“My wife and I left South Africa in 2008 and have been told we must financially emigrate in order to receive an inheritance from our parents living in SA. My only remaining asset in SA is an RA of R34,000.” – Client
The short answer to this scenario, in most instances, is that you can do nothing until such time as you actually inherit, and then it will depend on certain variables applicable to your specific situation.
The longer version of the answer involves considering the following:
Financial emigration no longer exists
The South African Reserve Bank (SARB) removed the process of financial emigration as of 31 March 2021. Along with the end of financial emigration came the end of blocked Rand accounts, MP336 forms, and a number of related processes.
If you still have an active SARS tax number, you should undertake the process of changing your tax status with SARS to non-resident. In the scenario you described, you are unlikely to have any tax implications in South Africa if you simply left with nothing but a backpack when you were young (as many South Africans did); or you sold your family home and cashed in any South African investments and transferred the proceeds overseas with you when you left.
There could be deemed capital gain implications if you had worldwide assets, and/or assets in South Africa that you didn’t sell at the time of leaving e.g. a flat in Europe, an offshore share portfolio, or a share in a business in SA.
If you do not have an active SARS tax number, e.g. you left SA a long time ago, SARS does not want you to re-register for a tax number only to change your status to non-resident. Unless, of course, you had remaining assets in SA in your name, which are subject to South African tax.
Do you still have your South African ID document?
If you still have your green, barcoded SA ID book or ID card, this may enable you to make use of the annual R1 million single discretionary allowance (SDA) when receiving your inheritance. This could cut down on the amount of admin involved when inheriting.
If you are married to a South African who has the above ID book, you can possibly make use of their allowance as well (donations between spouses are tax free).
How much are you inheriting?
For inheritances of R10 million and below, the SARB has made a concession, noting the challenge beneficiaries face now that financial emigration is no longer an option). Applications by private individuals who are no longer tax resident in South Africa, and are no longer active on the SARS registered database, and receive an inheritance or life insurance policy up to R10 million will not require tax clearance. The challenge for beneficiaries living overseas is demonstrating they ceased to be resident for tax purposes and are no longer active on the SARS database.
For inheritances over R10 million – a tax clearance will be required, even if the beneficiary is no longer active on the SARS system.
We’ve been helping individuals and businesses make international transfers out of South Africa for over 20 years. For help receiving a South African deceased estate, you can get in touch at firstname.lastname@example.org or give one of our advisers a call on +27 (0) 21 657 2133.
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