With the ongoing global skills shortage and South Africans being highly sort after, many individuals are choosing to Financially Emigrate with the aim of starting a life abroad. However, this decision should not be taken lightly and requires a well thought-out road map and exit strategy.
South African’s planning their lives abroad have a lot to consider in terms of South African Tax Compliance.
With more people leaving the country, the tax net continues to shrink, prompting Sars to look abroad to boost their revenue collections. Sars’s rising focus on offshore assets and income has resulted in increasing anxiety for those without a proper exit strategy.
One of the most important reasons to plan ahead is to ensure that there are no tax surprises when you leave the country. A common mistake made by many is the failure to formalise their tax residency when moving abroad, resulting in a significant exit tax liability. With the right tax planning, you can minimise the impact of taxes on your wealth whilst ensuring that you remain fully tax compliant. A key part of the right tax planning is understanding that your tax residency does not cease when you leave and thus the income earned abroad remains taxable in South Africa. A cross-border tax specialist can help you navigate the various tax laws and regulations and create a plan that works best for you.
A road map and exit strategy for ceasing your tax residency should include considering your intention to remain abroad permanently or return to SA, assessing your tax residency, investment goals, risk tolerance, and time horizon. Natural Persons, as in accordance with Sars Practice and the Income Tax Act, No.58 of 1962, are seen as Tax Resident either by meeting the requirements of being ordinarily resident or physically present.
A cross-border tax specialist can help you identify and advise on your tax residency, your tax compliance options as well as advisory on options such as offshore investment, purchasing properties abroad, setting up companies abroad, and setting up offshore trusts.
When Financially Emigrating, these are significant decisions that require careful planning, specialist advice and preparation. Having a full road map and exit strategy in place is essential for ensuring a smooth transition for you and your family. It allows you to anticipate and prepare for any potential obstacles or challenges that may arise during the process.
Moving your wealth
Part of the roadmap should also include the strategic planning of the remittance of any funds offshore as part of the Financial Emigration process. The steps involved range from Sars Declarations to bank account conversions and special approvals for transfers above R10 million.
Without this planning, you could be faced with rejections from both the South African Reserve Bank and Sars, which can have a knock-on effect on your emigration planning. This support can provide peace of mind and reassurance of the road ahead.
Having a full roadmap in place means that you and your family will have a clear plan of action to follow, which can help alleviate any uncertainty or anxiety that may come with making such a big move. It will allow you to focus on the positive aspects and make the transition as stress-free as possible for you and your loved ones.
Roxanna Naidoo is an admitted attorney at Tax Consulting SA.