So, in 2008, whilst on the rise, Minister Nene went crashing to the floor. (See Video Below.) Now, he is on top of it, in fact he was handed a poisonous chalice and survived. In fact, he survived so well he had some goodies to share with Expat South Africans.
Yes, one has to compliment the new Minister of Finance on his performance. Minister Nene, at times, had to force his fellow politicians to enjoy the tax lecture and austerity and budget cuts. Increasing the tax on sinners, smokers, gamblers and other naughty taxpayer did not help to make him too popular.
But the tablets were handed out, the jabs will follow later. The patient is indeed not yet able to leave the hospital. Increasing VAT to 15% would have ensured a cure but once again we saw the ANC lead government fearing the EFF and labour onslaught that may follow a VAT rate increase.
With a tax rate increase of 1% for most taxpayer including local trust, the tax news may not have been all that good, yet we can look past the not so good and share the nice surprises.
Buying a holiday house in SA is now less of a hassle, and relax, the rumour had it wrong. Only agricultural land will be protected from foreign buyers using hard currencies!
• The transfer duty rates and brackets for those wishing to buy a holiday home in SA have changed
• Properties below R750 000 will now be exempt from transfer duty, however the rate for properties exceeding R2.25m has increased by 3%
Fewer restrictions when transferring money to foreign currencies
Retired South Africans or children who have inherited their parents’ retirement funds (living annuities) may transfer to the UK, WITHOUT ANY RESTRICTION on their monthly, quarterly or annual pension or annuity payments;
What does WITHOUT RESTRICTION mean?
• Free of income tax;
• Without obtaining prior tax clearance i.e. it is freely transferable, (however there is short double tax treaty verification required to ensure SA fully exempt you from the pay roll tax);
• The funds can flow immediately, on presentation of a foreign address and proof of the pension or annuity benefit
R1m allowance can be used for any legal purposes abroad
There have been changes to the single discretionary allowance (SDA), which is an allowance with an overall limit of R1m per year which a South African resident over the age of 18 may make use of.
The SDA allows SA residents to:
• Either invest or advance R1m to foreigners and South Africans living abroad without obtaining a tax clearance;
• Spend some R1m per person on overseas travel, provided that the aggregate spend does not exceed R1m per year.
The SDA remains at R1million per person 18 years and older, yet the various SDA subcategories are to be removed and the annual R1 million allowances may be used for any legal purpose abroad.
Saffas can now invest up to R10million abroad
The Foreign Investment Allowance (FIA), a capital allowance allowing tax compliant South Africans to freely invest abroad is now set at R10million (was R4 million).
The following additional rules apply:
• R10m is a calendar year allowance (not aligned to the tax year);
• Available to all Exchange Control residents, albeit that the living temporarily abroad ,
• If the 2015 calendar year FIA R4m was fully used up, the balance can be taken in April 2015;
• The annual limit can be increased through special applications and, more specifically, for South Africans wishing to invest in a second property outside South Africa. This is no longer only available for African properties, the second home can be anywhere in the world;
Formal emigration FCA is now set at R20million
The foreign capital allowance on formal emigration (FCA) is now set at R20 million (was R8m) per family unit or R10m (R4m) per single adult.
Certain Retirement annuities can be extracted without formal emigration
If previously tax non-residents temporary workers, contribute to a SA retirement annuities (RA) while in SA, they will in future be allowed to extract their RA’s without the need to undergo the formal emigration process.
SA companies can give invest R1billion per year to foreign branches
South African companies may now invest or advance some R1 billion per year (was R500 million) to their foreign subsidiaries.
• Furthermore, SA companies may make use of foreign credit cards (currently limited to individuals); and
• Previously granted allowance not fully utilised, will now be carried to the following year
But as they say in the classics, the devil is in the detail and we await the draft laws as the exchange control changes (for example) are only applicable as of 1 April 2015.
The full budget speech can be found on www.treasury.gov.za