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RA cashed in after retirement age - tax implications?


brian1948

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We've been in Oz since 1986, but only just discovered this forum when it popped up in a search, and hope someone can help with our query please?

Being over 60 I was eligible to cash in a (small by total's dollars) paid up retirement annuity and elected to take 1/3 in cash, and balance as an annuity, as I understand that would make it tax free. Does this meant that I don not have to submit a return to SARS - either for the lump sum or the annuity stream?

I leave all of the money in SA so it is starting to accrue a small amount of interest - as it isn't much I'm hoping it will be under a threshold - is there an amount beneath which you don't have to submit a return?

Slightly off topic - but still on the money theme - I read with interest the anxiety of new and potential arrivals - exactly what we felt nearly 30 years ago. If its any consolation - we found that we became so focussed on rebuilding wealth that in retrospect - now believe we are better off than if we have remained in SA and just carried on without any sense of urgency - amazing what you can do if you set your mind to it.

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Hi

the retirement age is now 55.

The tax exemption in SA is because of the tax treaty or the threshold exemption. In the latter case and for RA income up to R250 000 pa you can escape tax filing but it may not be in your best interest.

In terms of the double tax treaty, should your SA RA / pension income now exceed the SA threshold, you can claim full tax exemption (in advance or tax refund in arrears).

SA interest paid to tax non-resident is normally always tax exempt there is no threshold.

SA exemption = taxation by the ATO, so to leave in ZAR makes no economic sense unless you wish to retain a sludge fund to cover local spend on your next trip.

Pensioners no longer need to formally emigrate, you can take your pension / annuity out on a monthly basis as it is banked or you can have it paid from the fund to you directly.

Finally, lump sum may be tax free in SA but the chance of it being ATO tax free so many years after your arrival in Oz, is remote. The longer you in Oz the bigger the tax chunk taken by the ATO.

The good news is the taxable or assessable (ATO term) amount is reduced by inter alia contributions made and value in fund on the day you acquired your PR. Often dumping lump sums into a Super could also reduce the effective global tax rate.

This is a general answer, client specific questions can't be answer on a public forum yet you can inbox me or email hugovz@iafrica.com

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