Can you please give me more information regarding Financial emigration? Will one still need to submit tax returns after the application has been approved? A client wants to apply for financial emigration.
Important:
This answer is based on tax law for the year ending 28 February 2020.
Answer:
This is not really a tax related issue.
It is our understanding that the term ‘financial emigration’ is the process whereby a South African resident changes their status with the Reserve bank to a non-resident. The RSA Reserve Bank guide refers to ‘individuals regarded as residents by the Financial Surveillance Department who are leaving South Africa to take up permanent residence in any country outside the CMA’ – paragraph 4.1. Paragraph 4 of the guide deals with the process to be followed in this regard. It is not a tax related issue and best referred to an authorised dealer.
From a tax point of view, if the person has not formally left South Africa, i.e. emigrated or no longer ordinarily resident in the RSA, the tie breaker clause of the relevant treaty, if any, will have to be considered. In other words, where the individual is liable to tax in the RSA by reason of that person’s domicile, residence, or any other criterion of a similar nature. This term does not include any person who is liable to tax in South Africa in respect only of income from sources therein. For purposes of the tie-breaker, the country where a permanent home is available to the individual, will, in the first instance, be important.