The new Tax Amendment Act introduces some significant changes to the definition of financial emigration. Under the new definition, financial emigration means a person’s tax status changes from being a South African resident to a non-resident. The current laws allow for withdrawals from retirement annuities and preservation funds in the event of a financial emigration if the emigration is recognised by SARB for exchange control purposes. The Tax Amendment Act 23 of 2020 states that a person who is not a resident for an uninterrupted period of three years or longer on or after 01 March 2021 will be eligible for financial emigration.
What does this mean for you?
1. You plan to emigrate after 01 March 2021
You will have to wait for the required timeframe of three years to lapse before you can access your funds. Note that SARS may require proof of your financial emigration before allowing this claim.
2. You have already left South Africa more than three years ago.
You will have to prove non-tax residence to encash your retirement fund savings. Please consult your financial advisor and/or a qualified tax practitioner if you are affected.