“ With many South Africans residing outside South Africa the publication hereunder by one of our service providers is important. You may wish to forward it to any non-resident South African who may have the status of a SA resident living temporary abroad. BY REGAN VAN ROOY”
Good news for emigrating South Africans amid COVID-19 gloom.
A worldwide pandemic. A frustrating lockdown. A pending economic depression. In these difficult times, there is little to cheer about, but South Africans who plan to emigrate may find some comfort in recent developments. The fact is that it has never been easier, both financially and administratively, to give up one’s South African tax resident status.
The financial aspect relates to the decline in the so-called “exit charge” that South Africans usually face when they inform the South African Revenue Service (“SARS”) that they have migrated. SARS treats migrating individuals as having disposed of all their assets (bar some exceptions, such as South African real estate) for capital gains tax purposes. This means that departing South Africans may pay up to 22,4% tax over to the government on the increase in value of assets they have not actually sold yet.
South Africans who hold substantial investments in shares are usually hit the hardest by this charge. Now however, with stock markets tanking the world over, there is more likely to be a decrease in the value of their holdings triggering a capital loss upon their deemed disposal. This means many South African may not incur any exit charge at all if they migrated now for tax purposes.
Besides this tax break for emigrants, the Government has relaxed the administrative restrictions relating to leaving the country as well. The Government currently has in place substantial controls regulating the amount of funds that individuals who emigrate can extract from their South African bank accounts. During his February Budget speech however, the Minister of Finance announced that, with effect from 1 March 2021, these harsher controls, facilitated in the past through the South African Reserve Bank, will be phased out. While exchange controls will still apply to emigrating individuals, they will be no different to those already enforced against South Africans who are not emigrating.
Of course, things may change soon. Stock markets do rebound. Harsher exchange control restrictions can be re-imposed by the Government to staunch a bleeding economy. South Africans who want a relatively easier emigration process would need to take advantage of this window of opportunity soon before it closes.