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Author Topic: Taking money out when immigrating  (Read 2921 times)

Offline Johan01

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Taking money out when immigrating
« on: April 27, 2007, 03:03:15 am »
How to get through the ins and outs of emigration

ZILLA EFRAT's quick guide to approaching the many important decisions involved in leaving

EMIGRATION is right up there with life's biggest stresses. But while South Africa's foreign exchange control regulations don't make life easier for those leaving, careful financial planning will.

For the seriously wealthy, emigration is a minefield of potential legal and tax problems. For the rest of us, the choices are much simpler.

A family which officially emigrates can take out a settling-in allowance of up to R400 000, plus the R80 000 annual travel allowance for each member over 12 and R25 000 for those under.
In addition to this, you can ship household goods worth R100 000 and a car (or two) up to the same value.

Whatever you have over and above this, however, remains behind and is "blocked". You can still receive all the income earned on your blocked funds, so the way you structure these assets is crucial.

How to structure the assets left behind

The name of the game is to invest for high income generation, rather than capital gain.
Johann Benade, associate director at accounting firm Ernst & Young's entrepreneurial services and tax consulting division, says there are a host of ways to maximise your income.
But what you do depends on the country you are going to and the assets you already own.

You will need to start planning at least six to eight months before you leave, and it's preferable to work through an expert.

To avoid costly mistakes, carefully research the tax system in your new country.
Some countries may, for instance, treat trusts differently for tax purposes while others, like New Zealand, may not have double taxation agreements with SA, which means paying tax twice if your assets are not properly structured.

Should you form a trust for your blocked funds?
Whether or not to form a trust, company or close corporation should be considered.
Ernst & Young's emigration consultant, Trevor Sussman, says the main advantage of donating all your blocked assets to a trust after emigration is that you will not pay estate duty in SA on those assets when you die.

But trusts offer no income tax benefits to non-residents and can be costly to set up and administer. Also, impending tax changes could further diminish your funds.

The timeshare tip
One common way of taking more money out, it seems, is to buy quality timeshare.
This can be exchanged for weeks at international resorts, which means your family's future annual holidays are paid for, or income is earned if the weeks are sold.

Should you officially emigrate or not?
This is the first choice those of more substantial means have to make.
You can leave unofficially with just your travel allowance - which amounts to R320 000 for a family with two teenage kids - and household goods and car. And if you have left money behind, you can return annually to take it out on your travel allowance.
But be warned: the experts are at odds as to whether this is strictly legal, and you will only be given your allowance if your air ticket is purchased locally.
One advantage of not officially cutting ties with SA is that it will be easier to return if things don't work out in your new country (and stories abound of people returning to SA).
Another is that you won't have your tax affairs scrutinised by the Receiver of Revenue before you leave.

The major disadvantage, says Emigration Network Services' Gwen Lonsdale, is that you will not be able to make use, in another country, of any money you inherit without special permission from the Reserve Bank.
Inheritances of up to R500 000 are automatically received by emigrants overseas.
If you don't officially emigrate, however, you can ask permission to receive money offshore to pay for the likes of children's education or medical bills.

Does the overseas investment allowance affect your emigration allowances?
Last year, citizens were permitted to invest up to R200 000 in foreign assets as a one-off investment allowance.
You can make use of this allowance - which for a married couple amounts to the same as a family's R400 000 settling-in allowance - but you cannot take both allowances. The amount of your overseas allowance is deducted from your settling-in allowance.
According to Lonsdale, taking the offshore allowance now is advisable if you are planning to emigrate or relocate in the future - you avoid any further depreciation in the rand and you start earning foreign income on your assets.
Nonetheless, she adds: "Some people are simply placing these funds in an account that can be drawn on the next day." Investing offshore requires prior clearance from the taxman and, by law, any investment income other than dividends is taxable in South Africa.

What do you do with life assurance policies?
Before you emigrate you will have to decide what to do with your life assurance policies. These can be kept on in SA being paid with your blocked funds, or surrendered, or you can transfer your insurability to the new country.
According to newsletter service, International Personal Finance, transferring your insurability means that any insurance company in your new country, which has an association with your company in SA, will provide the same amount of life cover (charging premiums at its current rates for your age).
The only benefit of this is that no medical will be required, even if you are now uninsurable on health grounds. But the investment value of the policy cannot be transferred and it is effectively encashed.
If you die after emigrating and you kept your policy in SA, your heirs can inherit.

The expense of it all?
Buying air tickets and shipping a container of your household goods and car to your new home can easily set you back R50 000.
According to Magna International Movers, a 20-foot container will cost R25 000 to R30 000 to ship, with insurance, to most destinations.
Magna's managing director Dave Buchanan says your furniture must be at least one year old to avoid customs duty in the foreign country.
He adds that those who do not have permanent residence or a two-year work permit, may have to leave a deposit with their new country's customs department.

Should you take your car?
Whether or not you should take your car is a matter of debate.
It may save the expense of having to buy another at the other end, but you will have to fork out for freight, import duties in some countries, and roadworthy tests.
According to International Personal Finance, cars generally cost more in SA than they do in other countries.
And when it comes to safety and resale values, you could be disadvantaged, as most countries drive on the right hand side of the road.
Finding spare parts may also be a problem.

Emigrants qualify for:
•  A travel allowance: - single person - R80 000 - family unit - R80 000 per adult and R25 000 per child under 12 years.
•  A settling-in allowance: - single persons -up to R200 000 - family unit - up to R400 000. Note: 1. A widow/widower with dependants may also be regarded as a family unit. 2. If you use your overseas investment allowance of up to R200 000, this amount is deducted from the settling-in allowance.
•  Household and personal effects up to a value of R100 000
•  Motor vehicles, caravans, trailers and motor cycles with a maximum value of R100 000.
•  Income from blocked funds can include: dividends from listed JSE companies; interest from bonds or debentures; interest on fixed, savings and notice deposits; income from close corporations; directors' fees/close corporation members' fees; pension payments for those older than 55 or those who have retired because of disability or ill health; income from trusts; cash bonuses from insurance policies; rentals from property. Your blocked funds may be used for:
•  covering living expenses while visiting South Africa: up to R75 000 per family each year, at the rate of R3 000 a day per adult and R1 500 a day per child under 12 years.
•  air travel to and from your new country.
•  tuition and boarding fees for local schools and universities attended by those children who remained behind.
•  membership subscriptions and affiliation fees due to local clubs and medical, engineering and technical societies.
•  premiums on long-term insurance policies - life, endowment and retirement annuity - entered into before you left.
•  child maintenance.
•  mortgage repayments on property
•  up to R100,000 a year in gifts, donations and maintenance to third parties resident in South Africa. Note: 1. Emigrants are allowed to top up their settling in allowances in line with the latest increase (the last one was on November 19 1997).


Offline zatexnz

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Re: Taking money out when immigrating
« Reply #1 on: April 27, 2007, 04:00:04 am »
wow!  Thanks for that info, very helpful indeed.... wish I'd known some of that when we left SA.

Also gives me some things to think about concerning our insurance policies this end....
lekker sweet as, y'all
~ Colleen

SA Going to NZ Advice Forum

Re: Taking money out when immigrating
« Reply #1 on: April 27, 2007, 04:00:04 am »

Offline Nolan

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Re: Taking money out when immigrating
« Reply #2 on: April 27, 2007, 12:54:56 pm »
Thanks Johan, great article. It is however outdated with athe actual Rand amounts they mention. I am on my way out, but when I get back, I will 'update' the article so that the correct amounts are mentioned.

This has however answered many questions I have been struggling with.  O0

Offline Happy Expat

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Re: Taking money out when immigrating
« Reply #3 on: April 28, 2007, 03:04:32 am »
Some interesting points O0


Badprop

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Re: Taking money out when immigrating
« Reply #4 on: May 05, 2007, 11:06:59 am »
The figures would be interesting so see Nolan.  If you sell your house now days that R400 000 is not going to works is it? 

Offline Nolan

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Re: Taking money out when immigrating
« Reply #5 on: May 05, 2007, 01:37:25 pm »
I started adjusting the amounts in Johan's post, but then I discovered a great article on another site which is up to date. Get the latest info HERE.

Then I also discovered THIS article which is also relevant.
« Last Edit: January 30, 2009, 12:59:53 pm by Nolan »

Offline zatexnz

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Re: Taking money out when immigrating
« Reply #6 on: May 05, 2007, 06:34:22 pm »
We were fortunate that when we left, we didn't have enough capital to be worried about it.   Now we've built up some real money, and SA hasn't a handle on it!  :clap:
lekker sweet as, y'all
~ Colleen

SA Going to NZ Advice Forum

Re: Taking money out when immigrating
« Reply #6 on: May 05, 2007, 06:34:22 pm »

Offline Johan01

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Re: Taking money out when immigrating
« Reply #7 on: May 05, 2007, 08:49:22 pm »
Thanks Nolan, Didn't had much time lately to surf around. Busy with winding up 4 businesses plus sold of one and busy with the tranfsfering of assets. Recieved two offers for the house so will see who come to the table first.

I thinl I'll be able to manage monay out, that which stay behind will be used locally for some activities still going on.

Signed about 7 power of attorneys for special tasks that needs to be performed in my absence.

I can only get tax clearance once all deals and financials are finalised. Hopefully the majority of stuff will be dealt with by Friday next week then it is over to relaxing mode for the next 4 weeks and then I am on the way.

Offline Nolan

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Re: Taking money out when immigrating
« Reply #8 on: May 05, 2007, 11:31:50 pm »
So a seriously busy two weeks for you  :gl:

Offline johanpet1

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Re: Taking money out when immigrating
« Reply #9 on: September 20, 2008, 08:52:39 am »
We spoke to a finacial broker which also advised us to not tell to much as door close in your face at lighting speed if you mention the word immigrate .
All this sounds too much for our grey matter.  :idiot2:

He will help us with our stuff at a fee of 1.5 % of all moneys moved. This sound reasonable for us - shame he won't be earning a big paycheck from us  >:D