Mrs A aged 60, Married ANC wants to emigrate to the UK with her husband who is a Pharmacist. Her total investment portfolio is worth R 3,663,240 and consists of: Retirement annuities R 1,137,391 Living Annuities R 1,327,206 Other investments R 1,198,643
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
In terms of paragraph (b)(x)(dd) of the definition of “retirement annuity fund”, in section 1(1) of the income Tax Act, a member who discontinues his or her contributions prior to his or her retirement date shall be entitled to … the payment of a lump sum benefit contemplated in paragraph 2(1)(b)(ii) of the Second Schedule where that member –
(A) is a person who is or was a resident who emigrated from the Republic and that emigration is recognised by the South African Reserve Bank for purposes of exchange control; or
(B) departed from the Republic at the expiry of a visa obtained for the purposes of—
(AA) working as contemplated in paragraph (i) of the definition of ‘visa’ in section 1 of the Immigration Act, 2002 (Act No. 13 of 2002), or
(BB) a visit as contemplated in paragraph (b) of the definition of ‘visa’ in section 1 of the Immigration Act, 2002 (Act No. 13 of 2002), issued in terms of paragraph (b) to the proviso of section 11 of that Act by the Director-General, as defined in section 1 of that Act,
and is not regarded as a resident by the South African Reserve Bank for purposes of exchange control; …
The tax will then be in accordance with the relevant tax tables for lump sums.
The Act does not allow for the living annuity to be commuted into a lump sum, unless when the value of those assets become at any time less than an amount prescribed by the Minister by notice in the Gazette. See the definition of living annuity in section 1(1).