You might be under the impression that once you’ve wrapped up your financial and tax affairs in South Africa, you can longer hold onto your South Africa bank account. Well, we are here to bust that myth with a look at what banking looks like once you’ve squared up with the South African tax authorities.
With the change in exchange control rules effective 1 March 2021, there is no longer a distinction between residents and non-residents when it comes to moving money out of South Africa. Non-tax residents are now instead subject to a tax verification process that ensures you are in good stead with the South African Revenue Service (SARS) and that you can verify the source of funds you are transferring abroad.
Bank account once I have tax emigrated?
Am I allowed to have a bank account as a non-tax resident?
We won’t blame you for thinking that your bank account will be blocked or closed when you cease to be a tax resident of South Africa, since that is exactly what happened with your bank account in the past when you completed a financial emigration from South Africa with the Reserve Bank.
A blocked rand account was a special bank account created for individuals who completed a financial emigration from South Africa with the South African Reserve Bank (SARB). The restrictions placed on the funds that were authorised to leave South Africa allowed the bank to monitor all cross-border transactions so they could report back to the SARB. In addition, strict controls were imposed on funds that were allowed into the bank account and many of the normal functions such as internet banking and card facilities on the account were no longer available.
Luckily, banking is no longer as complicated and restrictive as it previously was for non-residents. Once you have successfully completed a tax emigration with SARS and ceased to be a resident of South Africa, you can manage your banking transactions from what is now known as a South African non-resident account.
Why do I need a non-resident account?
In order to move money from South Africa, you will always need a bank account for receipt of the funds before it’s transferred abroad. A non-resident account is the only legal manner in which you are able to move funds abroad as a tax emigrant.
Completing a tax emigration with SARS isn’t always an outright financial separation from South Africa. Many expats retain property, retirement annuities, pension income or other assets, and a non-resident account must be used to access and transfer these funds, as required. In addition, if you visit South Africa and you need money while you are in the country, you can use the funds from your non-resident account.
Having a non-resident account in South Africa makes a lot of sense in the following scenarios:
- If you still own property in South Africa and receive a regular rental income.
- If you receive a regular pension income from a South African fund.
- If you receive dividends from a South African company or local share portfolio.
- If you want to cash in your retirement annuity or pension fund, but you aren’t able to because you don’t meet the three-year non-tax residency requirement yet.
- If you have a family that you support financially in South Africa.
How do I open a non-resident account?
All banks in South Africa have their own set of rules for opening non-resident accounts, but there are few common denominators:
- You must be older than 18
- You need to provide a certified copy of your passport
- You need to provide a proof of address showing your name and current residential address
If you have completed your tax residency cessation with SARS, and you have an existing bank account in South Africa, you are required to inform your banking institution of your tax emigration. The bank will then convert your existing account to a non-resident account. You are allowed to have a non-resident account with more than one banking institution in South Africa.
Are there any restrictions on a non-resident account?
Although there are less restrictions in terms of non-resident accounts, there are some important considerations to keep in mind when moving money out of South Africa from this account. As a non-tax resident, you aren’t bound by the same exchange control regulations as South African residents, but that does not mean your funds are freely transferable.
SARB divides offshore transfers into two categories for non-residents – transfer of funds from an income source and transfer of funds from a capital source. If you transfer income abroad (such as rental income) you need to provide your bank with a Good Standing Tax Clearance Certificate once a year. If you transfer capital funds (for instance money from the sale of a property) you will need a valid Emigration Tax Clearance Certificate or a valid Foreign Investment Tax Clearance Certificate (also referred to as Tax Compliance Status certificates). These tax compliance certificates can be obtained from the South African Revenue Service and must be provided to your bank, before you’re allowed to move money out of South Africa.
FinGlobal – your cross-border financial specialist
As a cross border financial and tax specialist, FinGlobal is perfectly positioned to assist with all your money matters. We are ready to assist with everything from opening a non-resident bank account online and transferring your funds offshore to obtaining tax clearance from the South African Revenue Service.