Emigration

/ˌɛmɪˈɡreɪʃn/

“The act of leaving one’s own country to settle permanently in another, moving abroad.”

Emigrating can be one of the most stressful and confusing periods an individual can experience. This decision to emigrate should not be taken lightly and requires a well-thought-out roadmap and exit strategy. South Africa experiences a steady outflow of its citizens, particularly medical and engineering professionals who move abroad to pursue work-related opportunities.

If you are considering leaving the country, ensure that you are well informed on the emigration process, which includes citizenship, tax residency and exchange control regulations.

Citizenship

The Oxford Dictionary defines a citizen as a legally recognised subject or national of a state or commonwealth. In South Africa, you automatically qualify as a citizen if you were born here, at least one of your parents is South African, or via naturalisation.

South Africa also allows dual citizenship, which means you can simultaneously be a South African citizen and a citizen of another country.

South Africans can apply at the Department of Home Affairs for permission to retain their South African citizenship. Unless you have been granted retention of citizenship before acquiring citizenship of another country, you will lose your citizenship automatically.

 

Tax residence  

An individual is a resident for tax purposes in South Africa if so determined by the ordinarily resident test or the physical presence test. You are ordinarily resident in South Africa if it is the country to which you will return after your wanderings. Physical presence means you will be considered a tax resident during a particular tax year if you have been inside South Africa for more than 91 days during the current tax year and each of the five preceding tax years.

You could therefore be a South African tax resident without being a South African citizen or an exchange control resident.

 

Accessing your retirement annuity and preservation funds

Access to your benefits is only permitted after you have ceased being a South African tax resident for an uninterrupted period of three years.

Factors that will be considered in determining whether a taxpayer has ceased to be a tax resident of South Africa include:

• A letter from an authorised dealer confirming that the emigration was recognised by the SARB for the purpose of exchange control;
• a copy of the Tax Compliance Status (TCS) PIN issued by SARS in your name; and
• a certificate of residency obtained from the relevant country in which you reside.

 

Tax implications on a lump sum withdrawal

SARS will tax your withdrawal according to the tax table below if you choose to withdraw from your retirement annuity before retirement. It will consider any previous taxable withdrawals, retirement lump sums and severance benefits, including those from other investment companies, when determining your tax liability.

How long will it take to process your withdrawal due to emigration, cessation or an expired work visa?

SARS provides the procedural requirements to process this withdrawal instruction, but your financial advisor may require additional supporting documentation. The withdrawal requires the approval of SARS, and the successful processing of the instruction is at their discretion. It takes SARS a minimum of 21 business days to assess and provide feedback on these tax directive applications.

Emigration involves weighty decisions that require careful planning, specialist advice, and preparation. A complete roadmap and exit strategy are essential in ensuring a smooth transition for you and your family. We encourage you to contact your NFB advisor early in the process to help you start this journey on the right footing.