Exit of SA Emigrants
SA Pensions and expat income becomes the focus of South African Revenue Service.
As a South African myself, living and working offshore is becoming a challenging and interesting landscape. Therefore, many other South Africans have emigrated, or are seeking work and opportunities outside of South Africa.
And so there are quite a few reasons for the increase in emigration. Some of these are better opportunities, better earnings, education, currency volatility, political instability and safety in South Africa. The latest is the Tax laws by SARS, which affect SA Pensions and expat income
Money flows out of SA
Knight Frank’s Wealth Report of Feb 2021 established that South Africa’s high-net-worth individuals with assets over US$1 million declined by 12% from 50,823 to 44,605 between 2015 and 2020. As well the ultra high-net-worth South Africans worth over US$30 million declined by 18% from 910 to 742 over the same period.
On an estimate and only taking the minimal values, we are talking of $15 billion, having left the SA waters.
Now obviously the above stats are just those of HNW and UHNW people. Whilst there are normally about 800 000 people migrating out of South Africa per year.
Of course du to Covid that number has slipped to 200 000 leaving the other 600 000 in stress and frustration.
SARS reaction to SA Pensions and Expat Income
Now as we might know due to various circumstances, the SA government are looking for funds.
They have realized that there are 2 opportunities, and they are the SA Pensions and Expat income. Not to mention the GEPF pension but that is another discussion and can be seen HERE.
And so, SARS have targeted as of March 2020, SA residents employed outside of SA for periods exceeding 183 days (60 days of which are consecutive) in any 12-month period. They would pay SA tax of up to 45% of their foreign employment income where it exceeds the threshold of ZAR1.25 million.
South African reaction to SA Pensions and Expat Income
And so many South Africans are not just leaving the shores but are externalizing their assets and pensions. As well, those that are already living and working abroad, are deciding not to return to SA for pension. The reason being the new ‘exit tax’, which is taking effect as from 1 March 2022. This new law is going to have serious effects on peoples carefully planned Pensions that are going to be upended.
Now for the next 3 years your proof of your financial earnings needs to be given to SARS as proof for financial emigration. So not only will there be a significant impact on your pension but now SARS has retrieved the info they were looking for.
What could your actions be if you have, or intend to Emigrate??
1) Invest nothing or as little as possible in a SA Pension.
2) Move your capital and pension money offshore as quickly as possible.
3) Establish a Offshore Pension Trust.
4) Remember if moving cash don’t wait for Jan 2022 but move no later than Dec 2021.
5) Establish a Offshore Trust and business head office.
6) Lastly speak to an Accountant, Tax Lawyer and Wealth Manager.
Therefore it is certainly time to do your Financial Planning and enable us to place you in contact with the qualified associates to advise you on the appropriate decisions.
See Video on the above
