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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].

Finance Minister Tito Mboweni Tries to Keep the South African Reserve Bank from Being Nationalized

Finance Minister Tito Mboweni took to Twitter recently to ask what the ANC wanted to achieve by nationalizing the bank.

The African National Congress (ANC) has cautioned Finance Minister Tito Mboweni to be aware of the implications of his comments about the party’s position to nationalize the South African Reserve Bank.

Mboweni, who is also an NEC member, has tweeted that the ANC adopted the wrong resolution during its policy conference in 2017 by wanting the central bank to be nationalized.

The issue of what purpose the reserve bank should and should not serve has once again played out within the ANC.

Mboweni took to Twitter recently to ask what the ANC wanted to achieve by nationalizing the bank.

“As a long standing member of the ANC and its leadership structures, I know and understand our resolutions. I don’t need lectures on that. But on the SARB, I am convinced that we adopted a wrong resolution. What do we want to achieve? Our Strategic focus: Structural Economic Reforms,” Mboweni said recently.

“As of now, 90% of the SARB profits are handed over to the National Revenue Fund. So? What do we want to achieve? Tell the public. Lets debate. Don’t say internal debates, this is a fundamental National debate. Answer the question. What do you want to achieve by nationalizing the SARB. Don’t tell me about internal debates, NEC, etc. what do you want to achieve? Lets answer that fundamental question. Party spokesperson Pule Mabe said that the leadership of the ANC was expected to be consistent, coherent and united on policy positions. The leadership of the ANC is expected to appreciate the need to articulate a consistent, coherent and unified message on policy positions. Unfortunately, public spats initiated without any provocation feeds into the narrative of lack of policy certainty,” he continued.

ANC leaders counter-attacked each other last year about the mandate of the central bank, with some saying the mandate of the institution should be expanded to include job creation.

The party said that only the ANC national conference had the right and power to change any decisions.

 

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].

South Africa to Get Limited Edition R25 Natura Series Dinosaur Coin in 2020

Finance minister, Tito Mboweni recently confirmed that a new 2020 Natura series collectible coin will be released in South Africa next year and it features nothing other than dinosaurs!

The South African Mint, a wholly-owned subsidiary of the South African Reserve Bank (SARB), reports that a new chapter in the award-winning Natura series began with the introduction of the paleontology theme in 2018, in recognition of South Africa’s significance to this field and study of plant and animal fossils.

The first installment of the paleontology-themed 24ct gold coins focused on ‘Rise of the dinosaurs – Archosauria, and as a response to popular demand, the SA Mint released the very first silver Natura coin under this theme in 2019.

Now, SA Mint is proud to introduce the 2020 silver Natura coin, the second-ever silver coin to join the Natura series.

This coin also focuses on the ‘Rise of the dinosaurs – Archosauria’ theme and bears the same image as the 2018 1oz 24ct gold coin – the Coelophysis rhodesiensis.

R25 coin

This R25 fine-silver coin features the Coelophysidae which were highly successful primitive theropod dinosaurs that lived worldwide from the late Triassic to early Jurassic.

Coelophysis rhodesiensis, a small, agile dinosaur which preyed on small animals, inhabited South Africa and Zimbabwe during the early part of the Jurassic period. This slenderly built, bipedal dinosaur grew up to 3 m long and weighed about 32 kg.

The coin will be a limited edition with only 50 000 coins being made.

Common obverse

The obverse depicts the fossilised skull, neck and shoulder of an Erythrosuchus africanus. The words ‘Rise of the dinosaurs’, ‘Archosauria’ and the year 2020 as roman numerals ‘MMXX’ complete the obverse design.

Earlier this year, SA Mint released the SA25 themed coin range under the series ‘Celebrating South Africa’.

“2019 marks a monumental 25 years of Constitutional Democracy for the nation of South Africa,” said SA Mint. “To reinvigorate national pride, the South African Mint released the SA25 themed coin range under the series ‘Celebrating South Africa”. SA Mint went on to develop the range, “giving everyone an opportunity to reflect on our diverse identity as a country”.

 

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

Sources: [1], [2], [3]. Image sources: [1], [2].

Highlights From South Africa’s Second 2019 State of the Nation Address

South African President Cyril Ramaphosa delivered the country’s second State of the Nation Address yesterday evening, keying South Africans into his plans going forward, now that the country’s new Parliament is settling in, after the recent general election.

Below are 10 highlights from his speech.

  1. A special appropriation bill is to be tabled to allocate a significant portion of the R230 billion that Eskom needs to pay its debtors and keep the lights on.
  2. The president reaffirmed the constitutional mandate of the Reserve Bank “to protect the value of our currency in the interest of balanced and sustainable growth”.
  3. The Minister of Communications has been instructed to issue policy direction to the Independent Communications Authority of SA (ICASA) to begin licensing spectrum that will significantly reduce data costs.
  4. To return public money that has been looted, civil claims arising from investigations conducted by the Special Investigative Unit (SIU), estimated to be around R14.7 billion, will be fast-tracked.
  5. The Presidency plans to drive the implementation a comprehensive plan to create two million jobs for young people over the next 10 years.
  6. Government intends to double international tourist arrivals to 21 million by 2030, by introducing a “world-class visa regime”, and focusing on tourists from China, India and the rest of Africa.
  7. Government plans to accelerate efforts to identify and release public land that is suitable for smart, urban settlements, as well as for farming.
  8. Government plans to establish a gender-based violence and femicide council to guide the former’s efforts to eradicate gender-based violence in South Africa.
  9. Ramaphosa announced plans to train foundation and intermediate phase teachers to teach reading in English and African languages, and to deploy experienced coaches to provide on-site support to teachers.
  10. The President said he envisions the first new city built in the democratic era, with skyscrapers, schools, universities, hospitals, and factories, to ease the pressure on the congested cities of Pretoria, Johannesburg, Durban, and Cape Town. This includes the construction of a cross-country high-speed train.

To watch the full Address, click here.

South African President Cyril Ramaphosa delivers the country’s second State of the Nation Address on Thursday, 20 June 2019.

 

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

Sources: [1], [2], [3], [4]. Image sources: [1], [2].