The SA Emigration Checklist: Navigating Tax Consequences & Compliance with SARS

The SA Emigration Checklist: Navigating Tax Consequences & Compliance with SARS

May 13, 2024

Emigrating from South Africa is a significant life decision that comes with a multitude of considerations, both personally and financially. Among these, understanding the tax consequences and ensuring compliance with the South African Revenue Service (SARS) is of paramount importance. Failing to follow the correct emigration process can lead to penalties costing you thousands! We've put together an emigration checklist that not only covers the practical aspects but also highlights the critical tax-related considerations when moving abroad.

  1. Obtain Professional Advice: Before embarking on your emigration journey, it is crucial to seek advice from tax professionals who specialize in South African emigration and international tax. Insights into the tax implications of your move and effective planning are crucial in this process.

  2. Determine Your Tax Residency Status: Understanding your tax residency status is the cornerstone of managing your tax affairs when emigrating. South Africa has a residency-based tax system, meaning that residents are taxed on their worldwide income. Non-residents, on the other hand, are only taxed on income generated within South Africa's borders. Establish your tax residency status accurately to ensure you comply with tax laws and don’t end up being double taxed.

  3. Inform SARS of Your Emigration: Notify SARS of your intention to emigrate by completing the necessary forms. Failure to do so can result in ongoing tax obligations in South Africa, even after you've left. Keep in mind that emigration involves more than just physically leaving the country; it's a formal process with tax consequences. But this doesn’t mean you have to formally emigrate with the SARB. This is a bigger discussion and may not be necessary for everyone.

  4. Do I need to liquidate South African Assets: Consider whether you want to or should be selling or liquidating your South African assets, such as property or investments before emigrating. Capital gains tax (CGT) may apply, but careful planning can minimize its impact by making sure these transactions are structured efficiently. Note, you don’t have to sell your assets, but any income you earn on these would still be taxed in South Africa.

  5. Open a foreign bank account: You'll need a non-resident bank account to manage your finances abroad.

  6. Manage Retirement Funds: Determine what to do with your South African retirement funds. You can choose to cash them in, transfer them to a retirement annuity, or preserve them in a preservation fund. Each option has different tax implications.

  7. Review International Tax Treaties: Research the tax treaties between South Africa and your destination country. These treaties can impact the taxation of your income and assets in both countries. Ensure you understand how they apply to your situation.

  8. File All Outstanding Tax Returns: Ensure that you're up to date with your tax obligations in South Africa. This includes filing all outstanding tax returns and settling any outstanding tax liabilities before emigrating.

  9. Keep Records: Maintain meticulous records of your financial transactions and travel arrangements, especially during the emigration process. These records will be invaluable for tax compliance and any potential audits in the future and for making sure your tax residency (and date of change) is accurate.

  10. Plan for Future Tax Compliance: Even after emigrating, you may have ongoing tax obligations in South Africa, such as rental income or dividends from South African assets and investments. Stay informed about your responsibilities and engage with tax professionals as needed.

  11. Your Children’s Tax Status: Don’t forget to also consider your childrens’ tax status and registration with SARS. Even though they may be minors.

  12. Future Inheritances: Not something one would normally consider, but if you are likely to receive a material inheritance in the future you may prefer to remain registered with SARS to avoid future admin headaches.

The Importance of Compliance

Compliance with SARS regulations during the emigration process is not optional; it's essential. Failing to follow the correct procedures can lead to penalties, interest, and unnecessary tax leakage. Additionally, non-compliance can result in difficulties accessing your South African assets or returning to the country in the future.

At SAIL, we are here to help you navigate these hurdles and make your exit as efficient and stress free as possible to save you time and money while keeping you compliant with SARS and the tax authorities in your new country.

Book a FREE 15-minute consult with one of our advisors here

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Caleo Capital USA (Caleo Capital NA LLC) are an integrated wealth advisory and asset management firm that serves high-net-worth South African families who have relocated or are planning relocation to the United States. Emigration and relocation is complex both administratively and emotionally, with so many aspects to consider. Financial planning for the average high-net-worth individual is no simple task, but tax, retirement, trusts and estate planning is even more complicated when your financial life spans international borders. Caleo Capital has established relationships with reputable partners who assist with a range of challenges facing newly immigrated clients.

Caleo Capital USA (“Caleo”) is a State Registered Investment Advisor.  Caleo and its affiliated persons only conduct business in those states in which it is lawfully registered or exempted from registration. This material is for discussion purposes only, and Caleo is not soliciting any action based upon it. This material does not constitute, and is not to be considered, an offer to sell or a solicitation of an offer to buy any product, security, advisory, risk management, or other service mentioned herein. It has no regard to the specific investment objectives, financial situations or particular needs of any specific recipient.  This material is not to be construed as investment advice nor is it intended, to constitute legal  or tax advice. Be sure to consult with  legal and or tax professional before implementing any strategy. For information regarding Caleo’s business operations, services, fees and registration status, please contact the firm or visit https://adviserinfo.sec.gov/ and search for Caleo  or for CRD #308542.