

South African non-tax residents who want to transfer more than R10 million offshore in a year:

  • Will be subject to a stricter SARS verification process and then an approval process with FinSurv.
  • Larger transfers will be subject to a risk management test that will assess tax status verification, funds source, as well as the undertaking of an individual-level risk assessment in terms of anti-money laundering and countering terror financing requirements contained in the Financial Intelligence Centre Act.
  • To transfer an amount larger than R10 million, an application must be made toFinSurv, supported by a TCS PIN letter containing the individual’s tax number and TCS PIN to verify tax compliance.
  • All transfer of assets by private individuals that have ceased South African tax residency will be subject to tax compliance checks.

What must you do if you inherit a house in South Africa?

If a relative has left you a non-monetary bequest like property or a house in their will, how does this work? While most people are apprehensive about such a bequest, worrying that inheriting a house is basically inheriting a bottomless pit of hidden costs, this is not actually the case.

Fortunately, most costs will be covered by the estate, which means that as the beneficiary, you should not be expected to pay conveyancing fees and transfer duties. This means that when you inherit a house or property in South Africa, the only real cost (except of course for any outstanding debt on the property and maintenance and improvements) comes in the form of Capital Gains Tax. You don’t have to pay it right away, or even before you take transfer of the property. You’ll only need to address Capital Gains Tax when you sell the property. The tax amount payable is then calculated on the difference between the property’s present-day value and the value on the day of inheritance.

FinGlobal: cross-border financial specialists for South Africans living abroad

Cross-border inheritances can be lengthy, complicated, drawn-out processes. It makes sense to find a trustworthy financial services partner to assist you access your inheritance and transfer the proceeds abroad in a safe, time-efficient manner; a partner that will even help you with tax clearance where necessary. That’s what we do at FinGlobal. We help South Africans move their money where they need it to be. We offer highly competitive foreign exchange rates, transparent service fees, and accelerated timelines – all of which add up to a faster, larger inheritance transfer for you.

Top Tip: Let FinGlobal simplify your life and assist with smoothing out your complicated cross-border inheritance claim. Leave us your contact details and we’ll be in touch.