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There have been a few changes announced at the budget speech held on 26 February 2020 that will impact some individuals. Not all the changes are confirmed and it will still have to pass through Treasury, but it is good to take note of it in the meantime.
In summary, it appears that the Government is trying to put an end to Financial Emigration as of 1 March 2021. Please note that this is only with SARB as the Financial Emigration is a SARB and not SARS procedure.
The impact it will have on you is mostly financial. You will not be able to withdraw their RA’s before retirement anymore and we foresee that it will become harder for High Networth individuals to take their money abroad. All at once, at least.
When it comes to SARS, you will still have “the presence test”. If someone meets this test, they can deregister from tax, without the financial emigration process.
What is this test?
This is where a person will return to after their wanderings. If they live in New Zealand, for example, but plan to one day come back to SA, then this is their country of tax residence. If they own a home which they one day plan to come to retire in, the same applies.
Breaking tax residency
If you spend more than 330 full days out of SA, you qualify to be a non-resident tax payer and can apply at SARS for this status. Mint Accounting can assist with the process and any other questions you might have regarding.
As mentioned, these changes are not confirmed yet and will need to be passed through Treasury. One change that affects you, is that the tax threshold is not R1 million anymore, it has now increased to R1.25 million.
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