We have received a number of enquiries regarding Financial Emigration and what it involves.
What has brought this subject into sharp focus is the recent change to the tax laws which now requires South Africans working abroad, who are still considered as residents of this country, to declare all their foreign earnings to SARS.
This is particularly important as many who leave this county to live and work abroad do not formally go through the emigration process and are therefore considered as being “ordinarily resident” here.
Regarding the new law, there is an exemption of R1m but it has been noted that although this seems generous, included in the definition of foreign earnings are allowances such as housing, flights and security for example. This means that, in many instances, the R1m could easily be exceeded.
By formalising the process of Financial Emigration with both SARS and the SA Reserve Bank, an individual working abroad is no longer considered “ordinarily resident in the Republic” and has no further obligation to submit tax returns to SARS.
It should be noted that Financial Emigration is not the same as full emigration where an individual goes through a process to cut all formal ties with South Africa.
- 5 Aug, 2019