Accounts & investments in SA - 457 visa

[SJVH]

This question has been asked a few times in different ways - I've read the responses and I'm still a little confused. Hoping one of the resident experts here can guide me please.

We will be heading over to Aus on a 457 visa. We are renting out our house so will be receiving some 'income' in SA.

Question is - what do we do with our bank accounts in SA? I've read about 'blocked' accounts - does that apply to us on a 457? We will close all but one account and use that to receive rent and send funds to Aus.

What about investments? Share accounts? Can I still trade equities online while in Aus on a 457? What declarations do I need to make to SARS, if any?

In short, my question is really - what do we need to do in terms of our finances to prepare for moving to Aus? We are 99% certain that the move will be permanent, but until such time as we have PR we don't want to liquidate all our assets in SA.

Many thanks!

[Gerhardk]

The blocked accounts is with reference when you financially emigrate from RSA, just coming over on 457, nothing will happen to your bank accounts.

Australia has a concession for temporary tax resident for someone who is on say a 457 visa so Australia will not tax you on your worldwide income. Accordingly RSA rent and RSA interest will be excluded and not taxed in Australia. Although it is a concession, I have seen cases where people on 457 argue that they are a 'full' Australian tax resident and also people in Australia on PR argue that they are not a tax resident (full or temporary). Your tax residence depends on a lot of factors including your intention.

If you are in Australia trading shares, the source will be Australia so you will be taxed in Australia.

On your question what to do, it is generally easier to sell everything and keep one bank account open to finalise SARS and bring all the money over. I wish I did that but again the ZAR may strengthen against USD and AUD.

[SJVH]

Thanks Gerhardk - very useful.

Keeping the house and investments in SA is definitely a gamble - we have seriously considered selling up everything - but as the 457 is temporary and my company is notorious for selling off sections of the business without warning, we're hedging our bets and keeping the option of an easy return open. Property market in our area is flying, and we've managed to get a very generous rental return, so hopefully this will go some way to offsetting any further degradation in the Rand. Apparently Investec sees the Rand hitting 17.3 to the dollar by 2019 though... Scary stuff.

On the share trading question; if I am trading online, how will anyone know whether the purchases are coming from outside SA? We will file a SARS return for the house rental, would that be a giveaway?

Cheers.

[Gerhardk]

I read recently that since around 2007 (or 2009?) the JSE has grown more or less at the same rate as the ZAR devaluated against the USD so in ZAR you may be getting say 20% return on JSE but on worldwide basis you are at the 2007 level.

We made good ZAR gain on a property but AUD loss as a result of the devaluation so it depends, if the ZAR / AUD stay the same you are probably better off investing in property there but with all the hassles you have to decide.

Maybe I am misunderstanding your question but on your question who will know, I'll give you the same answer I give to prospective clients asking whether they must disclose cash income: I can not give advice on tax morality, but in my view everyone must pay their taxes due since this is the price of living in Australia and enjoying the benefits such as safety / roads /public service. For every person not paying their share, the rest of us must pay more so not declaring income to me is similar to stealing. In Australia there are many opportunities to take things that does not belong to you without anyone knowing, does it happen, yes in isolated cases, but not often. There are many ways to legally minimise tax and a lot of tax concessions available, that is why so many people use tax consultants in Australia.

[SJVH]

Apologies - didn't mean to give the impression that I'm looking to defraud the Aus government. I agree with paying taxes, especially when you get so much back for your contribution. But I guess that would be the end result of not declaring the trades. My point was more "can I just pay SARS as I have been", but I take your point - thanks.

Currency VS Property... massive gamble! Holding thumbs it goes our way.

[Hugo2]

Good day SJVH

I agree with most of what was said above, but the following may clarify:

1. on 457 the double tax treaty (protocol update 2008 and ATO law changes 2006) provided clarity, you can not be anything but SA tax resident ie all income even Oz salary and share trade is taxable in SA
2. In terms of DTA, ATO can tax Oz source income only and Oz source is Oz salary (irrespective of where the employer is), Oz shares and Oz rental income
3. In terms of DTA, SARS can tax all Oz income but unilaterally SARS will not tax Oz salary because of the 183/60 day test.
4. The share trade on SA platform is a SA source income - source is where you invest and not from where you login
5. The DTA does not allow ATO to tax 457 residents on worldwide income

[Gerhardk]

Interesting response but I am not totally in agreement.

If you are a share trader while in Australia then you are most likely operating a business here and may be required to obtain an Australian Business Number. In any case since you have a business here you will most likely have a permanent establishment here so I do not see why Australia will not tax the income.

It is the definition of temporary resident and the applicable domestic legislation that provide concessions to temporary tax residents (not taxed on worldwide income). Yes the DTA also refers to temporary tax resident but the purpose of DTA is to apply if there is double tax.

I did a quick search in RSA and found case 11156 which found that the place where the activities took place is where it must be taxed (or the loss allowed), I don't know whether this case was overturned but it makes sense for activities such as foreign exchange and shares.