The Taxation Laws Amendment Bill will stop South Africans from transferring pension funds and annuities overseas. Deadline - March 1 2020
South African expatriates need to take action on any pension funds held in South Africa before March 1, 2021.
According to an article by Sovereign Trust, the urgency is driven by provisions announced in the draft Taxation Laws Amendment Bill on July 31 2020. The new rules are designed to prevent expatriates removing funds from South Africa, but there is a window of opportunity for transferring the funds out provided certain conditions are met. Funds can currently be withdrawn if South African expatriate have financially emigrated, can demonstrate they have been a non-tax resident for three consecutive tax years and have not yet reached retirement age.
Sovereign Trust , warned that any pension funds/retirement annuities remaining in South Africa would become challenging to manage. Those funds would remain tied to the uncertain South African economy and potentially be tied to potentially unprofitable government sponsored investments.
Sovereign Trust was quoted as saying, ‘The real and ever-present danger is that South African-based retirement and pension funds will be forced to apportion a fixed percentage of their funds into government infrastructure projects and bailing out state-owned enterprises. Those who have already left South Africa should, if they have not done so already, should examine their options for any retirement funds they have left behind.”
Sovereign further advised that ‘prospective expats, particularly those retired or close to retirement, should consider funding an overseas pension account in lieu of contributions to an SA-based retirement annuity or pension.’
This issue is further evidence that South African expatriates need to pay close attention to financial planning to protect their assets. If you would like to learn more join our free webinar on Tuesday 8th Dec 2020 with South African international fiduciary expert Geoff Dore who will look at how South African expatriates can maintain tax efficient, offshore investments in stable international currencies. The webinar will include a live Q&A for you to put your question to Geoff. Register here https://bit.ly/MCP_SouthAfrican