Annuity Emigration and 457 visa

[delboy2oz]

Hi All,

As a 457 visa is a temporary visa, and then the definition below as

"When emigration is still in progress" or "When an emigration has already occurred" and this is where I'm a little confused.....

My question is, can I take my RA and Pension funds out when leaving SA on a 457 or

Do I need to wait until such times as I have PR before getting my funds?

Thanks....

From my broker below:

Members wishing to commute the retirement annuities on emigration must now themselves obtain a manual tax directive from a SARS regional office

SARS Head Office is no longer issuing manual directives for these lump sum commutations, and has rolled out the process to their regional offices. Consequently, Liberty staff members are unable to obtain tax directives for commutation on emigration on behalf of members, using the original manual process. Retirement Annuity fund members are therefore required to obtain the directive from a SARS regional office themselves. SARS regional office contact details can be obtained at www.sars.gov.za

The following documentation must accompany the directive application at the SARS regional office:

• A copy of the original policy document if the member is over 55 years of age;
  

And:

When emigration is still in progress:

• A copy of the SARS application for a tax clearance certificate (IB-IT21(a) form), bearing the date stamp of the SARS Office where the tax clearance application was submitted.
  
• A copy of the Application for Foreign Capital Allowance (MP336() – submitted to the South African Reserve Bank by the member’s authorised dealer (bank).
  
• A letter from the authorised dealer confirming that:
  
  1. Formal emigration approval has been received from the South African Reserve Bank (SARB);
     
  2. Confirmation that a blocked account has been opened for the member, which is subject to exchange control regulations, with the name of the account holder and account number.
     

Or:

When an emigration has already occurred:

• The member’s certificate of residency from the relevant tax authority confirming residency and proof that the client is paying tax in that country
  
• Letter from the authorised dealer as per the above
  
• A copy of the tax clearance certificate issued by SARS in respect of the emigration
  

[Hugo2]

Good day to all! Sad how the brokers pass the buck to the client as there is no more commission to be earned on cash out!

See http://www.cashkows.com or contact me and I will assist you. In short NO, on a 457 you do not qualify to cash in your RA. You need to be able to present a PR or second passport

Greetings

Hugo

[delboy2oz]

Thanks Hugo, emailing you now,

[StevePorter]

Hi delboy2oz

Just a quick note to let you know that whilst Hugo's comments are strictly speaking, correct, we have been successful in emigrating a number of people who don't have PR, thus enabling the surrender of RA's. Additional documentation is required and we can't guarantee the outcome, however we are happy to try and of course if we were to be unsuccessful you incur no fees!

Please feel free to contact me if you would like to discuss.

Regards

Steve.....at cashkows.com

[Gerhardk]

The responses are interesting. My understanding is the same as what Hugo noted,especially since you will only qualify as a temporary resident for tax purposes in Australia. This implies that you are a resident in SA (or somewhere else). The effect is that you are not taxed on your worldwide income.

Should you emigrate (and obtain access to your RA) then your tax residence should change since SA will not recognise you as a resident anymore, but I very much doubt that you can convert from a temporary resident to resident on 457 with the ATO. So is this a loophole and you will not be taxed anywhere on your worldwide income? I doubt this, however I am not sure what will happen.

[Mara]

Being a tax resident has nothing to do with your migration status, or with the visa that you hold. It is only viewed from where you live most of the time. So if you are going to be living and working in Australia full time, you will be an Australian tax resident.

[delboy2oz]

Thank you all for the input, I have been in touch with Hugo and will be using his services when the time comes, he provided some good insight and information and highly recommend his services,

Cheers

[Gerhardk]

I believe there is a clear link between tax residence and migration status. My understanding is that a temporary resident in terms of the ITAA97 act is defined as a person which is the holder of a temporary visa under the Migration Act 1958 and a temporary resident cannot choose to be a Australian tax resident - ATO ID 2006/163.

RA / Pension is linked to SARS / tax status etc. So technically one of the reason you can have access to it is if you cease to be SA tax resident and hence a citizen. However, my point is that it is strange that you cannot become a tax resident of Australia as a result of your visa yet be able to change your tax resience status in SA i.e. cease to be a resident. Of course there are other residence test rules such as where you will live after your wanderings etc etc