Tax clearance

[JDJoburg]

Hi JD.

Yes, that's what we have done. Because we're taking less than 500k, it's less than the travel allowance deal, we've been able to transfer our money with only the air ticket and passport. What you'v said previously, if I understand correctly, is that you only need the tax clearance certificate if taking more than the 500k allowance, and then you also need the approval from the reserve bank ?.

Mike.

Hi Mike

You can take up to R500k per year as a travel allowance, and for that you only need your air ticket / passport. If you want to take out more than that, or if you aren't flying anytime soon, you have to use your foreign investment allowance, which is currently limited to R2mil per per person in total (note, not per year), or your emigration allowance, which is R4mil per household inclusive of any foreign investment allowance already used.

The foreign investment allowance has, in principal, nothing to do with emigration or travel - it's available to all South African residents. To do this, you need Reserve Bank clearance, which you will only get if you can provide proof of tax clearance from SARS. Your bank or forex dealer will usually handle the SARS / SARB processes for you - it's mostly just a formality and much simpler than it sounds.

It's just important to understand that the travel allowance is a separate process altogether and that it has an annual limit which you cannot exceed. I say it's a separate process for good reason: you can use the foreign investment allowance at any time, and long before you're even thinking of buying a plane ticket. You don't have to first use up the travel allowance and only then move on to the foreign investment allowance. As long as you remember that the two allowances are entirely different and independent from each other, you'll be able to take maximum advantage of them.

Does that answer your question?

By the way, the R500k allowance is now known as a "discretionary allowance" because you can also use it to send gifts overseas, or to make loans to people in other countries. I've posted a lot of info about these issues in the Money section - do a search if you have some time.

Cheers

Edited December 4, 2008 by JDJoburg

[Mara]

I have 'pinned' this topic, as requested!

[Pine and Riana Pienaar]

Hi Mike

.

.

.

By the way, the R500k allowance is now known as a "discretionary allowance" because you can also use it to send gifts overseas, or to make loans to people in other countries. I've posted a lot of info about these issues in the Money section - do a search if you have some time.

Cheers

Where does the tax issue come in? I racall someone saying something about if you use more than R100000 of this discretionary allowance there is donations tax or something on it?

[Mike and Nicole]

Hi Mike

You can take up to R500k per year as a travel allowance, and for that you only need your air ticket / passport. If you want to take out more than that, or if you aren't flying anytime soon, you have to use your foreign investment allowance, which is currently limited to R2mil per per person in total (note, not per year), or your emigration allowance, which is R4mil per household inclusive of any foreign investment allowance already used.

The foreign investment allowance has, in principal, nothing to do with emigration or travel - it's available to all South African residents. To do this, you need Reserve Bank clearance, which you will only get if you can provide proof of tax clearance from SARS. Your bank or forex dealer will usually handle the SARS / SARB processes for you - it's mostly just a formality and much simpler than it sounds.

It's just important to understand that the travel allowance is a separate process altogether and that it has an annual limit which you cannot exceed. I say it's a separate process for good reason: you can use the foreign investment allowance at any time, and long before you're even thinking of buying a plane ticket. You don't have to first use up the travel allowance and only then move on to the foreign investment allowance. As long as you remember that the two allowances are entirely different and independent from each other, you'll be able to take maximum advantage of them.

Does that answer your question?

By the way, the R500k allowance is now known as a "discretionary allowance" because you can also use it to send gifts overseas, or to make loans to people in other countries. I've posted a lot of info about these issues in the Money section - do a search if you have some time.

Cheers

Hi JD.

100%, thanks amillion ( excuse the pun ).......

All the best, cheers.......

[JDJoburg]

Where does the tax issue come in? I racall someone saying something about if you use more than R100000 of this discretionary allowance there is donations tax or something on it?

If you give someone a gift (make a donation), you (the donor) will pay donations tax of 20% on the amount in excess of R100 000 per year. This applies to all South African tax residents, and it applies to most donations, whether the recipient is a South African resident or not, and regardless of whether the money left the country or not. It is thus not a tax that applies to emigration / foreign investments / discretionary allowances in particular, but if any such transactions constitute a donation, then donations tax will be levied on the non-exempt portion.

Donations between spouses are exempted.

There are a couple of other exemptions, but they are boring and probably of little relevance to you. (and I'm too lazy to type them...)

[Pine and Riana Pienaar]

Donations tax:

Thanks.

[celeste]

There seems to be a bit of contradiction here, or maybe it's just me that misread something.

We need to invest $100 000 in Australia (currently less than R700 000) to get five bonus points. The money will be invested with the Australian Treasury for one year and it is a condition we have to meet before the visa is granted.

Is it possible to use the discretionary allowance (R500 000 per spouse) for the above investment WITHOUT having purchased the air tickets? One poster here indicated that the air tickets are needed and another said no. Who is correct?

We don't really want to buy the tickets until we have the visa approved and we can't get the visa approved until we have made the above investment? It would be nice if we could use the discretionary allowance as it would mean less paper work.

[JDJoburg]

If you want to use your discretionary allowance as a "travel" allowance, then you would need the air tickets. You may use your discretionary allowance for other purposes, such as loans and gifts to foreign residents, without the need for a plane ticket, but that won't help you in this case.

Why don't you just use your R2million per person foreign investment allowance, Celeste? This has nothing to do with your discretionary / travel allowance and is available to all SA residents. Just remember that the R2mil is an overall total limit and not an annual limit as is the case with the discretionary allowance. Your bank can organise this for you (you'll need a tax clearance certificate and your bank will then get Reserve Bank clearance) - it's really quite simple.

By the way, any portion of your foreign investment allowance that you use now will be deducted off your R4mil per household "emigration allowance", if you ever want to go the "formal emigration" route.

There seems to be a bit of contradiction here, or maybe it's just me that misread something.

We need to invest $100 000 in Australia (currently less than R700 000) to get five bonus points. The money will be invested with the Australian Treasury for one year and it is a condition we have to meet before the visa is granted.

Is it possible to use the discretionary allowance (R500 000 per spouse) for the above investment WITHOUT having purchased the air tickets? One poster here indicated that the air tickets are needed and another said no. Who is correct?

We don't really want to buy the tickets until we have the visa approved and we can't get the visa approved until we have made the above investment? It would be nice if we could use the discretionary allowance as it would mean less paper work.

[celeste]

Thanks JDJoburg

I was really just wanting to avoid additional paper work but as you say, the bank does it and not me, so that should be okay then.

Sadly, we will not get anywhere near hitting even half of the R4million mark! : (

[Tex]

Why don't you just use your R2million per person foreign investment allowance, Celeste? This has nothing to do with your discretionary / travel allowance and is available to all SA residents. Just remember that the R2mil is an overall total limit and not an annual limit as is the case with the discretionary allowance. Your bank can organise this for you (you'll need a tax clearance certificate and your bank will then get Reserve Bank clearance) - it's really quite simple.

Hi JD,

I've been working outside of SA so long now that I am no longer regarded as a resident, so I can't take monies out as a "travel allowance". Looks like the easiest viable option is to use the foreign investment allowance. As I understand from reading the previous posts on this subject:

1. I need to apply for a tax clearance certificate from SARS.

- Not sure if my broker can do it on my behalf, or do I need to do this personally?

- Not sure how long this takes. (1 week? 1 month? 6 months?)

- Not sure what one does if one has been deregistered as a taxpayer ('coz of 0 taxable income for multiple years).

- Not sure about satisfying FICA requirements if one does not have a Telkom account or rates bill??

2. Once I have the tax clearance certificate, I take that to the bank and they apply to SARB for clearance.

3. Once the bank obtains this, then the bank can wire the funds to my account overseas.

Think thats about it.....appreciate your or others input. Thanks!

Tex

[JDJoburg]

Hi Tex

Strictly speaking, the foreign investment allowance is also only available to SA residents, which might cause some problems for you - if that's the case, you might have to go the "formal emigration" route to get your R4mil per household out.

I'm not too sure of the practical issues (timelines in particular), however I do know that your bank will usually handle both the SARS and SARB clearances for you. I think your best bet would be to contact your bank's forex department - they should be able to assist. Please let me know what you've found out, if you don't mind.

JD

Hi JD,

I've been working outside of SA so long now that I am no longer regarded as a resident, so I can't take monies out as a "travel allowance". Looks like the easiest viable option is to use the foreign investment allowance. As I understand from reading the previous posts on this subject:

1. I need to apply for a tax clearance certificate from SARS.

- Not sure if my broker can do it on my behalf, or do I need to do this personally?

- Not sure how long this takes. (1 week? 1 month? 6 months?)

- Not sure what one does if one has been deregistered as a taxpayer ('coz of 0 taxable income for multiple years).

- Not sure about satisfying FICA requirements if one does not have a Telkom account or rates bill??

2. Once I have the tax clearance certificate, I take that to the bank and they apply to SARB for clearance.

3. Once the bank obtains this, then the bank can wire the funds to my account overseas.

Think thats about it.....appreciate your or others input. Thanks!

Tex

[Tex]

Hi Tex

Strictly speaking, the foreign investment allowance is also only available to SA residents, which might cause some problems for you - if that's the case, you might have to go the "formal emigration" route to get your R4mil per household out.

I'm not too sure of the practical issues (timelines in particular), however I do know that your bank will usually handle both the SARS and SARB clearances for you. I think your best bet would be to contact your bank's forex department - they should be able to assist. Please let me know what you've found out, if you don't mind.

JD

Thanks for the quick response JD - will let you know how it pans out.

Regards,

Tex

[potjiekos]

Hi there everyone,

My apologies for not ever posting and only reading and then life took over as we put our plans on hold, but hopefully we are back on track.

I need some help desperately. I have had a look around the site but I am so confused that I feel stupid for even asking this.

We left SA about 7 years ago on a working holiday and never returned. Before we left, I was not working because I went on maternity leave 18 months prior to us leaving. So here is the problem, I never knew about "Tax Clearance". My Ouma has passed away and I am receiving a very small sum but the Excutors is asking me for a Tax Clearnce.

My questions as as follow:

1. How do I get one as I have no-one is SA that can take it to the Receiver, not even sure if it has to go there.

2. Is there a fee involved

3. Is it a very complicated matter as the amount is so small and it might not even be worth it.

4. What do they check for before issuing a Tax Clearance?

I am sorry if someone has asked this before, but would really appreciate your input. Can I please ask that you reply in simple terms as I am not familiar with any of the Tax issues.

Thank you kindly.

J

[Biker]

that's why lawyers have few friends

You think it is because they are so pedantic?

Uuhhmm... let me not be the bearer of bad news, save to say that it is NOT the reason

[Diveup]

Hi,

I will be travelling back to South Africa at the end of this month. I have been in Australia for 10 months. I bought my return tickets in Australia. I need to move my money to Australia. Can I use my tickets in South Africa for my 500K travel allowance? Do I have to get a tax clearance? Your help is much appreciated.

Diveup

[Diveup]

Hi,

I bought my return tickets in Australia. I need to move my money to Australia. Can I use my tickets in South Africa for my 500K travel allowance? Do I have to get a tax clearance? Your help is much appreciated.

Diveup

[Almost Aussie]

No tax clearance needed for the travel allowance, only for foreign investment allowance. Your ticket should be fine as long as you can proof you're travelling to Aus.

[Diveup]

Hi Almost Aussie,

Thanks for your feedback. I went to Rennies and they also told me that I can use my travel allowance even if I bought my tickets in Australia. I just want to be legal. I will be applying today for my tax clearance today in Alberton.

Diveup

[Almost Aussie]

Hi Almost Aussie,

Thanks for your feedback. I went to Rennies and they also told me that I can use my travel allowance even if I bought my tickets in Australia. I just want to be legal. I will be applying today for my tax clearance today in Alberton.

Diveup

No worries mate!

[BevF]

Hiya

To anyone out there who can provide some advice, please ...

If your taxes are all sorted and you have a "clean slate" when you leave, does buying a one-way ticket, or a return ticket have any consequences down the line, for example, should there be an inheritance, or if the sale of your house comes through only after you've left? I know I've got the short-end of a half-truth here, so any advice is most welcomed.

[Mara]

If you are expecting to inherit, do yourself a favour and get a tax clearance and leave the country officially....you will be thankful for that when the time comes to inherit. Trying to get throught the red tape from the Australian side is a real hassle, ask those that have had to do so.