Andrew Stegmann
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Warning Over Government’s Plans to Change South Africa’s Emigration Finance Rules

A number of tax and financial groups have issued warnings over a new draft bill which will introduce changes for South Africans looking to take their retirement funds out of the country.

Under the current system, members of preservation funds and retirement annuity funds may withdraw from such funds if they formally emigrate from South Africa for exchange control purposes and their emigration is approved by the South African Reserve Bank

However, changes in the draft Taxation Laws Amendment Bill (TLAB) will effectively phase out the concept of emigration for exchange control purposes.

The amendment will mean that South Africans emigrating from the country will only be able to make a withdrawal when a retirement fund member has ceased to be an tax resident and has remained so for a consecutive period of at least three years.

The change has come under fire as the TLAB was the subject of public hearings in parliament on Wednesday (7 October).

Impractical and draconian

“The proposed requirement that an individual be non-resident for a period of three years prior to being entitled to access retirement funds is impractical, draconian and will present administrative difficulties for both SARS and taxpayers,” said professional services firm PwC in its submission.

The firm said that where an individual permanently departs from South Africa, the proposed rules could – depending on the particular circumstances of that individual – result in considerable financial hardship for an extended period of time before retirement funds are available.

“Under the current rules, a person who emigrates is entitled to withdraw their retirement funds immediately. Under the proposed rules, they would now need to wait for at least three years before being able to do so,” the firm said.

“Retirement funds are frequently required by emigrants to make emigration financially viable and the proposed rules will severely impact this.”

As an alternative, PwC recommended that the proposed three-year residence rule should be replaced with another ‘more practical rule’.

“For example, it could be linked to a person ceasing to be ordinarily resident in South Africa – as opposed to necessarily not tax resident,” it said.

The opposite of modern

In its submission,  Tax Consulting SA said that the amendment is at ‘cross purposes’ to its intended goal of a more ‘modern’ exchange control system.

It highlighted that under the new system , retirement benefits will effectively be locked in and will be inaccessible to the individual in question for a minimum period of three years, even after they have left South Africa permanently.

This restriction will only be lifted once the taxpayer in question is able to prove they have been non-resident for an uninterrupted period of at least three years.

“By any measure, this new test is the opposite of modernisation and a step back towards locking in retirement funds after becoming non-resident for tax and exchange control purposes,” it said.

“Furthermore, if the test is to be based on residency, it is not clear why withdrawal is subject to a period of three full years. If the taxpayer has ceased residency, why impose a punitive lock-in of this extent?,” the firm asked.

Tax Consulting SA that the proposed amendment will do away with a well-established process that allows emigrants to freely expatriate their retirement benefits with one that is far more restrictive and less transparent.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

Andrew Stegmann
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Cape Town Concerned Over Non-adherence to COVID Safety Protocols Like Mask Wearing and Sanitizing. City Warns of Second Wave of Virus

Cape Town’s health department has expressed concerns over the increase in non-adherence to safety protocols, saying this could lead to a second wave of Covid-19 infections.

Mayoral committee member for community services and health, Zahid Badroodien, said some residents were no longer wearing face masks in public and social distancing protocols were being ignored by many businesses.

Badroodien feared the work that went into halting the spread of the coronavirus could soon be undone if citizens dropped their collective guard.

“Our environmental health practitioners are particularly concerned about the number of people who are going about their business in public without masks, as well as crowd management in shops, malls and other public amenities,” said Badroodien.

“Cape Town worked very hard to overcome the peak of the pandemic so we could start focusing on rebuilding lives, communities and the economy. All of this hard work will be undermined if we drop our collective guard.”

Over the past few months, the Covid-19 caseload and related fatalities have decreased significantly, with fewer cases registered every day.

On Tuesday, SA recorded 1,027 Covid-19 cases, pushing the number to 683,242. There were 87 deaths reported compared to 40 on Monday, and 15 were from the Western Cape. This brings the total number of deaths to 17,103.

Badroodien said a second wave could set Cape Town back from making progress in decreasing the number of deaths.

“I hear far too many anecdotes about the pandemic being a thing of the past. This is not true, particularly if one looks at the many countries where lockdowns have had to be reintroduced as a result of a second wave of infections,” he said.

“Cape Town and SA must take heed from these cautionary tales and do everything possible to mitigate the risk of a second wave here.

“We therefore urge the public to continue abiding by the health and hygiene protocols and to wear a mask at all times in public to help avoid a second wave of infections locally, or at the very least mitigate the impact thereof.”

Second wave plan

According to health minister Zweli Mkhize, a plan has been tabled should the country be hit with a second wave.

TimesLIVE reported that Mkhize told a webinar hosted by the SA Medical Association that while the worst was over, SA may still be facing a second surge.

He said the plan would follow the World Health Organisation’s (WHO) guidelines on how to deal with the second wave.

“Of course, we may still be facing a second surge. I think we all speculate about how likely that is because many of the countries that are overtaking SA are in a second surge. Whether it’s going to be like that in SA depends, of course, on how we deal with our containment measures,” said Mkhize.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

Andrew Stegmann
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Relocation Africa’s Algerian Immigration Interview

Our Immigration Lead, Lynn Mackenzie, recently had the pleasure of speaking to François, our Algerian immigration partner, about Algeria’s current immigration landscape.

To listen to Lynn and François’ conversation about immigration in the current context, click here to view the recording, or view it below.

We would like to say a huge thank you to François for his insights. We hope you enjoy the recording.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

Andrew Stegmann
,

Cape Town Dam Levels at Historic 100.8%

The Mother City has come a long way since Day Zero. The dams supplying Cape Town with water are at an historic 100.8%, and are full for the first time since 2014.

The latest dam level reading shows that levels increased by 1.3% to 100.8% in the last week. The fullest dams are Theewaterskloof at 101.7%, Steenbras Lower at 101% and Berg River at 100.7%. The remaining major dams are just under 100%.

This time last year, dams were 81.4% full, in 2018 they were 75.9% full and in 2017, an astounding 37.7% full. Theewaterskloof, the Western Cape’s largest source of water, is currently overflowing. Three years ago the very same dam was at 12.9% full, and Cape Town was days away from being the first city in the world to run out of potable water.

On October 2, the City announced that the dams have reached 100% capacity, thanks to an intensive whole-of-society effort to protect our available water supply before, during and after the shock of Day Zero.

“It is clear that as a society we have completely changed our relationship with water,” said the City’s Mayoral Committee Member for Water and Waste, Alderman Xanthea Limberg. “The City’s water saving achievements have been internationally lauded, with the International Water Association naming Cape Town the world’s number 1 water saving city for reducing demand by 55% between 2015 and 2018 without resorting to intermittent supply.”

However, Limberg warns that this exciting milestone does not indicate permanent water security. “Full dams may give the impression that our troubles are over, but rainfall this year was only just above average. Low consumption has also contributed to the recovery of the dams. Although there is some room to relax, we need to remain vigilant that water consumption remains at a water wise level and proceed diligently with additional water sources including groundwater, reuse and desalination as outlined in the City’s Water Strategy,” she said.

She warns that another drought could strike, and last much longer than the one The Mother City battled over the last few years. “Climate change studies undertaken by the City indicate that droughts such as the one we have just experienced will occur more often and last longer.”

On the question of easing water tariffs, Limberg adds that appropriate tariffs and restrictions for the 2020/21 hydrological year (which runs from November 1 to October 31) are currently taking place. “Tariffs are currently on the second lowest level possible in terms of the City’s 2020/21 Budget, and have come down significantly since the peak of the drought. The no restriction, water-wise tariff which is under consideration will provide some relief, but with due cognisance of the importance that sufficient funding is available to continue increasing our resilience. “Also being taken into consideration is the projected increase of the proportion of residents needing indigent support, in part due to the deteriorated national economic climate.”

Read the dam report here: Dam Levels October 5

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].