RA's at Age 55

[John Bertrand]

Hi all,

 

Like many others, (a common theme on these threads), we have been in Aus for 10 years, and thinking about what to do with RA's in the future. The value of our 2 RA's in SA is small, R200,000 total (R100k for each). So we never needed the money here, and preferred just to leave them in SA. Our plan was, come age 55 (15 years from now), we would have them cash out, and use the proceeds for "spending" money when going on holidays to SA. We have not financially emigrated. My questions/understanding are:

 

1 - As far as I know, we don't necessarily need to cash the RA's out at 55 into living annuities, it's up to us when we want to do that, is that correct?

2 - If we do cash them out, any value under R247,500 (currently) can be taken as a lump sum. But we'd then have to pay full SA tax on that (lets say 38%) and then full Aus tax on that (lets say 38%) but we could claim a tax credit in Aus. Or would we not pay tax on this in SA and just pay it in Aus?

3 - If it goes into an annuity, we'd have to pay SA tax every year, and lodge a tax return until we die. And the same in Aus. Correct?

 

It might be onerous and a headache to do (3), but maybe better than doing financial emigration now, since we don't need (or want) the money in Aus.

 

Any thoughts on this?

Thanks

John.

 

 

 

 

 

 

 

 

[Hugo2]

At 55 and as retiree your first R500k lumpsum will be tax free in SA. That assumes you have never availed to said R500k as its a once a lifetime exemption  

[John Bertrand]

Great, thanks Hugo, I didn't know that. But since I'm a non-resident, the lump sum would still be taxed in Australia?

[ottg]

Perhaps the question should be, where will I get the best bang for my bucks? Difficult question due to many variables, tax is payable irrespective. However, keeping the funds in a RA will guarantee minimal growth due to fees, insurance etc. Better to manage self (eg see https://www.multilect.co.za/)

Don't think for one moment the RSA growth is all that bad. Here I overlayed the JSE (Turquoise), ASX (blue) and SP200  (Orange). I've included the website in the picture.

Providing you invest in Capitec, AVI, Italtile etc. you can get good capital growth.

A few old threads also to consider

http://www.saaustralia.org/topic/48527-leave-ras-in-sa-or-move-to-aus/

http://www.saaustralia.org/topic/797-policies-retirement-annuities/?do=findComment&comment=18156

reads