I have written a few articles on tax and financial emigration. It is a complex process, involving different stakeholders like SARS, the Mutuals, Banks, The South African Reserve Bank (etc), coupled with changing rules…and an alliance of countries formed to share information. It is also unique for each individual, as profiles are different – one from the next.
Many clients ask me what changes are expected – going forward. I can only but suggest some feasible scenarios SARS could be working towards based on my knowledge and experience:
Date of tax emigration
As much as case law supports emigration being a factual event, the onus of proof is on the taxpayer to support the date of emigration. This is an easy task for recent emigrations, but not as easy to prove for emigrations that occurred, say 20 years ago…
Imagine that SARS made it more difficult for people to back date emigrations and defaulted to the current period. This would result in all ‘foreign’ wealth accumulated in the past being subjected to a South African deemed sales event, with potential CGT being raised. One word – Expensive for the taxpayer, even to dispute.
World Wide Assets – CGT event
Experience suggests that most clients emigrated factually some time back. My guess is that, at the time of emigration there was no MP336 form of formal process of emigration. The system is designed for the taxpayer that leaves South Africa today - to emigrate today. But, there are so many variations and most clients actually left many years back, and have accumulated wealth abroad.
It must have been difficult for SARS to trace such wealth, as the result of an emigration is a deemed sale of ALL assets on the date of emigration, and a CGT event. My guess is that many assets abroad, must have simply – been undetected.
Today with the alliance, FATCA (links to the USA reporting standards) and CRS (links to European reporting standards), one wonders what will be uncovered and reported to South Africa’s SARS?
Will they find more to tax? In this day and age of technology, it is not unreasonable to expect this.
Article by Fred Akal CA (SA) - Owner and Director of ACS PLUS. Read PART 2 of this article here.
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