The information on the Adviser and Institutional areas of this site have been tailored for investment professionals. Appropriate product, fund and service information
for private investors can be accessed on the Personal area of our site. Terms & conditions.
17 January 2015
The number of people ‘packing for Perth’ has also declined in recent years. South Africans are still moving to other countries for travel, work or even retirement, however. The question is: should they emigrate, or just relocate? Given the number of people coming back, formal emigration is usually not a good option, says Clive Hill, legal adviser at Sanlam Trust.
“Relocation means moving to a foreign country – usually to work – without exporting your assets from your home country, whereas emigration means leaving to settle permanently in another country, taking as many of your assets with you as you wish and as exchange control allows Emigration is a Reserve Bank process and does not affect your citizenship or use of your SA passport. It does, however, have tax implications. We generally advise people to think seriously about whether they really want to emigrate,” he says. You need to consider the following:
“If you relocate, on a non-permanent basis, you remain SA resident for tax and exchange control purposes, so your assets will not be subject to CGT if you keep them in South Africa. In terms of SARB rules, you will be able to take money offshore via an annual investment allowance of R4 million, subject to obtaining a tax clearance from SARS.” says Hill. Your bank account will not be designated as non-resident and your assets won’t fall under the control of an SARB authorised dealer.
Returning to South Africa after you have emigrated may also not be so simple. “Many people who acquire foreign citizenship do not know that they have to apply to the Department of Home Affairs beforehand if they wish to keep their South African citizenship. If they have not done so and later want to come back permanently, they will be treated like any other foreigner applying for South African citizenship. We know of quite a few people who are now in this predicament.”
Hill says the global financial crisis which began in 2008 has resulted in many former South Africans being retrenched in their adopted countries. Their skills, coupled with their international experience, are making them highly attractive in the South African market, especially in management positions. “People also want to return for family reasons such as aging parents, and private school education. And let’s face it, the South African lifestyle and climate are hard to beat.”
So before acquiring foreign citizenship, Hill recommends going through the proper procedures at Home Affairs, which will likely result in your family being granted dual citizenship. “This means you will not have to relinquish your South African citizenship, which will make it much easier should you wish to return later.”
He says the only reason for deciding to emigrate formally however, should be if you need to take a large sum of capital (more than R5 million) offshore in a short space of time, for example, if you wish to retire overseas and need to take capital to buy property and to have pension and other income on your blocked SA assets remitted to your foreign bank account You will then have to go through the proper SARB emigration procedures.
“We advise especially younger people, who may not have many assets, to relocate, not emigrate. Even if you do have large sums to export, you will have time to do so through the annual travel and investment allowance. If you don’t have to emigrate, why do so? Why cut your ties with your home country in such a way that may make it hard to return?” Hill concludes.