South African Emigration - New Changes

/

You have spent months contemplating making your big move – you know where you’re going to go, you know what you’ll be doing when you get there, it’s all looking great, but… do you understand the financial implications of emigrating or working outside South Africa?

As a South African who has done exactly that, and expanded her business in her new homeland, Annja Louca is ideally placed to advise you on what to do, and what not to do.

Possibly the best place to start is here with our blog on the changes introduced in South Africa in March 2020:

But briefly, (well, as briefly as we possibly can), these changes affect:

  • Individuals classified as South African Residents working temporary abroad and who earn more than R1 million, especially if there isn’t a double taxation agreement in place.

  • South African residents working abroad for short periods of time and earning more than a R1million and not paying enough foreign taxes or any taxes

  • Anyone financially emigrating, which means that you change your status to being non-resident. You need to obtain a tax clearance and the status will be recorded with the South African Reserve Bank and SARS.

  • SARS will use the law against people that work abroad and have not formally financially emigrated. We have noticed that on the new tax returns there are specific questions around residency and foreign income.

Now, let’s go back to residency test:

If a person is not in South Africa for the year of assessment (so the physical presence test cannot be applied), a person is still regarded as South African if:

  • Primary home is in South Africa – this is driven by intention

  • Intention is to come back to South Africa

  • Employment is still in South Africa

  • Personal belongings are in South Africa

  • Where their family is situated

If ordinary residence cannot be determined, the physical presence test in the last 5 years needs to be considered and how much time has been spent within South Africa. It is important to understand that having SA citizenship or a passport does not make you a SA tax resident.

It is a good idea to speak to your financial advisor about your situation and your plans for the future.  Getting it right from the start can make your financial journey much easier.