STOP PRESS: Retirement Annuities: Withdrawals on Emigration

[Tex]

Update : Finally the last of our RA's have been paid out !! This has taken almost a year of constant paperwork and missions but is so worth it!! We did however have a problem using a transfer agent to get these funds into Oz, the bank doesnt want to allow us to transfer it into another account in South Africa, the funds have to go from our SA account to our Oz account...so while we wait for a more favorable exchange rate...Let the house-hunting begin!!!

Hi Elleneo,

Ja we had to close our "normal" SA bank accounts when we became regarded as non-residents, so we could only transfer funds via a blocked-rand account to our Ozzie account. We've been house hunting for a while now

Tex

[EstherH]

Hi all,

I have been reading this thread with great interest as we are in the situation that we left SA back in 2002 for NZ but still had our RA's in South Africa.

We never formally "emigrated" with SARS so are now trying to complete all the paperwork and my goodness what a pain!

We have had our tax status reactivated and got our tax clearance in good standing certificates but I now have a question regarding the MP336b form.

Do my husband and I each need to fill one in or do we do one form that covers both of us? Does the bank then send this form to the SARB or do we need to do that?

I really appreciate any pointers in the right direction because every time I ring SARS I get a different answer! We have completed our IT21a but without this MP33b it is no good.

Many thanks,

Esther

[PieterK]

I don't know if someone on the forum would know this, but I'll give it a a shot anyway:

I started the process to get my AF paid out by Liberty Life in September last year, and after more than a year of submitting the same documents to Liberty over and over and over, they have finally paid out, except the value that they paid out is less than 17% of what the policy was valued at last year, and now Liberty simply isn't answering my requests for an explanation.

How can it be possible that the payment could be that low? I understand SARS takes a cut, and Liberty probably takes a lice for themselves as well, (administration fees or some nonsense I imagine), but a drop of 83%?! Should I just contact the Ombudsman and get it over with, or is there actually a valid explanation for this?

[penny]

I don't know if someone on the forum would know this, but I'll give it a a shot anyway:

I started the process to get my AF paid out by Liberty Life in September last year, and after more than a year of submitting the same documents to Liberty over and over and over, they have finally paid out, except the value that they paid out is less than 17% of what the policy was valued at last year, and now Liberty simply isn't answering my requests for an explanation.

How can it be possible that the payment could be that low? I understand SARS takes a cut, and Liberty probably takes a lice for themselves as well, (administration fees or some nonsense I imagine), but a drop of 83%?! Should I just contact the Ombudsman and get it over with, or is there actually a valid explanation for this?

Hi Pieter

All I can suggest is get an exact breakdown of what the policy value was at the time of cashing in, tax deductions etc. Only then will you be able to make an informed decision. If you are then not happy with Liberty you could take it up with them. We have just cashed in some pension money and they gave us a complete breakdown of what went where

Regards

Penny

[PieterK]

Thanks Penny, I've already requested that from them, but they remain silent as a mouse on the whole affair. Honestly though, I'd be absolutely disgusted if an 83% drop in value is somehow legally justifiable. How is that in the consumer's best interest?

[Tex]

Hi all,

I have been reading this thread with great interest as we are in the situation that we left SA back in 2002 for NZ but still had our RA's in South Africa.

We never formally "emigrated" with SARS so are now trying to complete all the paperwork and my goodness what a pain!

We have had our tax status reactivated and got our tax clearance in good standing certificates but I now have a question regarding the MP336b form.

Do my husband and I each need to fill one in or do we do one form that covers both of us? Does the bank then send this form to the SARB or do we need to do that?

I really appreciate any pointers in the right direction because every time I ring SARS I get a different answer! We have completed our IT21a but without this MP33b it is no good.

Hi Esther,

Yes the process is somewhat of a pain!

We had to fill in one mp336b form for the family - two adults and one minor. The bank submitted the form to the SARB for us, with all the supporting documentation.

Tex

[Tex]

I don't know if someone on the forum would know this, but I'll give it a a shot anyway:

I started the process to get my AF paid out by Liberty Life in September last year, and after more than a year of submitting the same documents to Liberty over and over and over, they have finally paid out, except the value that they paid out is less than 17% of what the policy was valued at last year, and now Liberty simply isn't answering my requests for an explanation.

How can it be possible that the payment could be that low? I understand SARS takes a cut, and Liberty probably takes a lice for themselves as well, (administration fees or some nonsense I imagine), but a drop of 83%?! Should I just contact the Ombudsman and get it over with, or is there actually a valid explanation for this?

Pieter,

Our investment funds were with Investec. Each time they paid the balance of the funds over to our blocked rand accounts, Investec sent us a detailed statement showing gross proceeds, less tax withheld, net proceeds, paid to xxx bank account and also provided a copy of the IRP5 Tax Directive statement they received from SARS detailing how much tax was to be withheld. Liberty should have provided that to you - at the very least.

Kind regards,

Tex

[JK in Brissie]

I am a newbie to this forum (I only discovered it recently) but have lived in Aus since 2003. My circumstances appear similiar to but not identical to many posters on this topic. Please may I indulge the members with a request for a steer?

I am 55 years old, married, moved to Aus in 2003 and did not emigrate. I left a house rented in Cape Town and do an SA Tax return for the rental, even though I am non-resident for tax purpsoes (required by law, I gather). I would maybe clear R3m for the house if sold. I maintain an operating SBSA bank account and mortgage. The bank manager is not too happy with the set-up but goes along with it.

I left a pension in SA in a Capital Preservation fund (Momentum) and it is sitting at about R2.2m. I hung on until 55 as I understood there were tax advantages if withdrawn after then but it now seems the "one third tax free plus last 2 year average tax rate" rule has disappeared?

I declare the house rental on my Aussie tax return but it has managed to show little or no positive income. The house is therefore legal taxwise in both countries. I have already invested R600,000 out of SA as allowable foreign investment, prior to 2003 when I left.

I think it is time to move some or all of this out of SA. I am prepared to emigrate if it is possible or helps. [Oh yes, the pesky SA Govt withdrew my SA citizenship as I did not realise that I had to get a letter befoe I took Aus citizenship. But that is another story...]

The worst csae scenario that I can see is that I draw the pension, pay tax on it, move it to Aus and pay tax again on it at marginal rate as income (howls of pain...) The best case would be for me to "roll" it out of the capital preservation fund in SA into my Aus superannuation fund, to minimise tax in both countries but I cannot see how to do that.

Regarding the house, I know I will pay CGT in both countries but hopefully will get an offset in Aus.

I was wondering if anyone out there is/was in a similar position and could offer some direction to me?

Thank you for reading all this if you got this far!

[Brannigan_FX]

Hi, JK in Brissie

I had a look at your query and it is quite intricate. The probelm with your query is that there are numerous interpretations that need to be made.

I am going to have a look into it. I work for a company(TreasuryOne)who deals with people emigrating and people who havent emigrated. We then transfer funds out via the various avenues via our dealer bank Investec.

What I can let you know in the interim is that moving the funds for your property wont be an issue. The reason is that because you are still paying your taxes, you are still registered with SARS which means you would be able to do an application for a tax clearance and thus transfer R4mil via that avenue. So that wont be an issue, which is good news. The second part regarding your RA may having some tax implications but I will look into it an advise.

Please advise if you still have your green bar coded SA ID book?

Then please email me your email address and I will advise your further over email.

Have a great day.

[StevePorter]

Hi JK in Brissie

I'm a director with cashkows.com, an Authorised Financial Services Provider (No. 42872) that specialises in "financial emigration" for South Africans.

I would concur with Brannigan's comments in terms of the property sale proceeds: you will most likely be liable to tax in SA on disposal however without fully understanding your situation it is difficult to be specific. You are welcome to contact us and speak to one of our tax specialists without charge or obligation.

The situation with regards to your Capital Preservation fund and the options which are open to you very much depends upon whether or not you have made any withdrawals previously. If you haven't, you should be able to withdraw the full amount, less tax although it will be necessary to engage with Momentum in order to fully understand the specific terms and conditions relating to the product. You should not require emigrant status, unless you also hold retirement annuities that you wish to surrender. You are welcome to register with us via the link below to receive a complementary, no obligation financial report which will detail the amount you will receive at the end of the process.

http://www.cashkows.com/enquiry.asp

Please feel free to telephone us on 00 27 28 312 2764 or contact us via skype at steve.cashkows if you would like to discuss the matter in more detail.

Steve Porter

Director

cashkows.com

[Olkabolka]

Hi Everyone

Another scenario of struggling to get RA's paid out from Liberty Life.

18 Months ago we went through the process of formally emigrating, done all the paperwork, had hubby's bank account blocked and his RA's had paid out without problems, except still waiting for his Old Mutual RA. I have a bank account, but it's not blocked, as it's only nescessary for main account to be blocked, and that's hubby's, he was the one paying tax. I never paid tax in SA, never earned enough money, didn't work for long periods of time, so never had a tax number.

I've submitted all the required documents, also proof that hubby's account has been blocked, including my name because my account is also being monitored. But, Liberty insists that my account should also be blocked, no matter what we say, or what our financial advisor in SA tells them. How on earth do we solve this problem? This has been going on now for more than a year, and I so wish to finalise all this and close my bank account. Should I close my bank account and ask that the money be deposited in hubby's account?

Edited July 26, 2011 by Olkabolka

[schnappi]

We're also about to immigrate, I'm torn between just taking the money from my pension fund, or to transfer it to a preservation fund and to then 'formally immigrate'. Sounds like the second option will result in paying less tax, but boy oh boy, just reading what everyone has said here, I'm not sure if it's worth all the trouble. I'm also afraid that for some reason or other I won't be able to get the money out of SA ....

[JDJoburg]

We're also about to immigrate, I'm torn between just taking the money from my pension fund, or to transfer it to a preservation fund and to then 'formally immigrate'. Sounds like the second option will result in paying less tax, but boy oh boy, just reading what everyone has said here, I'm not sure if it's worth all the trouble. I'm also afraid that for some reason or other I won't be able to get the money out of SA ....

No need to formally emigrate in order to take out your pension fund money - this is only an issue with Retirement Annuity (RA) funds, not with pension or provident funds. The tax implications are the same in all cases. If you first transfer to a preservation fund, it will result in additional costs and admin and you will not achieve any tax benefit, so don't do it if you want to take your money out with you.

[schnappi]

No need to formally emigrate in order to take out your pension fund money - this is only an issue with Retirement Annuity (RA) funds, not with pension or provident funds. The tax implications are the same in all cases. If you first transfer to a preservation fund, it will result in additional costs and admin and you will not achieve any tax benefit, so don't do it if you want to take your money out with you.

Hi

thanks for the reply. Just out of interest. Does this mean that one can withdraw from a preservation fund at any time ? I was under the impression that there was legislation to prevent you from doing that until retirement, same as for RA's ?

[JDJoburg]

Hi

thanks for the reply. Just out of interest. Does this mean that one can withdraw from a preservation fund at any time ? I was under the impression that there was legislation to prevent you from doing that until retirement, same as for RA's ?

You are allowed one pre-retirement withdrawal from a preservation fund.

[TimP]

JD Joburg is 100% correct.

For more info on this topic i refere to a tax specialist in SA, Hugo van Zyl where he addresses the topic with Guidance and file notes on the resignation from retirement funds subject to formal emigration.

se the link below or visit his site on www.crossbordertaxation.com

http://crossbordertaxation.com/Documents/090828%20sa%20FORMAL%20EMIGRANT%20RESIGNATION%20FROM%20FUNDS.pdf

cheers,

Tim

tim@forexcapital.co.za