Kodplessis Posted June 14 Report Share Posted June 14 (edited) Hi All, We have been pondering whether we need to bite the bullet and kick off the process of ceasing tax residency with SARS. Following a lot of reading, my wife and I still have some questions and would really appreciate it if someone who has gone through it recently, or someone who is on the know can help us in understanding the process and some pro' and con's. I am providing some background and have some questions later, which we hope someone can help us with. Some background: We have been living in Australia since 2016 and are tax residents and citizens in Australia and pay tax to ATO. Except from a small bank balance in South Africa, we both have a small Retirement Annuity (R40K each). No further assets in terms of movable or other financial assets. Both my wife and I have been completing our SARS e-filing each year, so that is up to date. I know that the financial emigration process through the reserve bank is no longer in place and everything is going through SARS. We would ideally like to cash in the two small RA's we have as well. We have been visiting SA for about 3-4 weeks every 3-4 years to visit the family and we have both South African and Australian What we would like to understand is and het help with please: 1. From the three avenues to cease to be a tax resident below, which ones would be the easiest to get SARS approval (3 can do any of these) and any tips on these? Qualifying basis 1: Cease to be ordinarily resident Qualifying basis 2: Cease by way of the physical presence test Qualifying basis 3: Cease due to application of Double Tax Agreement (DTA) 2. In terms of SARS "exit charge" in the form of Capital Gains Tax, what does that include and how has that impacted people who has gone this route? How does SARS go about to calculate this? When is the best time to inform SARS as we have not lived in SA for about 8 years, as I understand that date will trigger the CGT process? Will SARS be looking at assets in Australia as well? Not sure but I do not want to get a nasty surprise... Thanks in advance for any help on this, wanting to wrap up SA things that are still lingering in the background. Regards, K Edited June 14 by Kodplessis Quote Link to comment Share on other sites More sharing options...
Hugo2 Posted June 23 Report Share Posted June 23 (edited) On 6/14/2024 at 7:23 AM, Kodplessis said: Hi All, We have been pondering whether we need to bite the bullet and kick off the process of ceasing tax residency with SARS. Following a lot of reading, my wife and I still have some questions and would really appreciate it if someone who has gone through it recently, or someone who is on the know can help us in understanding the process and some pro' and con's. I am providing some background and have some questions later, which we hope someone can help us with. Welcome to reach out should your questions not be answered On 6/14/2024 at 7:23 AM, Kodplessis said: Some background: We have been living in Australia since 2016 and are tax residents and citizens in Australia and pay tax to ATO. Except from a small bank balance in South Africa, we both have a small Retirement Annuity (R40K each). NOT WORTH CASHING OUT IF YOU ARE 50 YEARS or OLDER ALSO REMEMBER ATO WILL TAX AS WELL No further assets in terms of movable or other financial assets. Both my wife and I have been completing our SARS e-filing each year, so that is up to date. DID YOU DECLARE YOUR OZ INCOME? IF NOT YOU MAY BE UP TO DATE BUT NOT COMPLIANT WITH SA LAW I know that the financial emigration process through the reserve bank is no longer in place and everything is going through SARS. Correct We would ideally like to cash in the two small RA's we have as well. Cash out, SARS tax on excess over R27 500. Wait until retirment age 55 - tax free in total upto R550 000 We have been visiting SA for about 3-4 weeks every 3-4 years to visit the family and we have both South African and Australian For cessation of tax residency or tax emigration not an issue and days count not really relevant unless you work in SA What we would like to understand is and het help with please: 1. From the three avenues to cease to be a tax resident below, which ones would be the easiest to get SARS approval (3 can do any of these) and any tips on these? Qualifying basis 1: Cease to be ordinarily resident = NOT GOING BACK TO SA, INTENTION AND ABILITY NOT TO RETURN, need not wait for Perm Residence provided ability can be shown Qualifying basis 2: Cease by way of the physical presence test NOT POSSIBLE TO USE AS YOU WERE BORN IN SA Qualifying basis 3: Cease due to application of Double Tax Agreement (DTA) - YOU CAN APPLY THIS THE DAY YOU HAVE OBTAINED PERMANENT RESIDENCE (PR Date) 2. In terms of SARS "exit charge" in the form of Capital Gains Tax, what does that include and how has that impacted people who has gone this route? How does SARS go about to calculate this? FIRST - determine exit date using basis 1 or 3 above SECONDLY - determine worldwide assets on exit date THIRDLY - Exclude exempt assets, cash, retirement funds, life insurance and SA title deed property FOURTHLY - determine gain using market value FINALY- GAIN x 40% = taxable gain. There may be a max R40k annual exemption but this is reduced by the number of remaining tax year months after exit date When is the best time to inform SARS as we have not lived in SA for about 8 years, as I understand that date will trigger the CGT process? See above Will SARS be looking at assets in Australia as well? Not sure but I do not want to get a nasty surprise... Yes, if you acquired Oz assets before PR date Thanks in advance for any help on this, wanting to wrap up SA things that are still lingering in the background. Regards, K Edited June 23 by Hugo2 Quote Link to comment Share on other sites More sharing options...
Hugo2 Posted June 23 Report Share Posted June 23 The new two pot pension system changes may change my opinion on small balance RA's, but for now I suggest awaiting the relevant law being signed by Prez Cyril For most expats, there are three parts, the first being you vested interest in fund 1 March 2021 if you were 55 or over or the vested value 1 Sept 2024 in other cases If you are over 55, retire from the fund (R40k but up to value of say R250k) and have the entire payout cash, tax free in SA, before you tax emigrate Quote Link to comment Share on other sites More sharing options...
Kodplessis Posted July 29 Author Report Share Posted July 29 Hi Hugo, Thank you so much for your feedback - I appreciate it. We are both under 50 years, so we would prefer to get this process over with. I suppose my struggle is to determine the actual date when we have became non-tax residents ito SARS. Was it when we moved back permanently to AUS? After ATO first tax year thereafter? If you can provide some guidance on how I need to determine this? Thank you K Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.