(re)registering for tax in SA

[woodag]

In another thread here ( http://www.saaustralia.org/topic/45241-commuting-a-living-annuity/ ) I mentioned having a living annuity that I want to commute.

 

That was close to two years ago, and I finally got to contact Old Mutual about this - these things take time to get around to!

 

Although I did not have any automatic right to request commutation, it appears that OM are prepared to accept my request. However, as usual, they have found one of their spanners to stick in the works - this being that they say that they cannot process my request without a tax number. I have no idea how annuity payments are taxed in SA, but the annual payment I have been receiving is way below the threshold for registering for tax, and I have not had a SA tax number for over 35 years.

 

The SARS web site helpfully tells me "the only way to register is to visit a SARS branch" - from http://www.sars.gov.za/ClientSegments/Individuals/How-Register-Tax/Pages/Register-for-tax.aspx .

Now, for a start, I can't believe that what the SARS site says is correct, as there seem to be many situations where non-residents are required to pay tax, or even where residents may, for one reason or another, be unable to get to a SARS branch.

 

Even if it can be done, (re)registering for tax in SA is not something that appeals to me, as I then I would presumably need to get de-registered again afterwards, which might be even more difficult (witness threads like this http://www.saaustralia.org/topic/47836-yees-deregistered-from-sars/ ), and the possibility that I maybe I would have have to submit returns until such time that I can de-register. At best I might be replacing one nuisance with another worse one.

 

The lump-sum payment I would receive from OM would still be well below the annual income threshold which requires registering for tax. Do I really have to resister for tax again, or are OM just being difficult?

 

Any other thoughts on this?

Edited March 21, 2017 by woodag

[woodag]

Does the deathly silence mean that nobody else has a Living Annuity?

 

Or maybe anyone that does have one is happy with the situation, and does not mind still having to deal with companies in SA, perhaps "forever"?

 

It has been suggested to me that I should let sleeping dogs lie. I can see merit in that, but this particular dog suffers from insomnia. Every now and then the mutt wakes up and demands to be fed, or growls at me and bites my ankles. This is when the bank transfer to me in Australia fails, and I have to spend weeks chasing it up. Or when Old Mutual out of the blue decides that I am dead, and then demands that I prove otherwise (yes, that really happened).

 

Old Mutual have basically told me to get a tax number. My biggest "fear" with doing that is that if I do somehow mange to get a tax number, OM will only then find some other complication and reason why they can't cash out the Living Annuity, leaving me worse off than I started. I have had decades of dealing with OM, and something like that would not surprise me at all.

 

In any event, being unable to stroll into my friendly local SARS branch, it looks like it would be close to impossible for me to get a tax number without assistance. In other threads here, I see mention of companies like "Tax Smart" that can assist with dealing with SARS, and others like "Cashkows" and "Rand Rescue" that do the same and perhaps offer some additional services.

 

Are there any other similar companies I should know about? Any recommendations?

 

Edited April 2, 2017 by woodag

[ChrisH]

7 hours ago, woodag said:

Does the deathly silence mean that nobody else has a Living Annuity?

 

I think your situation might be fairly unique in that you de-registered from SARS and didn't take your annuities out at the same time. Most people would just do a financial emigration which cashes out the RA's (I don't think this was possible 35 years ago) and closes off SARS accounts.

[woodag]

Thanks for the comments Chris.

 

 We had migrated formally, financially, or whatever the correct term is, a very long time before the Living Annuity was set up, but could do nothing with Retirement Annuities until I was 55 years of age. Even when I reached that point, the rules were different to what they are now, and starting the Living Annuity was all that could be done.

 

I did see somebody here not long ago talking about starting a Living Annuity, but probably most people now would not consider doing that (and, if they were to ask me, my advice would be NO, DON'T DO IT!). My timing was just bad.

 

From discussions that went on here at the time I was trying to set the Living Annuity up, I know that there were some other members here who had gone down that path before I did. Perhaps they have moved on (hopefully, not in the way Old Mutual thought I had some time ago).

 

[Gerhardk]

As far as I recall any withdrawal from an annuity will be taxed at withdrawal rates and it probably applies to living annuity as well. You probably received the tax benefit of contributions to the initial annuity. I think the only way investment firms are allowed to pay out these products is after obtaining a directive from SARS about the tax payable. Even if nil a directive would be required. So there is probable not an easy way around this.

 

I have used Tanya van der Westhuizen at FX Capital, would be worthwhile to contact one of these FX firms. If you want more details then let me know.

[woodag]

I can see why it might be necessary to be registered for tax, even if no tax has to be paid.

 

It is a bit strange to me though, because of what happened at the time the Living Annuity was set up around ten years ago. At that time, I had another RA with another company, but this other RA had a value below some threshold amount, and as such I could simply take the whole lot as a lump-sum. Even back then I had not been registered for tax in SA for decades, yet the other company was able to pay me the lump-sum, and even withhold some tax from the payment, without me having to provide a tax number.

 

I have been in contact with one of those "FX firms" now. They seemed a bit surprised that I could have received a lump-sum payment from a RA without needing to provide a tax number. It seems it would be easy for them to re-register me for tax, but I'm still trying to work out if that is a good idea or not.

[Gerhardk]

I would also have concerns registering with SARS again since somewhere you will have to indicate the reason for registering. Unless temporary registration with 'withdraw lump sum' as an option, you will probably effectively be declaring you are now a tax resident again; which I guess is not the case. But good luck with this process.

 

Get some quotes from the FX companies, they seem to differ in price substantially.

[Go RSA]

On 20/04/2017 at 8:06 AM, woodag said:

I can see why it might be necessary to be registered for tax, even if no tax has to be paid.

 

It is a bit strange to me though, because of what happened at the time the Living Annuity was set up around ten years ago. At that time, I had another RA with another company, but this other RA had a value below some threshold amount, and as such I could simply take the whole lot as a lump-sum. Even back then I had not been registered for tax in SA for decades, yet the other company was able to pay me the lump-sum, and even withhold some tax from the payment, without me having to provide a tax number.

 

I have been in contact with one of those "FX firms" now. They seemed a bit surprised that I could have received a lump-sum payment from a RA without needing to provide a tax number. It seems it would be easy for them to re-register me for tax, but I'm still trying to work out if that is a good idea or not.

 

Hello @woodag

What did you do about registering for tax in RSA?

Did you get the funds?

 

Edited June 13, 2017 by Go RSA

[woodag]

Using the services of Cashkows, I got re-registered for tax.

 

Once that was done the funds were received into my SA bank account within a few weeks (compared to other dealings I have had with Old Mutual, that was super-quick). I still have not had the funds transferred to me in Australia. In the past, the normal annuity payments were being transferred to me annually, and as it happens, the final payout was made just shortly before the bank in SA is due to make the regular transfer for this year. So, I am hoping that everything will just happen without me having to tackle the bank. That would leave the SA account open with some small amount in it - I might try to get the account closed after that, but everything I try to get the bank to do turns into a big headache, so I might just call it quits at that point.

 

I'll know in two or three days if the transfer has worked.

Edited June 13, 2017 by woodag

[woodag]

Just an update on this.

 

My optimism that I would not need to contact the bank was misplaced. By now the normal annual transfer from my SA account, which is supposed to happen automatically, is about two weeks overdue. At the best of times this does not always go smoothly, so I eventually got around to contacting the bank yesterday. They told me that this was because of the cay by sea. At least that is what it sounded like - I had to ask him to spell it for me to determine that he was saying KYC (I departed SA so long ago that this was yet another TLA I was not familiar with). So, I have had to send assorted documents to the bank to appease the gods of this KYC.

 

But, Rome was not built in a day, nor it seems can financial ties with SA be severed in a hurry.

[SurferMan]

I am an ex bank IT specialist. KYC is Know Your Customer. It is a series of verification tests and data sets that all banks keep on you. It is used to check that you are whom you say you are. They then also queitly check if you owe money anywhere...SBSA has the best KYC process, but is also the most anal. All their systems are built around KYC and BP (Business Partner) attributes. When I implemented the NCA (National Credit Act) in 2007 I had to update master data across 897 systems in 6 months.

[woodag]

The KYC gods accepted the offering I sent, and the transfer to me was processed a few days later.

 

This leaves me still with a bank account in SA, with some small amount in it, but I don't care what happens to that. One day, If I am feeling strong enough, I might ask them to close the account. Otherwise I will just forget about it and allow it to die.

 

This was no giant leap for mankind, but I can tell you this was more than a small step for me. Finally fully financially migrated!

 

Today, we have been in Oz for 38 years and one day, but who is counting?