Client emigrated. not tax resident from 2013YOA from day moved to marry in USA. No IT12s filed since then. BUT has an investment at Stanlib & wants to take it out now. Question is about the mechanics of SARS recognising move to non-resident status 6 years
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
The practice generally prevailing, which was the same for the year of assessment in question, in this respect reads as follows:
“Generally, if a natural person emigrates from the Republic to another country, that person ceases to be a resident of the Republic from the date that person emigrates.”
From the information provided, that date was in 2013, and it appears that the MP336(b) form was NOT completed and submitted to the authorised dealer then. We base this on the fact that you say “the value is today's value”.
The person then probably also didn’t inform SARS at the time – because there was no actual financial emigration at the time. It is highly likely, if not absolutely so, that the individual already ceased being a resident of the RSA. Remember that a person ceases to be a resident of the RSA when the person became a person who is deemed to be exclusively a resident of the USA for purposes of the application of any agreement entered into between the governments of the RSA and the USA for the avoidance of double taxation – see paragraph 2 of Article 4 and the proviso to the definition of resident in the RSA Income Tax Act.
The individual would then have had to inform SARS, when the return of income for the year during which residency in the RSA ceased, of this fact, the date thereof and would have declared the capital gains that arose because of this. A voluntary disclosure may well be necessary if this was not done.
SARS can’t, as you say, “treat her as resident up till now” and the ‘income’ earned with a source outside the RSA after that date is irrelevant.
The SA Reserve bank, in response to the following question: “I have been living abroad for a number of years, how do I formalise my emigration?”, mentions the following:
In terms of exchange control policy, private individuals (natural persons) who reside permanently in a country outside the Common Monetary Area are required to formalise their emigration by completing a Form MP336(b).
Your emigration should be formalised through a local commercial bank of your choice in South Africa as follows:
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Complete a Form MP336(b) – Emigration: Application for foreign capital allowance. The form is available from the South African Reserve Bank website www.reservebank.co.za by following the links:
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Publications and Notices > Forms > Filter By Category: Financial surveillance and exchange controls and Year: current year > Form MP336(b) Emigration: Application for foreign capital allowance.
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Apply for a Tax Clearance Certificate - Emigration via the South African Revenue Service (SARS) eFiling system. The Tax Clearance Certificate - Emigration is based on the Form MP336(b), therefore, you will also have to provide SARS with a certified copy of the completed Form MP336(b).
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If you have resided permanently outside South Africa for a period longer than five years and you do not possess any assets other than an inheritance or insurance policies, it would not be necessary to obtain a Tax Clearance Certificate - Emigration.
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Submit the Form MP336(b) and the Tax Clearance Certificate - Emigration, if applicable, to your bankers. You will also have to submit any other documentation as required on the Form MP336(b), which includes a copy of the permanent residence permit, if you have been granted permanent residence abroad.