Ask Tim: Inheriting from South Africa without an SA tax number

At Sable International, we see these enquiries where the above sort of advice has been given too many times.

There are too many companies in South Africa charging clients fees for something they firstly, don’t need to do and secondly, actually can’t do.

This client was advised to go through a process of registering with SARS, then changing his status with SARS to non-resident before receiving their inheritance, and they’re calling this “financial emigration”.

Let’s be clear: SARS does not want the administration of you registering on their system and being issued with a tax number, only to then change your status to non-resident. SARS only wants people to register as taxpayers where they have future or previous tax liabilities in South Africa, not just to fulfil an administrative function so that a tax consulting firm can charge you a fee for something you didn’t need to do.

Before financial emigration was removed as an option in March 2021, you could have done what we called a “belated financial emigration”, backdating your financial emigration to the date of departure or date of gaining citizenship in your new country of residence (in your case, 1998). If you had no assets left in SA, it was a very simple process and, provided the date of financial emigration pre-dated the death of the person you were inheriting from, then you would have been placed on record with the South African Reserve Bank (SARB) as non-resident, and any inheritance would have been easily transferable to you as a non-resident.

Since financial emigration was removed, the SARB has placed all emphasis on ensuring people transferring funds out of SA are compliant with SARS.

Since you left South Africa a long time ago, were never a taxpayer and and are not registered on the SARS system, the exchange control rules provide a solution for you to receive both your inheritance and the proceeds from the life policy without having to re-register with SARS or “financially emigrate”.

You would have two options:

• If you are married and both you and your spouse have a green, barcoded SA ID book or the new ID card, you can use your combined annual single discretionary allowance (SDA). The SDA is R1 million, so you’d be able to inherit the R1.5 million inheritance plus proceeds from the R2.5 million in total split across two years. (Our clients often do this type of transfer over December and January).
• Alternatively, you can apply the South African Reserve Bank concession (circular 8) issued in 2021, which rules that, for inheritances up to R10 million, private individuals who are not tax resident and who are not active on the SARS registered database will not require tax clearance.

We’ve been helping individuals and businesses make international transfers out of South Africa for over 20 years. For help receiving a South African deceased estate, you can get in touch at estates@sableinternational.com or give one of our advisers a call on +27 (0) 21 657 2133.