Emigration is a significant life change, and along with packing boxes and saying goodbyes, you’ll need to address your financial portfolio. Specifically, what happens to your investments when you leave South Africa? It’s a big question. To help you answer it, we’ve put together a guide to walk you through the most important considerations regarding your finances and emigration, which should set you in the right direction when you jet off on your international relocation.
Emigration and retirement annuities – what you need to know
One of the most pressing concerns for future expats is the fate of their retirement annuities (RAs) and pensions. Can you withdraw retirement annuity funds? What are the tax implications?
Retirement annuities (RAs) in South Africa
RAs are designed for tax efficiency, but handling them upon emigration from South Africa requires careful planning. You will eventually be able to access these funds, but understanding the tax consequences is vital to planning accordingly.
- Is it advisable to invest in annuities in SA if you live abroad permanently or plan to?
- South African Retirement Annuities: what you can do with them before and after emigration?
- When is the right time to surrender your retirement annuity?
It is also essential to understand that physically leaving the country is not the same as tax emigration and that access to certain funds depends on your tax residency status.
Read more: Emigration and your South African Retirement Annuity – let’s talk facts, expats!
What happens to your living annuities when you emigrate?
Similar to RAs, the specifics of living annuities will need to be closely examined. Their tax treatment and accessibility post-emigration must be carefully considered and planned.
- Living vs life annuity: Which is best when planning to retire abroad?
- What happens to my living annuity if I emigrate from South Africa?
- What can South Africans living abroad do with their annuities?
- Can you cash in your South African living annuity?
What happens to your pension funds if you emigrate?
The ability to withdraw your pension funds varies, depending on the fund type and your emigration status.
- I currently receive a regular income stream from my pension fund in SA, can I transfer the capital abroad?
- Can a South African pension fund be transferred abroad?
- How do pension products differ and what are my options for remittance?
The South African tax implications of your emigration
Financial emigration, or tax emigration as it is now known, is vital as an expat. It signifies a formal change in your tax residency status with SARS, unlocking a different set of exchange control and tax rules that apply to non-residents.
Tax emigration from South Africa: This process has significant tax implications, affecting how your investments are treated. As such, it’s important to understand the tax implications before you leave. Failing to handle your tax emigration properly can lead to unexpected tax liabilities.
- What is tax emigration from South Africa?
- What are the dangers of not completing tax emigration after you leave South Africa?
- Why does tax emigration make sense even without financial ties to South Africa?
Non-resident tax in South Africa: Once you become a non-resident, your South African tax obligations change, which makes it essential to understand non-resident tax rules to avoid penalties. It is also vital to grasp the difference between being a resident for exchange control purposes and tax purposes. These can have different meanings and consequences.
- Citizenship vs tax residency – what’s the difference?
- How are residents and non-residents taxed in South Africa?
- What do you need to know about exchange control regulations when living abroad?
Exit tax on your emigration from South Africa: When you cease tax residency, South Africa may impose an “exit tax” on certain assets.
- What is Capital Gains Tax in South Africa?
- What do you need to know about how exit tax is calculated in South Africa?
- Capital Gains Tax – what’s the big deal? What are the exclusions?
South African tax on retirement – planning your post-emigration retirement
Retirement planning takes on a new dimension when you’re emigrating. You’ll need to consider the tax treatment of your RAs upon withdrawal or payout. Proper retirement tax planning should not be overlooked, especially for those emigrating.
- Tax on retirement annuity withdrawal in SA – what do expats need to know?
- South African expat retirement planning – what do you need to know about withdrawing your RA?
South African investment taxation: how to manage your investment portfolio when preparing for emigration
Your investment portfolio requires careful review and restructuring before you leave. Consult with a qualified advisor specialising in cross-border financial planning for assistance in:
- Clearly defining your tax residency status to avoid tax complications.
- Review your portfolio to evaluate your investments and make adjustments based on your emigration plans.
- Planning the migration of your finances well ahead of your departure.
Will you have to pay exit tax/capital gains tax in South Africa if you hold onto investments after tax emigration?
Regarding investment tax in South Africa, you’ll need to do your homework to ensure you understand the tax implications of your investments, including income tax and capital gains tax (CGT). You might want to consider tax-efficient investments to minimise your tax burden. However, it is essential to note that when considering the implications of “exit tax” and holding onto investments after tax emigration from South Africa, you must first understand the following:
- “Exit tax” is essentially a Capital Gains Tax (CGT) event that is triggered when you formally change your tax residency status with the South African Revenue Service (SARS).
- This means that SARS treats it as if you had “disposed” of certain assets at market value on the day before your tax residency status changed. Therefore, any accrued capital gains on those assets may be subject to CGT.
- So the exit tax is just a “deemed disposal” of assets at the point of tax emigration.
Post-tax emigration: Once you’ve completed the tax emigration process and become a non-resident, your tax obligations to SARS change.
- However, this does not mean that all tax implications disappear entirely, and you may still be liable for taxes on income generated from South African sources.
- It is also essential to understand that exit tax is intended to capture the capital gains up to the point of tax emigration.
Investments: If you retain investments in South Africa after tax emigration, any future capital gains or income generated from those investments may still be subject to South African taxes, even though you are a non-resident. The tax implications of holding investments after tax emigration can be complex and depend on various factors, including the type of investment and any applicable double taxation agreements.
FinGlobal: let us help you migrate your finances after emigration
Moving to a new country is a big step, and sorting out your investments and taxes can be confusing. It’s best to plan your exit strategy early and get expert input to avoid any headaches. Our best advice? Don’t let the tax stuff stress you out. FinGlobal can help you withdraw your retirement annuity and move your money in a safe, compliant and cost-effective manner by creating a tailored plan just for you so you can focus on your new adventure.
Contact us today to discuss how we can help you move your money. Alternatively, you can fill out the form below, and we’ll contact you.
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