Global Courant
According to Sable International’s Tim Powell, there are three ways South Africans living abroad can claim their inheritance.
The three scenarios depend on the status of the beneficiaries.
The first scenario is for a bona fide non-resident who was born abroad and has never lived in South Africa.
For this payment, the beneficiary must provide a copy of the ID or passport of his country of origin and proof of his foreign address.
Scenario two is for beneficiaries who have formally emigrated from South Africa, i.e. emigrated financially before March 2021.
In this scenario, the beneficiary was once a resident of South Africa, but has since emigrated and registered his emigration with the South African Reserve Bank (SARB). This is no longer an option since March 2021.
Powell said the inheritance can be paid to the beneficiary abroad through the beneficiary simply by providing confirmation of their emigration — usually a letter from the SARB with an ECA reference number.
On the other hand, an inquiry can be made to the SARB to confirm the emigration of a beneficiary and, when the confirmation is received, proceed with the transfer of funds.
The third and most common scenario is when a beneficiary has left South Africa but has not registered their emigration with the SARB and has emigrated for tax purposes or otherwise. There are two solutions for this scenario.
Suppose the beneficiary has another SA ID book or ID card. In that case, they can use their one-time discretionary allowance of R1 million and, if they still have a valid SARS Income Tax number and their SARS profile is up to date, they can apply for Foreign Investment Tax Permission and their foreign R10 million use. investment deduction (FIA) and send their inheritance abroad.
However, the beneficiary can only use his one-off discretionary allowance of R1 million if he has not emigrated for tax purposes.
Alternatively, the beneficiary can use solution 2. If the customer has emigrated for tax purposes or is no longer a tax resident and is not in the SARS database, SARB circular 8 applies.
SARB Circular 8 was introduced in May 2021, following the termination of the financial emigration system, to specifically address a scenario where a beneficiary of the estate of a deceased person in South Africa who resides abroad inherits or is the beneficiary of death of South African policies up to R10 million and have no other residual assets in South Africa and no SARS tax profile.
Powell said the solution will apply to more South Africans living abroad, and there are many factors to consider.
If someone left South Africa a long time ago, they are more likely not to be on the SARS system. The test is subjective and someone who left five years ago is more likely to get into the system than someone who left twenty years ago. South Africans leaving South Africa after March 2021 should consider tax emigration. Fiscal emigration occurs when an individual changes their tax status to a non-resident with SARS. Tax emigration is a position that requires the taxpayer to meet certain criteria – the tests for habitual residence and physical presence. If a person can prove fiscal emigration – such as a letter from SARS – then they can use Circular 8.
Read: South African companies panic about emigration
