On 24 April 2023, SARS announced changes to its Tax Compliance Status process, with immediate effect. Here’s everything you need to know about how it affects taxpayers.
The revised application – Approval International Transfer
The SARS Tax Compliance Status (TCS) system has been updated to redefine what it means to be tax compliant. The enhanced TCS application form was introduced to consolidate Foreign Investment Allowance (FIA) and emigration applications into a single Approval International Transfer (AIT) application.
AIT application requirements
The revised AIT option is a dynamic application suitable for both South African residents transferring money out of South Africa and non-tax-residents.
The new user-friendly e-Filing form for FIA applications requires more information than previously. Taxpayers applying for TCS status for international transfers are now required to submit the following:
- Relevant supporting documents showing the sources* of the capital to be invested
- A statement of assets and liabilities for the previous three years
- Proof of cessation tax residency (if the taxpayer is a non-resident for tax purposes)
- Applicable power of attorney where the TCS application is submitted by someone other than the taxpayer
- A detailed Capital Gains Tax Calculation schedule mentioning tax payable on deemed disposal of assets on the day before the taxpayer ceased to be a tax resident (if applicable)
*Among others, fund sources usually include cash or savings, distributions from a trust, donations, dividends from a company, inheritance, loans, sale of property, sale of shares and other securities, sale of crypto assets, transfer of listed securities
Tax clearance – What is the way forward?
These changes are not a rule or allowance change but merely a change in procedure. Some sensationalist articles claim that this is the beginning of the end of exchange control and a "silent but violent" shock from treasury, this simply is not true.
In summary, the application process is still the same and the following remains available:
- R10 million allowance to transfer funds each year for South Africans
- R1 million single discretionary allowance for South Africans
- The ability to transfer pension and annuity income*
* Note: non-tax-residents require a tax clearance good standing each year to transfer annuity income out of South Africa.
In the February 2020 Budget Speech, SARB announced that they would make tax compliance with SARS a condition of eligibility for the offshore investment allowance. This was implemented in March 2021. In light of these process changes, it seems evident that SARS will continue to do everything in its power to ensure tax compliance when leaving South Africa
While these changes to the TCS requirements were unexpected, and we are seeing some early teething problems on e-Filing, rest assured that if your applications are addressed proactively and made with the assistance of a qualified specialist, the compliance burden that you as a taxpayer may bear is lifted, and there is a light at the end of the tunnel.
Whether you are transferring funds offshore from savings, the sale of an asset, the encashment of pension or retirement annuity policies, annuity income payments, or receiving an inheritance or trust distribution, our dedicated team of exchange control specialists and tax consultants can take the stress out of the tax clearance process and transferring your funds offshore.
We specialise in transfers of over R100,000 and can assist with discretionary allowance payments, tax clearance applications and more at bank-beating exchange rates. Get in touch with us on +27 (0) 21 657 2153 or firstname.lastname@example.org.
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