So you’ve made your decision. It’s time to emigrate from South Africa. You’ve said to yourself: “I want to move abroad, but…where do I start?” What are the most important things to do before emigrating? Is there an emigration checklist? Well. There’s a lot to do, and it can get very overwhelming, very fast. We can’t help you with packing boxes, arranging flights or finding accommodation, but we can guide you in the right direction to prepare for your financial transition.
Take a look at these important things you’ll need to do before (and after) you emigrate from South Africa.
Do your homework on tax emigration
Unless you want to continue paying tax in South Africa on your worldwide income once you’ve left, you’re going to need to cease tax residency with the South African Revenue Service. This is one of the most important things you can do when emigrating from South Africa, but it’s unfortunately only something you can do after you’ve left.
- Take a look at the reasons why you’ll need to complete tax emigration after you have permanently relocated out of South Africa.
- Prepare yourself by reading Tax Migration 101 – road map for migrating your finances.
- How complicated is it to cease tax residency in South Africa? Get the answers, here.
- Should you cease tax residency in South Africa if you have relocated abroad? It depends on your individual circumstances, but it is highly advisable to do so.
Prepare for capital gains tax
Bear in mind, however, that emigrating from South Africa and ceasing your tax residency comes with a capital gains tax liability, in certain circumstances. Don’t panic. This isn’t as scary as it sounds.
- Here are the important facts around capital gains tax and emigration, explained simply.
- Capital Gains Tax is generally excluded on personal use items, and there are a number of other exclusions that might apply as well.
- There are a handful of things you can do to prepare for capital gains tax, and minimise its impact on your tax liability and your finances. Take a look at these tips on how to do it.
Don’t forget to inform the South African Revenue Service
- It is a legal requirement that you inform SARS within 21 days that you have ceased to be a tax resident. This usually happens when you no longer meet the requirements of the ordinarily resident and physical presence tests for establishing tax residency. (i.e: once you have emigrated from South Africa.)
- When it’s time to inform SARS that you wish to change from a resident to a non-resident, you’ll need to use the RAV01 form to do so. This will raise a flag with SARS, and they will open a case to investigate and confirm your tax residency status. You will need to submit a stack of documents to support your claim that you have ceased to be a tax resident of South Africa.
Remember that you will still have to file a tax return until you cease tax residence in South Africa
- You will still need to declare in South Africa your foreign income earned abroad. There is a little thing called the expat tax/foreign income tax exemption that can result in up to R.125 million of your annual foreign income being declared tax free.
- Think you can get away with not declaring your foreign income? You can’t. Rather don’t take that chance. Here’s what happens if you don’t declare your worldwide income and you haven’t yet ceased tax residency.
- Until you terminate your South African tax residency, you will be considered a South African Tax Resident Temporarily Abroad. Take a look at what that means.
Bear in mind you will have to wait to cash in your Retirement Annuity
Once upon a time, it was possible for South African expats to complete the process of formal emigration with the approval of the South African Reserve Bank in order to gain immediate access to their retirement annuities. This has changed.
- Now, you have to complete tax emigration with SARS , and then maintain this non-resident status for three unbroken years before you will be allowed to withdraw your funds.
Know how much money you can take out of South Africa when emigrating
- You are allowed to carry R25 000 on your person when emigrating from South Africa
- You are permitted to export your personal belongings to the value of R1 million after declaring as such to SARS.
- You can shift up to R1 million as your Single Discretionary Allowance in the year that you leave South Africa and up to R10 million per calendar year under your Foreign Investment Allowance.
Decide if you will still need to do banking in South Africa
- If you have family remaining in South Africa, and you have plans in the future to return for visits or holidays, it might be worthwhile holding onto a non-resident bank account in South Africa to facilitate this.
- If you have property remaining in South Africa, or any financial interests remaining, or you expect any inheritances, the only way to remit money abroad legally is through a non-resident bank account.
FinGlobal: cross-border financial specialists for South African expats
Emigrating from South Africa and relocating your life and your family can be complicated and stressful. Relocating your finances doesn’t have to be. With FinGlobal by your side, we can make sure that your financial transition is smooth and hassle-free.
To find out how we can make it easy for you to move your money out of South Africa in a cost-effective manner, leave us your contact details and we’ll be in touch.