Formal or financial emigration is the process to formally change your exchange control status from resident to non-resident. It is also sometimes known as Excon Exit.
Financial emigration will not affect a South African’s right to retain their South African citizenship or dual citizenship. It is thus a purely financial process.
Following financial emigration from South Africa, a person can remain tax resident in SA, based on the time spent in the country and subject to the double taxation agreement (DTA) in which the person will be living in future.
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.
(Post by TaxConnections Member in South Africa Hugo van Zyl)
There is so many new tax acronyms, one can’t be blamed for not always knowing the full phrase behind the tax acronym.
To guide you, all from a South African perspective yet they are all well-known international acronyms or abbreviations.
TaxConnections has a first row seat to what is driving new business to tax professionals around the world. Let me share a story with you that we received recently from one of our members. Allow me to preface this story with the fact that it would not have been possible for this tax professional to connect with this taxpayer if not for www.taxconnections.com. What is a taxpayer to do when caught between two country tax revenue authorities? TaxConnections connects our members with new clients all over the world.
The South African Revenue Service (SARS) has announced an amnesty of sort – a threat and upfront warnings: we do know about you, best you come forward before we make the tax audit into your affairs known.
On July 9th, 2015, SARS issued a press release, which can be read in more detail on:
http://www.sars.gov.za/Media/MediaReleases/Pages/9-July-2015 – – – South-Africans-with-accounts-and-investments-in-foreign-tax-jurisdictions.aspx
The International Consortium of Investigative Journalists (ICIJ), based information obtained by French newspaper Le Monde, ranked South Africa number 31 among the countries with the largest amount of dollars ($2.3blion) in the so-called leaked Swiss Read More
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 Read More
Our members blogs are read by visitors from 210 countries and territories around the world. We are amazed as we watch our members gain better visibility for their tax expertise and more authority in the marketplace. TaxConnections Bloggers have a unique style that resonates with our readers. We love the way our Tax Bloggers make the stories relatable to our readers. When you are marketing for new clients the secret is to make it less technical and more relatable. This week I want to give you all examples of our Tax Bloggers who had some of the most read blog posts over the past year: Michael DeBlis, John Dundon, Barry Fowler, Jeffrey Kahn, Manasa Nadig, Peter Scalise, John Stancil, Hugo van Zyl and so many more.
If you are interested in enjoying a wider distribution of your tax blogs and reputation to our hundreds of thousands of readers, please join us today!
In South Africa, the South African Revenue Service (SARS the local equivalent of the IRS) has just issued a draft public notice for comment and it refers to strange new terminology, not always correctly understood by the non-American resident.
Most US expats and failed SA expats returning from the USA with a green card in the back pocket, are all facing being caught red handed. Yes, for many years SARS was not the best of gossip queen in the OECD. The cam the Krok case and SARS received some interesting info from the ATO. Not only did SARS wake up to the word FOUNDATION they also saw the benefit of acting in “cohort” with another tax authority.
Suddenly the effort to make FATCA happen for FFI’s in South Africa, became an interesting Read More
Exchange Control is the bugbear of every South African residing outside SA or even for those in SA wishing to internationalize their business or investment portfolio.
South Africans have seen a gradual ease of exchange control rules and although most transactions remain under “surveillance” the ease of transfer and tracking have been made substantially easier of the last few years.
Tucked away with Finance Minister Pravin Gordhan’s budget address was a small note in section W3 suggesting he will make it easier for SA pensioners living abroad.
Pensioners living abroad can now extract their monthly pension and retirement annuity income from South Africa (SA) without the need of a tax clearance certificate, despite living Read More
Congratulations to Peter Scalise of Prager Metis CPAs, LLP who received the highest number of searches to his tax professional profile page on TaxConnections during 2013. With more than 7125 views in the year, everyone would like to know how Peter had so many prospective clients paying attention to his tax services. The answer is he utilized every feature available on www.taxconnections.com to build visibility and trust for his tax services and expertise. Marketing experts know that you need to build familiarity with clients first, familiarity builds trust, and trust is why people come to you for tax services. There are many of our gold annual members who made it to the top of the search results in TaxConnections including: Brian Mahany, Hugo van Zyl, Kathryn Morgan, Howard Liebman, Larry Langdon, Steven Potts and so many others who took the lead in marketing their tax reputations online Read More
Typical Double Tax Agreement (DTA) or treaty issues we face on a daily basis can be summarised as follow:
United Kingdom / South Africa DTA
1. Tax residency change not timeously reported to either SARS or HMRC
Most client suggest that they need file or report their SA income to the UK tax authority as they were non-domiciled in the UK and as the lump sum was not remitted to the UK, they need to pay UK tax on the lump sum income. No, says HMRC although you are non-domiciled you are subject to UK tax on lump sums received in SA, albeit not remitted to the UK, as lump sums are taxed on the arising basis and not on the remittance basis. In short, you cannot defer UK tax on the lump sum arising in SA, by sending said lump sum to Channel Islands, USA or EU nor can you escape the UK tax exposure by keeping the lump sum in your blocked account in South Africa.
2. The treaty dictates that lump sum received from South African fund managers on retirement annuity fund (RA) lump sums or pension/preservation funds, are tax exempt in SA and UK taxed only
This argument is most often presented to us by clients having called the HMRC call centre. We do not know how the client explained the situation to the HMRC call centre but suffice to say the answer is incorrect. The fact that HMRC refers you to Article 17 of the treaty is not adequate as the said article does not deal with lump sums. Article 17 specifically states that for purposes of the agreement an annuity taxable in the new home country only, is a fixed amount paid on a regular basis. You need not be tax lawyer to understand why the lump sum will never fall into this category of treaty exempt (in SA) annuity payments. Read More