Last month, the South African Revenue Service implemented a welcomed change to the foreign investment and emigration tax clearance process for individuals transferring money abroad. These changes are essentially system enhancements to align the different tax clearance processes and make compliance easier.
With official emigration having been phased out in 2021, SARS new tax clearance application processes for foreign investment and emigration allowances now treats all South African individuals the same, regardless of where they live.
This consolidated change is that the new ‘Approval of International Transfer (AIT)’ replaces both the previous ‘Emigration’ and ‘Foreign Investment Allowance (FIA)’ application types, which can conveniently still be applied for via e-Filing. As part of the AIT, the following information will be required by SARS:
- Statements of assets and liabilities must be split between foreign and local
- Tax status (resident or non-resident)
- Are you a beneficiary of a trust (foreign or local)
- Do you have a shareholding (directly or indirectly) in any legal entity of 20% or more (foreign or local)
- Have you made a loan/s to a trust (local or foreign)
For more details on the supporting documents that will be needed, see SARS link here.
Previously, the FIA (R10 million limit) required the completion of a SARS FIA001 Form that would generate a TCS (Tax Compliance Status) PIN for foreign investment. Emigrants followed a similar process, but was issued a TCS PIN for emigration. This has now been consolidated into an enhanced single clearance process, namely the AIT, which aims to dramatically improve turnaround times for taxpayers, provided they are already compliant.
However, these changes only apply to the tax clearance process, with no changes being made on the Exchange Control side. The allowances applicable to South African resident individuals, as well as those who have ceased to be residents for tax purposes (emigrants) remain unchanged, and can be summarised as follows:
- The current R1 million Single Discretionary Allowance limit is still available yearly to all South African resident individuals, 18 years and older, who wish to transfer money abroad, and does not require a Tax Compliance PIN. However, this is only available to emigrants in the calendar year when they leave South Africa. Any further capital transfers for residents or emigrants above R1 million require tax clearance in terms of the AIT process. For applications in excess of R10 million, SARB approval will be required.
In conclusion, this new process applies to new applications for foreign investment and emigration, and does not have any impact on tax clearances that have already been issued. Taxpayers are well advised that whilst SARS have made the process easier to apply, there is a strengthened and technology compliance enabled backend, which is best navigated through an experienced Tax Consultant, like ourselves. We, at Dirmeik Consulting can easily assist clients with this new tax clearance process, whether you are transferring or taking money abroad. We are also able to successfully have you coded as a non-resident tax-payer with SARS, should you choose to emigrate. Contact us today to find out how we can assist you.