South African Expats: What are your financial benefits?

If you are thinking of emigrating or you have already emigrated, you will want to make sure you are not missing out on any financial benefits.

A major advantage open to all South African’s is financial emigration — it allows you to withdraw and transfer your retirement annuities offshore.

What is financial emigration?

“Financial emigration is the process to conclude your financial affairs when leaving South Africa to settle in another country – and simply means your status – for exchange control purposes – changes from resident to non-resident. That's all.” – cashkows.com

You don't have to give up your South African citizenship, which means it's purely a financial process.

Benefits of financial emigration:

You’ll be able to transfer assets abroad — up to R10 million per annum per single adult, or R20 million per annum per family unit.

You’ll get a travel allowance — up to R1 million per adult and R200 000 per child under the age of 18 years is allowed.

You’ll be able to export — household and personal effects, motor vehicles, caravans, trailers, motorcycles, stamps, coins and minted gold bars (excluding coins that are legal tender in South Africa) per family unit or single person within the overall insured value of R2 million on export.

You’ll be able to access — retirement annuities and other financial assets before reaching retirement age of 55.

You’ll be able to transfer — trust distributions and inheritances abroad, even after physically leaving South Africa. Also, any passive income received in South Africa, plus any proceeds that have been gained from life cover.

You might be eligible for tax relief -

“Becoming resident in one country while still having financial commitments in another can cause complications to your tax status.” ~ Money Talk, BBC News.

Ryno Viljoen (CEO cashkows.com) states that: “If you’re a South African emigrant and you draw a pension or annuity from South Africa you could save a substantial amount on tax. Luckily South Africa and certain countries have a Double Taxation Agreement (DTA) in place to assist South Africans living abroad. The purpose of this agreement is to eliminate double taxation, which means you may be eligible for tax relief.”

In order to qualify for the tax relief in South Africa, you will need to submit a special application to SARS. The administrative process can be challenging, which is where cashkows.com is ready to assist.

You’re free to invest or use the funds as you like

Once you've transferred your funds abroad, you’re free to do as you like with them.

You can top up an existing pension fund in your destination country of residence. You can invest for your children’s education. You can even decide to diversify your investment portfolio and invest in funds across different markets, asset classes and currencies.

With the rand getting consistently weaker and investment opportunities abroad looking more and more attractive, it's no wonder South African investors are considering investing outside of the country.

Offshore investments

Investing outside South Africa enables you to benefit from opportunities that are not available locally and protects you from the risks of rand depreciation as well as political and economic risk.

It also gives you an opportunity to invest in international pensions, equities or funds to potentially earn greater foreign currency returns.

There’s a reason why 32% of South African High Net Worth (HNW) individuals hold their wealth offshore ~ Source: Datamonitor.

Benefits of offshore:

Diversification of your investment portfolio — by investing your money offshore it enables you to spread your risk, not only from a currency perspective but also in terms of asset class and jurisdiction.

Saving for future expenses — such as, education of children at a foreign university, extensive world travel, or retirement overseas.

Offers a hedge for people who fear political or social unrest

A hedge against the depreciation of the rand

If you’re serious about your financial wellbeing then you need to consider investing a portion of your total portfolio offshore too.

IMF economic growth forecasts by region

Always seek professional financial guidance

Transferring your assets and policies offshore has definite benefits, but it can be daunting and very time consuming. To ensure maximum value from your savings and investments, you should always seek the advice of a credible financial services provider.

They should be authorised by the South African Financial Services Board (FSB) and suitably qualified to advise you on the many different and often complex factors of financial emigration and offshore investments.