My clients are 2 retired individuals. They moved to Canada on 8 July 2017 and intend on staying there. They are now considering whether it will be better for them to formally emigrate or only relocate from a financial point of view.
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
In order to correctly advise your clients, you need to determine if they are persons who are deemed to be exclusively a resident of Canada for purposes of the application of any agreement entered into between the governments of the RSA and Canada for the avoidance of double taxation. You mention that they “are … unlikely to return to SA” – that may well mean that they are no longer ordinarily resident in the RSA. If so, they would already have ceased to be residents (see section 9H of the RSA Income Tax Act), for tax purposes, of the RSA. A capital gain would then have arisen and the right to tax the income earned thereafter, with a source in the RSA, would be determined in accordance with the treaty.
The SA Reserve Bank implications or request with regard to that, is best addressed to an authorised dealer. The SARB guide gives some good explanations of the issues involved. We noted that the issue arose because the value of the assets may have exceeded the R10 million (or R20 million) amount. Retention of bank accounts or assets in the RSA doesn’t have an impact of the question of where they are residents for tax purposes.