90 replies to this topic

[orca]

Just phoned Cashkows (emigration specialists) and they said that it is ok to just leave but the banks will not let you use your cards for extended periods of over 2 months as forex regulations will not allow them.
Your account will become a blocked account and can only be used for local transfers of money.
Only when you get a tax clearance and SARB permission, restrictions will be put on your account.
Your account will stay blocked and your local agent at your bank will transfer money to you upon your request as they need to control the account according to SARB regulations.
All your FX must be done via this blocked account.

Portugal has a 10 year tax free period to attract new money into the country.

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[dominant]

If you emigrate from SA but still generate income from your SA investments youll need to pay tax accordingly. As some of the other posters said, no need to emigrate. Just go to Portugal and manage your money online.

 

Well, it becomes a bit more complicated than this.

 

If you're deemed ordinarily resident in Portugal after leaving South Africa (and there are quite a few tests to determine this, intention etc), without emigrating, then paragraph 5 (assuming paragraph 4 doesn't apply, which will be the case if you only hold CML shares) of article 13 of the Double Tax Agreement between RSA and Portugal comes into play, and you'll be taxed in Portugal on the capital appreciation of the shares. I don't know the tax laws in Portugal therefore can't comment on the rates there.

 

It will however be difficult to prove that you're ordinarily resident in Portugal since all your capital (vital assets) are in South Africa. If you purchase a home that side it'll help significantly.

 

If you're deemed ordinarily resident in RSA whilst living in Portugal, you'll just be taxed in RSA with no taxes in Portugal (on your RSA assets)

 

You're going to pay tax somewhere along the line, and the maximum marginal CGT for individuals is 13.32% in RSA (your effective tax rate will probably be lower unless you earn other income as well), which is quite a fair rate.

Edited by dominant, 22 April 2014 - 12:19 PM.

[HendrikB]

If you emigrate from SA but still generate income from your SA investments youll need to pay tax accordingly. As some of the other posters said, no need to emigrate. Just go to Portugal and manage your money online.

[orca]

Thanks for the replies but my concerns are ;
1. If I formally emigrate then I pay no tax in SA on my monthly investment withdrawals
2. If I just leave, I will pay tax as normal in SA for as long as I live as a non resident temporarily living overseas.

I have been researching but find no clarity on this.


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[gamma]

Why emigrate, why not leave all as is and go live overseas? You will be deemed non-resident for tax purposes once outside the country for a certain period of time, and probably obtain citizenship in Portugal after 5 years (may be shorter if you own property there).

Might assist with all the admin you're struggling with now.

 

Agree. I did exactly this in 10 years ago.

Eventually decided to return and was hassle free. 

Only thing you need to take care of is proper filing with SARS.

 

Orca, you are over-complicating things..

[dominant]

Why emigrate, why not leave all as is and go live overseas? You will be deemed non-resident for tax purposes once outside the country for a certain period of time, and probably obtain citizenship in Portugal after 5 years (may be shorter if you own property there).

Might assist with all the admin you're struggling with now.

[orca]

Can someone please answer this. I am officially emigrating after filing the MP336b and the IT21a docs. Now my bank account will be blocked. My shares on the JSE will be held by my bank. My access to internet banking will be stopped. My bank cards will be cancelled.

How do I withdraw monthly from my investments when overseas?

My exit is in a month and I have paid for the plane tickets and don't want to to be stuck there without being able to withdraw money. The guys at my bank know nothing about this situation.

 

 

 

 

 

[orca]

Just got my tax trading activities disclosure results back. 

 

The 2009 was prescribed.

The 2010/11 and 12 was INVALID.

 

They treated them as OBJECTIONS and not as DISCLOSURES. Can't wait for 3 years to get all this Prescribed and behind me.

[Proff]

This is actually helpful thanx for the quote!

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[orca]

Went to SARS today to clear up my trading since 2008 that I omitted to include in my returns due to my stupidity. Had a -R284K loss in 2009 that SARS will not allow due to it being prescribed as it is older than 3 years. I had not been audited and disclosed my trading with the loss and profits on my own accord.

Now I read this:

 

TAX ADMINISTRATION 2195. Prescription APRIL 2013 – ISSUE 163

 

 

The coming into force of the Tax Administration Act (TAA) has brought the issue of prescription into sharp focus. There are two reasons why this is so: firstly, the standard prescription period of three years has been extended to five years for ‘self-assessments’, and secondly the assessment returns seem to require only limited disclosure and taxpayers are left wondering whether the limited disclosure affords them the prescription protection they need.

The reason for the extension of the basic period of prescription from three to five years is to accommodate the system of self-assessment. In light of the fact that the bulk of current assessments are completed on a ‘self-assessment’ basis, SARS requires a longer period in which to interrogate and audit the assessment. Self-assessments require no thought process from an assessor; they are simply captured by the SARS computer system, and theoretically could run the course through to prescription without any intervention in the form of a revenue official applying his mind. Prior to the e-filing self-assessment era, all income tax returns were subject to an assessment of sorts by an assessor whose job it was to identify and query anything problematic. That no longer applies and SARS requires a longer period to enable them to run risk assessment programs or analytics on returns which should identify potentially contentious issues and leave them time to query and reassess where necessary.

The TAA specifically defines a ‘self-assessment’, which on the face of it, gives rise to a surprising result since income tax returns would not constitute ‘self-assessments’ as defined, since self-assessments require a determination of the tax due whereas income tax returns, for companies and individuals, do not require any such determination. On that basis, these returns, not being self-assessments, would be subject to the three year rather than the five year prescription rules.

Whether the three to five year prescription rule applies, the protection afforded by prescription is extremely important for all taxpayers and indeed for SARS too. Taxpayers, who have made full and complete disclosure, are entitled to know that at some point they are beyond the stress of a SARS audit, and SARS needs to ensure that its system highlights and red-flags for query and audit, all those returns which warrant such attention, prior to the prescription period expiring.

In order for this system to work, it is clear that comprehensive and accurate disclosure on well-designed tax returns is critical. Oddly, the standard company tax return remains relatively abbreviated and one would expect in future, for example, a more comprehensive list of questions which would be required to be completed. The e-filing system does not require the submission of supporting schedules or even financial statements – these must simply be prepared and retained on file – so the taxpayer actually has limited opportunity for disclosure even should he wish to disclose more than the return demands. What happens, for example, when a taxpayer claims as a deduction an item which is not separately disclosed on the return, in a situation where the deductibility is somewhat debatable (as frequently happens in tax matters)? One option would be to retain an opinion on file supporting the claim, but that is not always practical. While the system of return disclosure remains in its current imperfect state, it is inevitable that disputes will arise with taxpayers claiming prescription on the one hand, while SARS on the other contests items on returns that have nominally prescribed.  Some legal precedent on this question involving a dispute on an assessment in the e-filing era would be particularly helpful.

Ernst & Young
TAA: Section 1 Definition of ‘self-assessment’

[orca]

What happens when you change your mind? You bought for speculation, but now you wish to hold the shares as an investment, or vice versa?

The need to carefully document "your intention" on acquisition of an asset is also evidenced from two sections of the Income Tax Act: section 22(8) and paragraph 12 (3) of the 8th Schedule.

Section 22(8) provides that if assets which were held as trading stock cease to be held as trading stock, the market value of those assets must be included in the income of the taxpayer in the year that they cease to be held as trading stock. In other words, if you have a change of intention in respect of shares that were originally acquired for speculative purposes, and now wish to regard these shares as capital assets, there is a "deemed accrual" for tax purposes. You will therefore be effectively taxed on a non-realized "gain". The shares now become "capital" assets and the "base cost" of the shares for CGT will be deemed to be the market value of the assets at the time they ceased to be part of a taxpayer's trading stock.

Paragraph 12 (3) provides for the opposite situation, where assets, which you held as capital assets, become trading stock. This situation will occur when a taxpayer "has a change of intention" and now wishes to speculate in that asset. At the time of the change of intention, the taxpayer is deemed to have disposed of the asset at its current market value for CGT purposes. In other words, for the purposes of CGT, there will be a deemed capital accrual of the market value of the assets at the time when there was this change of intention. This market value will then become "the cost" of the new trading stock.

[HDB]

Irrelevant.  Once you've held for 3 years, section 9C(2) deems the proceeds to be capital.  

 

Yes i now checked that and you are 100% correct!!

 

 

With the introduction of section 9C from 1 October 2007, proceeds on disposal of South 

African shares (including dual-listed foreign shares) held as trading stock for longer than 

three years are treated as being of a capital nature. Any expenditure or losses claimed 

against income during the period that you held the shares will be recouped on disposal. 

 Despite this recoupment, in the case of listed shares 

one-third of any interest incurred on borrowings used to acquire the shares qualifies as 

an addition to the base cost of the shares in determining any capital gain or loss .

Edited by HDB, 29 August 2013 - 08:04 PM.

[XXXXX]

ps.  just to confirm.  That's on the proceeds of the sale of that particular share (held greater than 3 years), not the entire portfolio.

[XXXXX]

Irrelevant.  Once you've held for 3 years, section 9C(2) deems the proceeds to be capital.  

[HDB]

If you hold listed shares for longer than 3 years, intention is irrelevant and any disposal is deemed as capital.  Intention (or change of intention) is only important if shares are sold before the 3 year mark.

Question is what if you already classified as a trader by Sars?????

[XXXXX]

If you hold listed shares for longer than 3 years, intention is irrelevant and any disposal is deemed as capital.  Intention (or change of intention) is only important if shares are sold before the 3 year mark.

[HDB]

So HDB, how does one get out of being classified as a trader? I stopped trading some time ago to hold for 3 years.

You probability will have to convince them now of your change of intentions..

[orca]

Correct!!

 

But if you are already classified as a trader by Sars, then the 3 year rule wont apply!! So be carefull!!

So HDB, how does one get out of being classified as a trader? I stopped trading some time ago to hold for 3 years.

[HDB]

CGT because you held them all for 3 years at least. Surely.

Correct!!

 

But if you are already classified as a trader by Sars, then the 3 year rule wont apply!! So be carefull!!

[Moonraker]

If I hold my stocks for over 3 years then start making 6 withdrawals py, would it be CGT or income?

CGT because you held them all for 3 years at least. Surely.