Expats living outside SA must first answer the following questions before they agree to emigrate financially:
- Provide a family structure and background information on the immediate family, i.e.:
- Married, single, children?
- Do your spouse and all your minor children reside with you in a foreign country
- If not, provide some background information on the location and reason therefor, concerning your immediate family. Any intention for them to join you soon?
- Your family home in SA:
- Did you sell or rent it out? If rented out, is it a long-term rental agreement?
- Do you own a holiday or house on the family farm, always available to you?
- When you and you and the family visit South Africa, where will you reside?
And now the questions we will be asking:
It is indeed time to consider the tax cost and consequence for aliens investing with Uncle Sam.
Yes, South Africans are aliens. President Trump may or may not have referred to people from South Africa as living in a s’hole country, who am I to say! The IRS and USA tax laws most certainly labels us South Africans without an USA passport or green card as non-resident aliens.
We may not be from Mars nor Jupiter yet we are, upon death to pay FET (Federal Estate Tax) on our USA situs assets.
FET’s maximum rate is 40% and there is no spousal roll over. The exempt amount is a mere $60 000. No further SA estate duty is payable on the said USA assets, as there is a treaty in place
No spousal roll-over you ask? Yes, no roll over and the take home is that USA stock and cash held by you USA stock broker, should NOT be bequeathed to your spouse!
No, not to the offshore trust either as your wife will be taxed, upon her death assuming she is the surviving spouse, on the USA situs assets held within the offshore trust.
Who then, should be nominated as the named legatee in your will, as the person to inherit eBay, Facebook and all other USA equities?
Indeed an interesting question!
Contact Hugo van Zyl with your tax questions.
South Africans living in the UAE (Dubai) or Quatar (Doha) not paying South African tax on their foreign earned salary, in most cases will remain tax resident in SA.
The 183/+60-day rule only speaks to the (partial) exemption of remuneration from employment. South Africans will continue to pay SA tax on worldwide income from all other income, including most retirement fund income albeit that the retirement fund is foreign based. Immigrant South African may enjoy some limited tax exemption on foreign pension, yet the SA retirement funds will indeed pay SA taxable retirement benefits, albeit that contirbutions were made from tax exempt foreign employment income.
Report from our correspondent Lutando Mvovo, South Africa
Budget for 2018-19 – direct taxation.
The Budget for 2018-19 was presented to Parliament by the Minister of Finance on 21 February 2018. Details of the Budget with respect to direct taxation, which, unless stated otherwise, will apply from 1 March 2018, are summarized below. For details with respect to indirect taxation, see South Africa-1, News 22 February 2018.
(a) Corporate taxation
The Budget proposes, among other things, to:
– Review the controlled foreign company high tax exemption; Read More