On Friday 31 July 2020, National Treasury released the 2020 Draft Taxation Laws Amendment Bill for public written comments.
One of the areas which greatly affects South Africans working permanently abroad, is the proposed changes to retirement fund withdrawals and other financial instruments which will come into effect from 1 March 2021. The changes make it more difficult for South African expats to withdraw their RA’s and Pension Funds when Financially Emigration through SARS and SARB for a minimum of 3 years post March 2021.
This is in line with the February 2020 Budget Speech announcement to phase out the SARB portion of Financial Emigration and replace it with a stringent verification test – effectively making it extremely difficult to move money outside of SA when emigrating.
HOW SOUTH AFRICANS ABROAD ARE AFFECTED
The payment of lump sum benefits upon emigration is to be removed and a new test be introduced where payment is only allowed where a person has remained non-tax resident for a period of at least three consecutive years or longer. This is a double whammy on the back of the “Expat Tax” amendment which took effect from 1 March 2020.
SARB Amendment for “retirement annuity fund”
NEXT STEPS FOR EXPATS
This announcement is not going to be well-received by the wider South Africa expatriate community. However, this has been in the pipeline for some time and the bottom line is – you have 6 months left to get your tax affairs in order and Financially Emigrate under the existing regime or face having your life savings trapped in South Africa at the mercy of SARBs new “three year rule”.