Expats from South Africa who don’t wish to return should change their tax residency as soon as possible to avoid negative financial and regulatory implications. Any delays in doing so may have unfavorable consequences.

Financial emigration to tax emigration

Before March 2021, SA emigrants could apply for financial emigration to wrap up their tax affairs. This enabled them to transfer the proceeds of annuities and other financial assets abroad before retirement age.

• When the SARB scrapped exchange control it eliminated the requirement for financial (formal) emigration. However, SARS imposed new protocols for moving money across borders for those who hadn’t formalised their emigration.
• South African expats who want to encash the proceeds of their retirement funds need to prove that they have been non-tax residents for a continuous period of 3-years from leaving.
• Even individuals who don’t wish to transfer any funds abroad need to confirm their tax compliance status. The Common Reporting Standard (CRS) is an agreement among members of the Organisation for Economic Cooperation and Development (OECD). This allows sharing tax and financial activities of residents and businesses in different countries. You need to confirm your tax residency and compliance or you could be barred from financial activities in your country.
• Encashment and transfer of certain annuities and funds is only allowed for individuals who are no longer tax residents of South Africa.
• Most retirement funds only allow encashment and transfer up to a certain age, which is generally 55-65 years depending on the type of fund. ​Recent years have seen the harmonisation of retirement fund descriptions, imposing similar rules for pensions, preservation funds and retirement annuities.

AIT & TCS applications

• Emigrants and individuals using their R10-million foreign investment allowance now have their TCS PINs grouped under the new Tax Clearance Status (TCS) protocols for Authorisation for International Transfer (AIT).
• AIT is far more complex, burdensome and time-sensitive than past tax compliance processes and difficult to manage across borders. You will need to provide a full Capital Gains overview for a retroactive period of three years, among other things.
• AIT requires a comprehensive financial overview. This may include an audit of sources and recipients of funds and detailed asset values over time. You may be asked to provide tax compliance documentation for your dependants and business partners as well. SARS may also require stakeholders information, and business audits proving ROI and losses.
• Individuals will also need to confirm their residency status, employment, visa and travel records.

South African tax residents can transfer up to R1-million per calendar year abroad using their Single Discretionary Allowance (SDA). Alternatively, the Foreign Investment Allowance (FIA) allows offshore transfer of up to R10-million per calendar year.

Each allowance has unique criteria and requirements for transferring funds abroad.

• The new TCS process has pooled former non-resident for tax purposes and FIA PINs under the AIT. This complicates matters for those who want to transfer more than R1-million per year.
• To prove their non-resident status for tax purposes and permanently emigrate, individuals must prove their non-resident status for three years.​ They are restricted from using their allowances for this period, as this would classify them as South African tax residents for the interim period.
• Double Taxation Agreements (DTAs) which allow tax relief on foreign sourced income aren’t applied quite the same as they were before the new AIT process.
• Residency tests imposed prior to 2021 no longer offer assurance for tax obligations since all cases are vetted on individual merit.

Administrative hurdles complicate estate affairs, even if the estate is straightforward or has limited economic value.

South Africans living abroad who are beneficiaries of SA estates should take note of the following:

• Different jurisdictions have vastly different rules and regulations for estate management, making it challenging to comprehend without a solid understanding of legislation and taxation.
• Rules of succession don’t always adhere to the stipulations in a deceased’s will. Heirs can lose out on their inheritance or be strapped with administrative penalties if not managed efficiently and timeously by specialists.
• To inherit from an offshore estate, beneficiaries must be tax compliant since such funds are subject to witholding tax and other deductions.
• Administrators of deceased estates must guarantee or front certain costs as imposed by probate legislation in instances of intestate succession. It’s essential to acquire the necessary expertise on such matters.
• You may need to provide an extensive overview of tax activities for  Capital Gains purposes if you didn’t confirm tax residency before receiving your inheritance.

If you’re travelling abroad for leisure or business purposes you could land in hot water or run out of funds if you fail to follow proper protocols.

Some considerations for your temporary travel:

• You can’t repurpose hard currency from someone else who previously visited the region you’re travelling to. The only exceptions are where amounts are negligible (i.e. small change) or where ‘handover’ was formally approved.
• Forex offices aren’t always operational at the destination when individuals arrive (such as airports or other border crossings). This could leave you stranded or delay your travel plans.
• Financial institutions across borders aren’t always in sync. Delays or challenges can result from time zone differences, operating hours, regulatory matters, tech integrations or socio-political factors.
• If you’re travelling to areas that don’t offer English as lingua franca, you may be hampered by language gaps and cultural nuances.