Financial emigration for overseas South Africans

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File picture: Ziphozonke Lushaba, Independent Media

DURBAN – The recent changes to the taxation of foreign income earned by South Africans that live or work overseas has put financial emigration in the limelight.

Claudia Aires Apicella who is a financial emigration specialist at Tax Consulting said that financial emigration process does mean that a citizen needs to give their citizenship, passport, the selling of property or the cancellation of financial products or bonds. 
Apicella said that it is a legal requirement from the South African Revenue Bank and the South African Revenue Services, to confirm non-residency. 
It is based on the whether South Africa is still a person’s usual or principle residence. People choose financial emigration as it gives legal certainty about their non-residency status for tax and exchange control purposes. It also allows a person to hold onto certain financial planning benefits like cashing out your retirement annuity. 
South African tax residents who live overseas are required to declare their worldwide income to SARS. Expatriates who left South Africa without giving in proper tax returns in South Africa or going the process of formal financial emigration are at risk. 
Apicella said that SARS and the National Treasury gave a very clear message that they must get their affairs in order. According to Apicella when a South African citizen just works overseas they are still classified as a South African tax resident and are therefore subject to South African tax laws. 
Financial emigration means that they cease to be a South African tax resident and will not be held responsible to pay South African tax on their worldwide income. The proposed change to the taxation of foreign income earned by South Africa tax residents has resulted in significant rise in financial emigration applications. 
South Africans that earn more than R1 million will be required to pay tax on their offshore salaries and benefits. In Parliament the National Treasury confirmed that the proposed change in September 2017, forcing South Africans to pay tax. The proposed change will take effect in March 2020. 
The process of financial emigration has two important regulatory components which are:
1. Changing your Reserve Bank status to non-resident for exchange control purposes and 
2. Obtaining tax clearance from SARS
According to Apicella the toughest part is getting the Emigration Tax Clearance Certificate, which is the part in the process where SARS formally notes you as non-resident. 
One South African residents that works in the United Kingdom said that the one of the advantages of financial emigration is that when I actually sell my assets I can potentially be taxed at a lower tax rate if the country I now live in has better tax laws than in South Africa.
When applying for the tax clearance certificate ensure that your tax returns are in order otherwise you will have to pay the outstanding tax returns before you get the certificate. 
If you financially emigrate retrospectively there must be an alignment between your tax position and your fiscal status. 
-BUSINESS REPORT ONLINE 

Source: IOL – Business News
Financial emigration for overseas South Africans

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