Tax Implications

[Sandi]

What will the tax implications be for taking our money out of South Africa?

I did read somewhere here that there is an allocation per person but we would likely be taking more than the allocation after our house, cars etc is sold!

[Cindylou]

Hi Sandy

Welcome to the forum, I'm sure there are loads of answers to the question, but I'm not sure exactlywhat you're asking: are you asking about the tax implications in SA or Aus?

Cindylou

[Barnone]

Hi Sandy

Welcome to the site.

As CindyLou said, your question is not very clear, it is never the less very relevant for most people here. I have been looking at tax on both sides of the Indian Ocean (you will see why later).

Firstly let me state that I am not a financial advisor & this is should not be considered financial advice ! it is mearly my understanding of how things work, I could be completely wrong & would welcome others input on the subject.

There are several important variable which need to be considered.

Firstly you need to remember that in order to get permission to transfer any funds offshore(apart from the standard travel allowance) you need to get an offshore funds tax clearance from SARS !

Then you need to look at how you are leaving 'Emmigration' or 'relocation' this affects how much you can take & how you will be taxed on funds accrueing to you once you have left.

Remember any SA citizen or SA resident may invest up to R2m offshore, emmigrants may take R 4m, whether you can do both is a matter for debate but I suspect this is not allowed.

I need to do some work & will finish this post later

[Cindylou]

Remember any SA citizen or SA resident may invest up to R2m offshore, emmigrants may take R 4m, whether you can do both is a matter for debate but I suspect this is not allowed.

Just to clarify this point: anyone over the age of 18 may invest R2mio or take an emigration allowance of R2mio. In the case of a family emigrating this amount is R4mio (including single parent families). If you apply for the emigration allowance any amounts you have previously invested offshore will be deducted from that allowance (so, no, you can't do both!)

C'Lou

[Sandi]

Thanks for your fast responses!

I guess I basically want to know about tax implications from both sides (RSA & Aus).

We will be leaving RSA towards end July on a 457 visa.

What are we required to do before then regarding taxes on taking moneys out?

[Barnone]

Thanks for the clarity Cindy you are 100% correct on the 18yrs + and the offshore allowances adding up to a total amount of R 2m each.

OK, so back to the viariables which must be considered.

Remember there is a distiction between being a resident of a country & resident for tax purposes. SARS calls you a resident for tax purposes(even if you are living in another country) if you spent more than a certain number of days in a country plus certain other 'tests' check out the SARS definition here and the ATO definition here.

South Africa and Australia have a tax agreement which means you are ussually taxed at the source & receive credit it the the country for which you are deemed to be a tax resident. The complication (if it is not complicated enough already) comes in when you consider that each country has a different financial year i.e SA 1 March to 28 Feb & Australia 1 July to 30 June so there is a 4 month period in which to look very carefull as to where it would be most adventageous to be deemed a tax resident of a particular country.

Lets also remember there are different types of TAX & sources of taxable income. The laws are slightly different in each country e.g CGT in SA there is only CGT for profits over R1m on a residents primary residence, In Australia as far as I know there is no CGT on profits of the sale of your primary residence.

These of just some of the issues which have been raised in my circumstances.

If the amount is large and it is a complicated situation then it may be well worth consulting a tax specialist who has knowledge and experience in both countries.

If you want to PM me, I can give you the details of the guy I have been dealing with.

Good luck

[Cindylou]

Thanx, Baldone really well put and easy to understand.

Sandi, I just wanted to react to one point in your original post

I did read somewhere here that there is an allocation per person but we would likely be taking more than the allocation after our house, cars etc is sold!

Over and above the R2mio or R4mio previously discussed you are also allowed to take a "cash allowance" of R160K per adult and R50K per child and household goods to the insured value of R1mio. If you wish to take in excess of this then

extracted from SARB EXCON Manual, section T

Emigrants can, on application, request to transfer blocked assets in excess of the limit of R4 million per family unit or R2 million per single person, subject to an exiting schedule, at the discretion of the Exchange Control Department of the South African Reserve Bank, and an exit charge of 10% of the amount.

So you can apply to take "the rest" but you have to pay!

Cheers

C'Lou