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Transferring your South African RA overseas: Three things you need to know

by Lucy Smith | Nov 30, 2016
  • As a South African who is thinking about emigrating, or as one who has already permanently left the country, you have probably heard that you can move your retirement annuities out of South Africa and to your new home. Some people need to financially emigrate to do so, while others do not.
    south african flag with blue background in the background

    Which ever way you choose, the process is quite complicated and we get a lot of questions about it. Below we’ve selected three key questions that should help you understand the processes behind these types of transfers.

    1. Do I need to have my tax affairs up to date to withdraw my RA?

    When you withdraw your retirement annuity funds, whether this is a retirement withdrawal or an early withdrawal after financial emigration, your SA tax number needs to be active and your tax returns up to date with SARS.

    The reason for this is that your funds will be taxed at source prior to the financial providers making a payment to you. For them to do this, they must apply to SARS for a tax directive and only on receipt of an approved tax directive can the providers then proceed.

    The tax directive will instruct the provider on what tax must be deducted from the retirement payment.

    Below are some tax tables from SARS. Your particular set of circumstances will determine which applies to you. After an assessment of your situation, we will be able to tell which applies to your financial emigration application.

    Withdrawal benefit

    2017 tax year (1 March 2016 - 28 February 2017)
    Taxable income (R) Rate of tax (R)
    0 – 25 000 0%
    25 001 - 660 000 18% of taxable income above 25 000
    660 001 - 990 000 114 300 + 27% of taxable income above 660 000
    990 001 and above 203 400 + 36% of taxable income above 990 000
    Figures from SARS

    Retirement and death benefits or severance benefits

    2017 tax year (1 March 2016 - 28 February 2017)
    Taxable income (R) Rate of tax (R)
    0 – 500 000 0% of taxable income
    500 001 - 700 000 18% of taxable income above 500 000
    700 001 – 1 050 000 36 000 + 27% of taxable income above 700 000
    1 050 001 and above 130 500 + 36% of taxable income above 1 050 000
    Figures from SARS

    2. I no longer have my SA ID. Does this have any implication for transferring funds out of South Africa?

    Although the South African ID does not hold any value overseas in other countries (as passports are king), for South Africa’s FICA purposes the green barcoded ID document is higher in value than your South African passport.

    If you have ever had permanent residency or been a South African citizen, you can send funds offshore using your annual discretionary investment allowances. To comply with the South African Reserve Bank (SARB) regulations, you must have a South African green barcoded ID book or new South African Smart ID Card. 

    If you have been out of South Africa for some time and no longer have this, or are only in possession of an old South African green ID book or the blue Book of Life, your only option to send funds out of South Africa may be to financially emigrate from South Africa.

    3. What is an emigrant capital account?

    You will probably have heard of a blocked Rand account. Well, in an effort to give the account a more desirable name, the SARB has begun to refer to these accounts as emigrant capital accounts.

    An emigrant capital account holds an emigrant’s remaining South African assets to which the Financial Surveillance Department of the SARB restrictions have been applied.

    After financial emigration, capital and income transfers out of South Africa will flow through this account. Your retirement funds and remaining assets, declared to SARB in your financial emigration application, can be deposited into this account and you can transfer your funds overseas to your new country of residence. Alternatively, instructions can be given to make local payments within SA for specific needs. 

    This account will fall into the control of the authorised dealer who submitted the application to the SARB. Future Rand-denominated inheritance will also be able to flow through this account to your new home.

    Unlock your financial potential

    Whether you have to financially emigrate or not, transferring your retirement annuities overseas can help you unlock the full potential of your assets. In order to do this transfer effectively, it’s important to have as much information as possible when you are considering your options.

    These are just three questions around financial emigration, accessing retirement annuities and transferring funds out of South Africa. The process is worthwhile for South Africans, but it can be complex. Give me a call on +27 (0) 21 657 2133 or send our team an email and we’ll answer any question you may have.

    We are a professional services company that specialises in cross-border financial and immigration advice and solutions.

    Our teams in the UK, South Africa and Australia can ensure that when you decide to move overseas, invest offshore or expand your business internationally, you’ll do so with the backing of experienced local experts.

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