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Provided by the South African National Department of Health
Tax compliance changes:
what you need to know
Fiduciary and Tax Specialist
May 31, 2023
On 24 April 2023, in the wake of South Africa’s greylisting by the Financial Action Task Force in February, SARS announced changes to the TCS process – with immediate effect. According to SARS, the system is being enhanced to align with international standards. The changes were further necessitated by the elimination in 2020 of the concept of emigration. The new process consolidates the formerly separate foreign investment allowance and emigration tax clearance applications into a single new Approval International Transfer (AIT) application.
In announcing the changes, SARS said the additional information now requested on the AIT application allows it to ensure tax compliance and, if necessary, to address any non-compliance detected through verification and/or an audit.
The revised AIT process applies to South African residents transferring money out of South Africa as well as those who have become non-resident for tax purposes.
For such non-tax-residents, the following information and documents are required:
*Fund sources usually include cash or savings, distributions from a trust, donations, dividends from a company, inheritance, loans, proceeds from the sale of property, crypto assets, shares and other securities, and transfer of listed securities.
Note: With regard to the withdrawal of certain retirement funds before the age of 55, such as lump-sum benefits from pension preservation, provident preservation and retirement annuity funds, the payment of such lump-sum benefits will be allowed only if the individual has remained a non-tax-resident for at least three consecutive years.
For South African tax residents, the following information and documents are required:
SARS has reserved the right to request further information and documents for applications. It will use the information provided in the application to determine if taxpayers have been compliant in their dealings with SARS. If there are any discrepancies, this will result in further verification or even a formal tax audit.
The turnaround time for applications is 21 working days. However, due to the additional information and documents that are now being requested, we expect this timeline to be exceeded and applicants should bear this in mind.
It should be clear that taxpayers seeking to externalise funds will now have to exercise a much higher degree of diligence to ensure that their affairs are in order, and it is imperative to obtain professional advice in this matter.
At Sanlam Private Wealth, we provide enhanced tax compliance services to high net worth and ultra-high net worth clients. If you’d like any further information, please contact Kajal Chowthee at firstname.lastname@example.org.
The formation and registration of trusts, and the provision of independent trusteeships – both local and oﬀshore.
The creation of BEE, charitable, special and Shariah trusts compliant with regulatory and legislative requirements.
The administration of deceased estates in South Africa and abroad.
Advice on complex structures, asset restructuring and bequests in foreign jurisdictions.
Advice on emigration and immigration, foreign earnings and the application of any double taxation agreements.
Updating trust deeds to ensure they’re in line with the latest changes in the trust environment.
Updating and/or drafting of wills dealing with South African and/or foreign assets.
Advice on the establishment and management of charitable organisations, their tax status and tax deductible donations.
Advice on the potential tax consequences and reporting obligations if you hold a US passport or green card, or if you have children living in the US.
Guidance on the financial implications of life-changing events, such as getting married, divorce or the birth of a child.
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Sanlam Private Wealth (Pty) Ltd, registration number 2000/023234/07, is a licensed Financial Services Provider (FSP 37473), a registered Credit Provider (NCRCP1867) and a member of the Johannesburg Stock Exchange (‘SPW’).
All reasonable steps have been taken to ensure that the information on this website is accurate. The information does not constitute financial advice as contemplated in terms of FAIS. Professional financial advice should always be sought before making an investment decision.
Participation in Sanlam Private Wealth Portfolios is a medium to long-term investment. The value of portfolios is subject to fluctuation and past performance is not a guide to future performance. Calculations are based on a lump sum investment with gross income reinvested on the ex-dividend date. The net of fee calculation assumes a 1.15% annual management charge and total trading costs of 1% (both inclusive of VAT) on the actual portfolio turnover. Actual investment performance will differ based on the fees applicable, the actual investment date and the date of reinvestment of income. A schedule of fees and maximum commissions is available upon request.
COLLECTIVE INVESTMENT SCHEMES
The Sanlam Group is a full member of the Association for Savings and Investment SA. Collective investment schemes are generally medium to long-term investments. Past performance is not a guide to future performance, and the value of investments / units / unit trusts may go down as well as up. A schedule of fees and charges and maximum commissions is available on request from the manager, Sanlam Collective Investments (RF) Pty Ltd, a registered and approved manager in collective investment schemes in securities (‘Manager’).
Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. The manager does not provide any guarantee either with respect to the capital or the return of a portfolio. Collective investments are calculated on a net asset value basis, which is the total market value of all assets in a portfolio including any income accruals and less any deductible expenses such as audit fees, brokerage and service fees. Actual investment performance of a portfolio and an investor will differ depending on the initial fees applicable, the actual investment date, date of reinvestment of income and dividend withholding tax. Forward pricing is used.
The performance of portfolios depend on the underlying assets and variable market factors. Performance is based on NAV to NAV calculations with income reinvestments done on the ex-dividend date. Portfolios may invest in other unit trusts which levy their own fees and may result is a higher fee structure for Sanlam Private Wealth’s portfolios.
All portfolio options presented are approved collective investment schemes in terms of Collective Investment Schemes Control Act, No. 45 of 2002. Funds may from time to time invest in foreign countries and may have risks regarding liquidity, the repatriation of funds, political and macroeconomic situations, foreign exchange, tax, settlement, and the availability of information. The manager may close any portfolio to new investors in order to ensure efficient management according to applicable mandates.
The management of portfolios may be outsourced to financial services providers authorised in terms of FAIS.
TREATING CUSTOMERS FAIRLY (TCF)
As a business, Sanlam Private Wealth is committed to the principles of TCF, practicing a specific business philosophy that is based on client-centricity and treating customers fairly. Clients can be confident that TCF is central to what Sanlam Private Wealth does and can be reassured that Sanlam Private Wealth has a holistic wealth management product offering that is tailored to clients’ needs, and service that is of a professional standard.