Ep.10_Sonja Clarke Talks about the Recent Changes to South African Tax Legislation

On March 1st, 2021 the changes to South African financial immigration tax laws prevented South African's from withdrawing retirement funds for a period of three years. Join us as we continue to address all of your questions and concerns around exiting South Africa cleanly from a tax perspective; including using the new Financial Emigration.  

Transcript

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On today's episode of investing in the American Dream podcast, we have featured guest Sonia Clark Fpp, regional director based out of Johannesburg, South Africa, whose focus is on US immigration through the EB five and e to investment visa programs. Sonia will be discussing the most recent changes to the tax legislation by the South African government, which went into effect on March 1 2021. And how these changes could prevent South Africans from withdrawing retirement funds for a period of up to three years and capping the exemption on foreign earned income. Sonia's goal today is to help inform and prepare investors in respect to navigating the situation with clarity and success and to provide her clients with the best tax experts so they can build the right roadmap when planning immigration. Let's get into it. Hi, Sonia, it's so great to have you on the podcast today. Thank you for joining us from South Africa. Hi, Jessica, thank you so much for having me. So Sonia, I've provided our listeners with a brief overview of our topic today. But I have some questions that came up after our last webinar in relation to the tax legislation changes. So I'm hoping you can address some of those. But first, could you please explain what these changes in the legislation mean to investors in South Africa? Absolutely, Jessica. So basically, what this means for investors with international economic interests is that the potential of double taxation on the income is imminent. So would you say a common misconception you see among South African expats is that they believe that they are automatically tax exempt just because there's a double taxation treaty in place between two countries. Yes, Jessica. And unfortunately, these presumptions neglect, to acknowledge the reality of the situation, which is that there are various factors that need to be considered and objectively proven, as citizens are still required by law to file a tax return and claim exemptions under the treaty relief. So I think it's great that your goal today is to help inform and prepare investors in respect to navigating the situation. Yes. And also the reason this topic so relevant to our south african audience is because around 23,000 taxpaying residents actually leave South Africa every year, which is quite astounding. And in an effort to curb this Exodus, the South African government amended the expatriate tax law. By capping the exemption on foreign earned income at 1.2 million Rand, and any person who's considering leaving South Africa permanently should carefully take into account that the tax implications of ceasing to be a tax reason and Tia as well as the further consequences of such a departure should he or she formally emigrate for exchange control purposes and immigration for tax purposes could have an imminent tax consequences with possible liability protects. And this liability is often missed, which could result in incorrect disclosure being made or late payments or tax and this in turn could actually attract penalties and interest. So what is the new financial immigration process for South Africans? So while the new process came into effect, as we know from the previous webinar on the first of March 2021, and is undergone various changes, such as the process is now fully tax focused on whether or not you meet the requirements to cease tax residency in South Africa. So basically, it's the formal process with the South African reserve bank to know oneself as a non tax resident for tax. So we talked briefly about exit tax. Can you elaborate? Of course, sure. So exit text is the text that might be paid on certain worldwide assets when one ceases tax residence residency for South Africa and this is a fundamental step in ceasing residency, often one that is forgotten leaving the door open for saws to question whether one has fully met the requirements to cease residency, which is a big concern. Right. And why is it important to consider the tax implications for your exit as well so the South African tax tax legislation, as we know is complex and a determination terms of the tax residency takes a taste of one specific situation must be done to ensure both compliance as well as a smooth and clean exit from SA so dealing moving out the country does not cut one TechStars and can often leave people in a situation where they are still liable for tax on gold. on income and assets after leaving, which is something to be well noted. Right. Thanks for breaking that down. And lastly, can you explain the importance of having a roadmap, let's say when planning and immigration, of course, absolutely. So the road map is specifically important for those that have to yet leave sa but are planning to do so. So understanding one's full potential or one's full, full personal situation and their plans is essential in creating a roadmap. And that is both practical as well as efficient. So that is hard money. Important to note. Well, Sonia, thank you so much for your time today and for giving us that high level overview on South Africa's tax legislation changes and how double taxation could affect South Africans, just because so much appreciated. And I'm happy to be able to share this valuable information with my fellow South Africans. And I would like to invite you all to join us for our second webinar on the topic, South Africans immigrating to the US investment programs and tax planning considerations. And this webinar will help you understand the US investment programs and how double taxation may affect South Africans moving to the United States. Thank you, Jessica. Thank you, Sonia. And if you would like to meet with Sonia or attend this webinar, you can register online at www dot first pathway.com Thanks again. It's a pleasure. Thank you, Jessica for having me again. If you would like to know more about first pathway partners, and how they can help you with a direct Eb five investment or if you're looking for other visa opportunities such as an E two visa, please contact them directly online at www dot first pathway.com