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What to know before transferring policy proceeds and cash from South Africa

What to know before transferring policy proceeds and cash from South Africa

February 23, 2024


When planning your emigration, it’s understandable that you’ll spend a lot of time researching your destination country to make sure you comply with immigration requirements, and you know what to expect when you get there. You’ll do your homework on housing, healthcare, leisure activities and your daily tasks such as your work commute and grocery shopping. While it’s great to be prepared like this, it’s also important to make time to research the financial and tax implications of your emigration at the same time. The last thing you want is to arrive in your new country, and find yourself in a pickle with the revenue authority or unable to access your money, because you overlooked an important detail. What a nightmare! To ensure this does not happen to you, we’ve put together a helpful guide on what you need to know about withdrawing and transferring your retirement annuity proceeds and your remaining capital out of South Africa, the right way.

How much money can you move out of South Africa when you emigrate?

When leaving South Africa, there are specific rules regarding the amount of money you can take with you. When physically departing the country, you can declare and carry a maximum of R25,000 in cash on your person or an unlimited amount of foreign currency per individual. If your destination is within the Common Monetary Area, there is no restriction on the amount of cash you can carry. Additionally, for the export of personal belongings, you are allowed to do so up to a value of R1 million, as long as you declare your belongings to the South African Revenue Service (SARS).

When it comes to the transfer of money out of South Africa, individual tax residents have two exchange control allowances:

  1. The Single Discretionary Allowance: You can transfer up to R1 million per year without needing prior tax clearance.
  2. The Foreign Investment Allowance: This allowance allows for transfers of up to R10 million per year through the Approval of International Transfers (AIT) clearance process conducted by SARS, after which you are issued a TCS PIN (Tax Compliance Status PIN).

While you remain a South African tax resident, you can combine both allowances to transfer a total of up to R11 million annually out of the country. Once you cease tax residency, you can transfer up to R1 million overseas as a one-time travel allowance in the same year without requiring a TCS PIN. However, this is a non-recurring allowance and cannot be used again. When you become non-resident for tax purposes, the exchange control allowances are no longer available to you and all offshore transfers must be conducted using the AIT process through SARS.

Read more:

Retirement annuity withdrawal rules in South Africa

As long as you live in South Africa and remain a tax resident, you cannot touch your retirement savings until you reach the official retirement age, except for a handful of limited exceptions that relate to illness, death and disability, which are not the ideal circumstances under which to access your retirement savings.

The rules around retirement annuity withdrawals change, however, once you’ve left South Africa permanently and become a non-resident for tax purposes by completing the process of tax emigration. Three years after becoming a non-resident, you become eligible to withdraw the full value of your retirement savings. It is important to note that the three year waiting period only applies to preservation funds and retirement annuities. It does not apply to pension funds. In terms of preservation funds and provident preservation funds, even if you have used your once-off pre-retirement withdrawal benefit, you can access and withdraw the remainder three years after you ceased tax residency.

You will need to know that withdrawing your retirement savings from South Africa is a significant tax event for SARS, and they will expect to receive their lump sum tax payment before you get paid out. There might also be some administrative and early withdrawal penalty fees for you to settle with your policy provider, but this depends on your specific product. Once tax has been paid, and your fees settled, the remainder of your retirement policy proceeds will be paid out into your South African bank account, after which you are free to transfer your money abroad by following the correct SARS procedures for making international transfers.

Approval for International Transfer from SARS

Where SARS used to have the Foreign Investment Allowance and Emigration TCS PIN procedures, this has been updated and merged into a single process, now known as the “Approved International Transfer” (AIT) application. To use this process, you will need to ensure that your tax affairs are in order, and provide a variety of supporting documentation with your AIT application to SARS, depending on the source of your funds. Once approved, you will be issued with a TCS PIN that will be used by the Authorised Dealer executing your international transfer to ensure that you are in fact tax compliant.

Read more: What supporting documents does SARS require with the Approval of International Transfers (AIT) application?

FinGlobal: retirement annuity withdrawal specialists

If you need a hand consolidating all of your policies, and accessing your funds from outside of South Africa FinGlobal is ready to help. We’ve already helped thousands of expats in more than 105 countries to cash in their policies and move the proceeds abroad. We can help you every step of the way, with tax emigration, tax clearance, retirement annuity withdrawal, foreign exchange and more.

To find out more about our hassle-free, reliable cross-border financial services, get in touch with us today.

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