Financial emigration (cessations of SARS tax residency)

[Kodplessis]

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

[JJV]

Hi K

 

You may have noticed that the participation on this forum is a shadow of its former self...sad, isn't it?

 

I found this article useful when I applied.

 

ATO's tax resident confirmation (available on their website) Australian citizenship and residential utility bills should satisfy Qualifying basis 1.

 

With regard to CGT - 

The day before you become a non-resident for tax purposes, you will be deemed to dispose of your worldwide asset base at market value. This triggers a Capital Gains Tax (CGT) event – also known as an exit charge.

 

Let us know if you have more questions.

 

 

 

 

 

 

[Kodplessis]

Hi JJV,

 

Agree that this forum is not nearly as active as it was once upon a time... 

 

Thank you for your feedback, seems like it is still a bit of a process and because we have moved in between SA and AUS, 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 or how you have determined this date?

 

Cheers

K