The National Treasury and the South African Revenue Service (SARS) have announced a 2021 tax amendment bill. The bill proposes significant changes affecting South Africans seeking migration.
According to tax experts at Tax Consulting SA, a tax expert, the bill has undergone considerable scrutiny in the last two weeks as it includes an additional “exit tax” on retirement funds at the time of immigration. I am.
And the existing 3 year lock-in ruleThe company said the scrutiny was immediately furious as it went into effect in March 2021 and continued to be implemented regardless of the proposed additional exit tax.
“While taxpayers were previously able to monetize their pensions at the time of immigrants, lock-in rules allow immigrants to live outside South Africa for the third consecutive year and then use their retirement savings. rice field.
“Now, if a proposed tax bill change is signed, they will face additional taxation after waiting for that lock-in period.”
This is problematic because, according to Tax Consulting SA, there is no way to know the future tax rate and how to determine if the maturity or monetization value will have a spillover effect after 3 years.
“There have been numerous petitions from industry leaders and the bill is still accepting public comments. The intent behind the implementation of the proposed changes indicates a more aggressive revenue service.
“SARS has revealed that they will not throw stones when it comes to foreign income and taking out money from South Africa.”
Panic and advance planning
According to Tax Consulting SA, taxpayers working abroad and taxpayers planning to leave South Africa are furious with the news of additional departure taxes and are confused about their retirement fund and their future as expatriates. ..
“If you plan to leave South Africa after March 2022, many will need to review their retirement savings.
“Some are investigating alternative investment platforms instead of current pensions, while others are ready to stop donations altogether. Early panic sneaked into the hearts of taxpayers, which made them I was hungry for information. “
There are certainly options available, the company said.
While some are unexplored, investment companies and financial services providers (FSPs) across South Africa are looking for creative ways to limit their clients’ treasured savings tax exposures.
This includes reviewing the number of financial instruments on the market to counter the impact of the proposed bill.
“For example, offshore endowment policies are outside the scope of exit tax calculations in terms of the current tax system, which allows investors to withdraw funds at various intervals.
“One such example is Discovery’s Global Endowment, which offers investors a favorable investment option as a retirement option.”
“No matter where you are in the immigration process or how much you have contributed to retirement pensions, it is imperative to keep in mind sound financial advice before making decisions that can cost a small amount of tax.”
Commentary by Susan Warren (Insurance Specialist) and Reabetwe Maloi (Legal and Compliance Manager) at Tax Consulting SA.
South African taxpayers panic prior to planned immigration changes
Source link South African taxpayers panic prior to planned immigration changes