Although leaving South Africa permanently is an exciting, life-altering decision, your emigration isn’t complete when your flight touches down on the other side of the world. There is still the matter of emigrating your finances, so you’ll need to plan ahead to smooth the way for moving your money out of South Africa. For this, we advise on getting your Financial Emigration Plan™ in place to ensure a seamless, stress-free transition so you can avoid being stranded penniless in a foreign country.
Here’s what you need to know about South African exchange control limits, and repatriating your money from South Africa.
Important steps before leaving South Africa:
1. Prepare your cash and pack your personal belongings:
When physically leaving the country, individuals are allowed to carry a maximum of R25,000 in cash. If relocating within the Common Monetary Area, the cash limit is waived. Personal belongings up to the value of R1 million can be exported after declaring them to the South African Revenue Service (SARS).
- Checklist of things to consider when emigrating
- How much money can I take out of South Africa when I emigrate and thereafter?
- How to export your art collection when you emigrate from South Africa
2. Know your South African exchange control allowances and limits:
South African residents can make use of two allowances annually in order to transfer money from South Africa.
- Single Discretionary Allowance: Used for transferring up to R1 million offshore per year without prior tax clearance.
- Foreign Capital/Investment Allowance: Used for transferring up to R10 million per year and processed through SARS via the Approval of International Transfers (AIT) clearance process.
When combined, residents can transfer up to R11 million out of South Africa annually as long as they remain tax residents.
3. Transferring money out of South Africa as a tax resident:
You are considered a tax resident of South Africa until you officially complete the process of tax emigration through the South African Revenue Service. While you are still a tax resident, you will be permitted to use the Single Discretionary Allowance to make an international money transfer of up to R1 million per year without tax clearance. All you’ll need is a valid South African identity document that is required for compliance purposes.
- Transferring money out of South Africa – the Single Discretionary Allowance vs the Foreign Capital Allowance.
4. Familiarise yourself with the process of transferring money out of South Africa using the Foreign Investment/Capital Allowance:
SARS has updated the process, replacing the need to seek a Tax Compliance Status (TCS) PIN with an “Approval for International Transfer” (AIT) application.
Important steps after leaving South Africa:
Much of your financial transition can only be initiated once you’ve physically left South Africa permanently. Here’s what you’ll need to do, in your new home country.
1. Inform SARS of your move:
It is compulsory to inform SARS within 21 days that there has been an important change in your details. You will use the RAV01 form to do this.
- Moving abroad? Here’s what you need to know about how to update your SARS details.
- Emigrating – what does SARS need to know and why.
2. Complete the process of tax emigration:
This process is started when you submit the RAV01 form, which kickstarts a SARS inquiry into your tax resident status. Ceasing tax residency is important once you’ve emigrated in order to avoid paying tax on your foreign employment income if you want to work overseas. Once SARS has reviewed your application to cease tax residency, you will receive a Non-Resident Confirmation Letter.
- Top reasons South Africans living abroad consider tax emigration
- How do I get my money out of South Africa via tax emigration?
- A step-by-step guide to ceasing tax residency and becoming a non-resident for tax purposes in South Africa.
3. Prepare for Capital Gains Tax aka exit tax:
Emigration may incur capital gains tax liability in specific circumstances. Understanding the exclusions and preparing for it can minimise the impact.
- The low down on capital gains tax when tax emigrating
- Tips on how to manage capital gains tax on emigration from South Africa
- Capital Gains Tax – what’s the big deal? What are the exclusions?
4. Clarify your tax resident status with SARS:
It is important to note that if you left South Africa a number of years ago already, you will still need to complete the process of tax emigration now. This applies even if you previously completed financial emigration, as SARS issued an alert that financial emigration doesn’t automatically make you a tax non-resident.
Why is it important to clarify your tax status if you’ve already left South Africa?
The Non-Resident Confirmation Letter issued by SARS is now part of the paperwork requirements to utilise the Foreign Investment Allowance to transfer money abroad, if you are not a tax resident living in South Africa.
- What supporting documents does SARS require with the Approval of International Transfers (AIT) application?
- Taxing matters: a guide to understanding South African tax residency for expats.
5. Continue filing your tax returns in South Africa:
Until your tax residence in South Africa ceases, you are considered a South African Tax Resident Temporarily Abroad and must continue filing tax returns.
- Emigrating? Don’t forget your tax obligations in South Africa when you leave!
- Emigrated from SA? How to deregister from SARS income tax.
6. Start the process of cashing in your retirement annuities:
As a non-resident, you become eligible to withdraw your retirement annuity in full, once you have ceased tax residency and maintained your non-resident status for a minimum of three unbroken years.
- South African Retirement Annuities: what you can do with them before and after emigration?
- Tax implications of emigration on your South African retirement funds.
7. Sort out your South African banking:
You will need a local bank account in South Africa (non-resident bank account) in order to transfer money out of the country, such as the proceeds from your retirement annuities, inheritances and so forth. FinGlobal can assist with non-resident bank accounts, quickly and easily.
FinGlobal: cross-border financial specialists for South African expats
Successfully transferring money out of South Africa before and after your emigration requires careful planning with attention to many different considerations. It is important to understand the exchange control regulations, comply with tax requirements, and have the necessary documents in place to ensure a smooth financial transition. Whether utilising annual allowances, handling your tax emigration, or deciding on banking arrangements for transferring money out of South Africa, careful planning with the right financial services provider by your side will ensure the hassle-free relocation of your finances.
To find out more about our comprehensive suite of cross-border financial services for South Africans, please leave your contact details below and we will be in touch.