Financial emigration from South Africa is often seen as something complicated and stressful.
Many people wonder if it’s even necessary to do, and there is so much misinformation and scare-mongering happening at the moment, so I wanted to write about some of the benefits of financial emigration to put the record straight.
Please note financial emigration is now known as tax emigration. The process changed slightly in 2021 but all the below benefits remain the same.
As you may or may not know, I represent Rand Rescue here in Australia.
Rand Rescue is one of the leading specialists in financial emigration from South Africa.
We also assist people looking to move money from South Africa to many countries around the world, including Australia.
5 Benefits Of Financial Emigration From South Africa
1. Cashing In Your Retirement Annuity Early
The most obvious benefit of financial emigration from South Africa is that you can cash in your retirement annuities and move the money to your new home country.
This is the main reason (but not the only reason) why people choose to complete financial emigration.
Even if you are under 55 years of age, you can surrender your retirement annuities and get the money paid in cash to your bank account in Australia (or wherever you are living).
There is no restriction on what you can use the money for either.
You do not have to put it straight into your superannuation fund in Australia (check with an accountant before you do this as there are personal contribution limits before you attract tax).
Many people choose to use some or all of the funds towards setting up a new life in Australia, or putting it towards a house deposit – the choice really is yours.
2. Access An Inheritance From South Africa
Another reason why people choose to financially emigrate from South Africa is so that they can receive an inheritance from South Africa.
If you no longer, or never had a green ID book, you cannot open a bank account in South Africa from overseas.
This means in order to receive a payout from an inheritance, you need to complete the financial emigration process.
Also, if there is a bank involved in the capacity of an executor of the estate, you will likely need to complete financial emigration before they will agree to pay out your money.
3. Cutting All Ties With SARS
Let’s face it, who likes completing their South African tax return every year? The joys of eFiling, hey?!
If you complete financial emigration from South Africa, you cut all ties with SARS as your financial affairs in South Africa are deemed to be concluded.
After the process is complete, you need to complete one final tax return in South Africa and then you’re done – for good!
4. Avoid Further Devaluation of Your Retirement Funds
The rand to Australian dollar value has been up and down like a yo-yo these past few months.
But look at the long term history of the rand against the Aussie dollar and you’ll see one obvious trend. Down.
Back in 2008, the rand was sitting at around R6 to the AU Dollar. Today, it’s around R11. In just 10 years the value of the rand has almost halved.
While no one can predict anything when it comes to stock markets and currency values in the future, past performance is not looking good for long-term gains on our rand value.
Cashing in your retirement annuities now could mean you get more bang for your buck compared to waiting until they mature.
5. Avoid Any Potential Future Tax On Your Foreign Income
If you follow tax news in South Africa, you may have read about a new plan by SARS to start taxing South Africans living and working abroad on their foreign income.
It has gone a little quiet lately, but plans are well underway to introduce a tax on your foreign income if you meet the criteria.
This is how it’s potentially going to work (at the moment):
If you earn under R1m, you will not have to pay any tax to SARS – there is a R1m exemption threshold.
While this sounds like a lot, it’s not just your base salary that SARS is including as earnings. It can include other allowances and fringe benefits, so if your employer pays for housing, bills, flights, travel, etc, you could tip that R1m threshold quite easily.
If you are earning over R1m, according to the SARS calculations, you may be taxed if the tax rate you pay in Australia (or wherever you live) is less than what you would pay on the same amount in South Africa.
Example – say you are taxed on your Australian income at 30% but in South Africa, you’d be taxed at 40% on the same income level, SARS is going to seek to recover the additional 10% from you.
You can read more about this amendment by SARS on the in-depth Rand Rescue blog here.
If the thought of paying over any of your overseas earnings to SARS is not one you want to consider, financial emigration could be the best path for you.
For those who have financially emigrated, there is no way that you can be taxed by SARS on your foreign income.
If any of these reasons resonate with you, I’d love to help you with your financial emigration. You can get in touch with me via my blog, or email me at firstname.lastname@example.org today.
Rand Rescue works on a no funds no fees basis, and we provide free quotes, so what are you waiting for? Contact me today and let me help you rescue your rands.
You can find out more about financial emigration and how I can help you here.