Relocating from SA? Here’s how to take your money with you

With South Africa’s current economic environment, many people are considering relocating. Finances could be quite tricky to navigate.

It is important to understand the different types of financial assets you may have and what the best way is to take them out of the country.

ALSO READ: Leaving SA? Clear with SARS first

Relocating: Capital vs income funds

When relocating from SA to live abroad, the transfer of funds will depend on what type of funds you have. SARS will regard your funds as either capital or income funds. Lovemore Ndlovu from Tax Consulting SA, gave an example to illustrate the difference: “the sale of property is regarded as a capital event, however, any rental activities are regarded as income”.

“Misalignment on these could very quickly land the taxpayer in hot waters, with declined applications and burdensome audits, further building on an already stressful move,” said Ndlovu.

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Capital assets

Capital transfers are subject to change control allowances and SARS clearance certificates. This allows taxpayers a once-off allowance of R1 million in the calendar year when an individual ceases their tax residency. For additional funds, the individual will need further clearance.

Taxpayers can keep assets in South Africa. These will be part of their capital assets. You can transfer these at a later stage. Keeping your property in South Africa and only transferring related funds after the sale is finalised, is an example of this.

ALSO READ: Why is Canada a popular option for South African migrants?

Income assets

Income generated from capital assets is freely transferable offshore after you have ceased tax residency, according to Business Tech, but your SARS tax compliance status must be verified once a year.

Ndlovu said that the funds seen as income include property rentals, payout from life annuities, and remaining salaries earned in South Africa.

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Inheritance funds

You can freely transfer inheritance acquired in South Africa provided that the estate involved has been finalised. You do not need SARS clearance, irrespective of the amount you want to transfer.

If you are no longer registered for tax on the SARS system, the regulations are different.

In this case, if the inheritance is over R10 million, you will have to apply for a letter of compliance. You can only use this letter if you are no longer registered for SA tax and want to transfer:

• an inheritance or life insurance policy above the value of R10 million; or
• a distribution from a South African Trust as a beneficiary, irrespective of the amount.

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