Treasury tightens the noose on emigrants’ retirement assets

Brontosaurus

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Oct 19, 2009
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huh? How does one settle debts with pre-tax income?

Dude read literally the next sentence I posted.

Any investment you make (with the exception of an RA contribution) is used with post-tax income, however, these investments also have their own form of tax (100% for speculative and 66.6% for capital gains).

The settlement of debt doesn't have these "additional taxes".

The assets which are tied to these debts - in this case your house - has a primary residence exclusion (last I checked, which was a while ago, it was R3.5m) for capital gains.

Sorry this is getting complicated, but the point is, settle your bond first, or take the risks that come with an RA, which are evident from the main point of this thread, which I've now deviated drastically from :D
 

deweyzeph

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This is the death knell for retirement annuities. I have no plans to emigrate any time soon, but this is enough to make me abandon my retirement annuity for good now. I'm sure a whole lot of people are going to be rethinking whether a retirement annuity is a good fit for them too.
 

deweyzeph

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Dude read literally the next sentence I posted.

Any investment you make (with the exception of an RA contribution) is used with post-tax income, however, these investments also have their own form of tax (100% for speculative and 66.6% for capital gains).

The settlement of debt doesn't have these "additional taxes".

The assets which are tied to these debts - in this case your house - has a primary residence exclusion (last I checked, which was a while ago, it was R3.5m) for capital gains.

Sorry this is getting complicated, but the point is, settle your bond first, or take the risks that come with an RA, which are evident from the main point of this thread, which I've now deviated drastically from :D

Deemed capital gains tax (which is actually what the "exit tax" is), is based on the value of your asset on the date of the deemed disposal (the day before you become non-resident) LESS the base cost of your investment. So the actual tax itself can never be more than the value of your RA on the deemed date of disposal, just by definition. The issue here is that because of the timing difference between the deemed date of disposal and the 3-year wait before you can withdraw your funds, it's possible that the CGT plus interest could accumulate to the extent that it is more than the value of your investment AFTER the 3-year wait when you can withdraw it. The solution then, if you can, is to pay the deemed CGT as soon as you become non-resident, and not wait the 3-years before you can liquidate the RA.

The inherit unfairness here is not necessarily the CGT, but the 3-year wait before you can liquidate to pay the CGT.
 

Hamster

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So this is the thing where they said they want to stop people who get a tax break in SA avoid paying back that tax in SA?

Do half of you commenting actually understand what is being said btw?
 

SauRoNZA

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I always assumed this was already the case that if you want to move it out of the country it’s a full withdrawal with the usual tax applicable.
 

HavocXphere

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Sorry this is getting complicated,
Well I studied this stuff so think I'll manage. ;)

What I was getting at is that to my knowledge there is no way to apply pre-tax income (either from salary or from investment income) against debt as you claim. Closest I can think of is against the interest on debt, which is deductible in some cases and thus effectively pre-tax as per the logic you outlined. The capital component of the debt repayments are always effectively paid post-tax since they're not deductible.
 

JayM

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Anyone know how this would affect a Provident Fund?

That you can still withdraw when you resign, or make a single withdrawal at a later stage from a preservation fund. For now anyway....I suspect this will be the next easy target they go for.
 

killerbyte

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That you can still withdraw when you resign, or make a single withdrawal at a later stage from a preservation fund. For now anyway....I suspect this will be the next easy target they go for.
Thats great news! Hopefully they don't come for them before I leave.
 

JayM

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Deemed capital gains tax (which is actually what the "exit tax" is), is based on the value of your asset on the date of the deemed disposal (the day before you become non-resident) LESS the base cost of your investment. So the actual tax itself can never be more than the value of your RA on the deemed date of disposal, just by definition. The issue here is that because of the timing difference between the deemed date of disposal and the 3-year wait before you can withdraw your funds, it's possible that the CGT plus interest could accumulate to the extent that it is more than the value of your investment AFTER the 3-year wait when you can withdraw it. The solution then, if you can, is to pay the deemed CGT as soon as you become non-resident, and not wait the 3-years before you can liquidate the RA.

The inherit unfairness here is not necessarily the CGT, but the 3-year wait before you can liquidate to pay the CGT.

I'm not sure it will be CGT rather than the standard withdrawal tax rates. The included CGT (40% currently) is taxed as income at marginal rate, and that will complicate things because people could simply become non resident at the start of a new financial year and have 0 recorded income, greatly reducing the amount of tax payable.
 

HavocXphere

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people could simply become non resident at the start of a new financial year
A solid strategy anyway given that the primary/secondary allowance isn't pro rata.

I very much doubt people moving their entire life will structure things around this though. Maybe for millionaires.
 

Johnatan56

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A solid strategy anyway given that the primary/secondary allowance isn't pro rata.

I very much doubt people moving their entire life will structure things around this though. Maybe for millionaires.
I have literally done this, next week I'm out of the country, definitely far from a millionaire, planned it so I fall under brackets in both countries. :p
 

HavocXphere

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I have literally done this, next week I'm out of the country, definitely far from a millionaire, planned it so I fall under brackets in both countries. :p
haha nice.

You are the exception though. Most people are taking a multi year run-up to emigrating and certainly can't time it with month accuracy

Pro rata is interesting though cause regardless of timing you're likely to benefit
 

maumau

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His point isn't that it is applicable to whites only. His point is that the government and most of the population don't want white people here but doing everything they can to take from them what they can before they'll "allow" them to leave. It irks a lot of people that they can't trap white people here in poverty. IIRC Malema said he wants a white domestic.

The big difference here is that black people are the heroes of SA, so if they leave they are going to be missed. When they leave it is for noble reasons. White people leave because they are being kicked out and told they aren't South African

It is one thing to add an exit tax, whole different thing to add an exit tax while also telling a certain group they should "go back to urop" (quote from twitter)


LOL at go back to urop :X3:
 
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