Financial Emigration Help

[Stretch]

Hey L4y3rcake,

 

ONLY if you're over 55. If you resign and cash it in (which you can also do with a pension fund) you'll be taxed according to the WITHDRAWAL tax tables, in which only the first R 25,000 is tax free, and up to R 660k is taxed at 18% and so on.

 

So yes, you can withdraw when you resign, but you won't have the same level of tax free capital that a retiree would have.

Tax tables on a lump sum withdrawal :

R 0 – R 25,000 - Lump sum tax free

R 25,001 - R 660,000 - 18% of the amount above R 25,000

R 660,001 - R 990,000 - R 114,300 plus 27% of the amount above R 660,000

R 990,001 and above - R 203,400 plus 36% of the amount above R 990,000

Tax tables on a lump sum retirement :

R 0 – R 500,000 - Lump sum tax free

R 500,001 - R 700,000 - 18% of the amount above R 500,000

R 700,001 - R 1,050,000 - R 36,000 plus 27% of the amount above R 700,000

R 1,050,001 and above - R 130,500 plus 36% of the amount < R 1,050,000

It's a effin cheek. You move country and you can't relocate your retirement policy. It's a nightmare trying to maintain a policy in another country so the next best thing is to FE and get taxed at 18 and 21%. One wonders if the tax implications is greater than just leaving it in SA.

[gummibear]

It's a effin cheek. You move country and you can't relocate your retirement policy. It's a nightmare trying to maintain a policy in another country so the next best thing is to FE and get taxed at 18 and 21%. One wonders if the tax implications is greater than just leaving it in SA.

I haven't properly done any sums but i decided to take the knock now and it can still recover a bit before i retire.Taking my pension fund and RA's out.None have really been growing to great over the last 5 years.

 

Just feel that it will become harder to take funds out in 15 years....if there's any left at that stage.

[IceCreamMan]

It's a effin cheek. You move country and you can't relocate your retirement policy. It's a nightmare trying to maintain a policy in another country so the next best thing is to FE and get taxed at 18 and 21%. One wonders if the tax implications is greater than just leaving it in SA.

 

Depends on your long term goals. If you are going to return to ZA at some point in the future then it may well be worth leaving but remember, one always pays tax on RA's as they are tax deductible during the course of the RA. Its just your tax rate which is lower after 55 to encourage you to keep it til you need it. 

 

However, even if your long term goal is to return to ZA there is the elephant in the room of the rand's value. If you believe that the rand will fail then again it is worthy your while to cash in , pay unto Caesar and bring your pounds/euro back one day and make a large "profit". 

 

In our case, we were going to return one day so left all our assets. Then over the course of time changed our mind so went the FE route and cashed in. Kinda worked out quite well to now with this ex pat tax on the horizon. Of course the rand could go to 5 rand to a pound in which case we erred massively. 

[l4y3rcake]

Hey L4y3rcake, 

 

ONLY if you're over 55. If you resign and cash it in (which you can also do with a pension fund) you'll be taxed according to the WITHDRAWAL tax tables, in which only the first R 25,000 is tax free, and up to R 660k is taxed at 18% and so on. 

 

So yes, you can withdraw when you resign, but you won't have the same level of tax free capital that a retiree would have. 

 

Tax tables on a lump sum withdrawal :

R 0 – R 25,000                                         -  Lump sum tax free

R 25,001 - R 660,000                              -  18% of the amount above R 25,000

R 660,001 - R 990,000                            -  R 114,300 plus 27% of the amount above R 660,000

R 990,001 and above                              -  R 203,400 plus 36% of the amount above R 990,000

 

Tax tables on a lump sum retirement :

R 0 – R 500,000                                                   -  Lump sum tax free

R 500,001 - R 700,000                                         -  18% of the amount above R 500,000

R 700,001 - R 1,050,000                                      -  R 36,000 plus 27% of the amount above R 700,000

R 1,050,001 and above                                        -  R 130,500 plus 36% of the amount < R 1,050,000

 

 

Thanks Cpt. Looks like I was reading an old article. So basically I can withdraw the whole fund, but will pay a greater tax on it. Still think it might be worth it in the long run.

[Captain Fastbastard Mayhem]

Thanks Cpt. Looks like I was reading an old article. So basically I can withdraw the whole fund, but will pay a greater tax on it. Still think it might be worth it in the long run.

No worries, man. Yeah, you may have been. It's also affected by your previous retirement withdrawals (ie whether you previously resigned and took the retirement capital out in cash instead of reinvesting it into a preserver / RA) 

 

IE: The tax table above is additive, so any previous withdrawals will affect new withdrawals. Even on retirement. It's not applied on a per-policy level. 

[Slowbee]

I haven't properly done any sums but i decided to take the knock now and it can still recover a bit before i retire.Taking my pension fund and RA's out.None have really been growing to great over the last 5 years.

 

Just feel that it will become harder to take funds out in 15 years....if there's any left at that stage.

Can we make a formal business meeting to chat about this ?

[IceCreamMan]

Just had a call from fin global the guys who did my FE.

 

They are now going to try claim back certain taxes paid during the FE process specifically for tax paid on RAs. They take a 25% cut of whatever they successfully claim.

 

Takes another 12 to 18 months apparently. I hope as its a lot of loot.

[l4y3rcake]

I haven't properly done any sums but i decided to take the knock now and it can still recover a bit before i retire.Taking my pension fund and RA's out.None have really been growing to great over the last 5 years.

 

Just feel that it will become harder to take funds out in 15 years....if there's any left at that stage.

My sentiments exactly. I’m only 35 so I don’t know what state the economy of SA will be in 20 years time or how policy might affect my ability to move funds. I would rather take the knock and move with my money than risk loosing it all in 20 years time.

[Wayne Potgieter]

Whats the average return on an RA now?

 

Ballpark figures?

[GrahamS2]

If my fund payout is under a mil I would be able to take that out the country without any tax implications?

 

Correct. You can move R1 mil out per calendar year as part of your discretionary allowance with minimal admin. You can move a further R10 mil per calendar year, with SARB approval. I use exchange4free and they monitor my annual limits for me, and also apply for SARB approvals for the foreign investment allowance. Very handy service.

[Captain Fastbastard Mayhem]

Whats the average return on an RA now?

 

Ballpark figures?

Depends entirely on the underlying fund they are invested in. Equities aren't doing well, but still positive growth.

[l4y3rcake]

Whats the average return on an RA now?

 

Ballpark figures?

 

My provident fund saw an average of around 7% last year. The 2 years before that we saw much higher growth. I think 2017 was averaging 14% and 2018 around 12%. I am on the high growth(risk) policy though.

[l4y3rcake]

Correct. You can move R1 mil out per calendar year as part of your discretionary allowance with minimal admin. You can move a further R10 mil per calendar year, with SARB approval. I use exchange4free and they monitor my annual limits for me, and also apply for SARB approvals for the foreign investment allowance. Very handy service.

 

 

When we sell the house and cash out pension funds we should be able to go tax free between my wife, the kids and I if we divvy it up properly. Think kids under a certain age can take R250k.

[Wayne Potgieter]

My provident fund saw an average of around 7% last year. The 2 years before that we saw much higher growth. I think 2017 was averaging 14% and 2018 around 12%. I am on the high growth(risk) policy though.

Thanks.

 

So to those that are trying to work out the pros/cons of leaving an RA behind, that’s then pretty simple.

 

I withdrew an RA that was growing at 12% per annum. Paid the tax on it and then put it in a ETF fund (similar to a satrix 40) at 22% growth.

 

Simple decision really.

[Stretch]

Thanks.

 

So to those that are trying to work out the pros/cons of leaving an RA behind, that’s then pretty simple.

 

I withdrew an RA that was growing at 12% per annum. Paid the tax on it and then put it in a ETF fund (similar to a satrix 40) at 22% growth.

 

Simple decision really.

We don't get anything remotely close to 22% in EU land as far as I can see... We don't even get anything even close to 12%

[Let's Ride]

We don't get anything remotely close to 22% in EU land as far as I can see... We don't even get anything even close to 12%

Yeah. After the sale of our house do we transfer the funds to Ireland and get very low growth or invest elswehere.

 

From what I see the returns are low. Interest and inflation also low.

 

Keeping in SA sure it grows but got to take into account the exchange rate and risk of goverment wanting the money.