Claudia completed her LLB degree at the University of Stellenbosch in 2019, and has embarked on the exciting journey of seeing all she has learnt in theory take shape in practice. She is currently enjoying a rotation in conveyancing at STBB, and she looks forward to trying her hand at litigation and/or commercial law. Outside of office hours you’ll find her either under the sea, on top of a mountain or with her nose in a book. She believes that life is for living and that while we can’t change our problems, we can always change our perspective.

South African emigrant pension funds to be locked in for three years

On 31 July 2020, the National Treasury and the South African Revenue Service (“SARS”) published a Draft Taxation Laws Amendment Bill (“TLAB”) 2020.While there is little unexpected about tax amendments, it is somewhat surprising that the TLAB contains amendments which aim to prevent South Africans who have financially emigrated, as recognised by the South African Reserve Bank (“SARB”),from withdrawing their pension preservation fund, provident preservation fund and/or retirement annuity fund for an uninterrupted period of at least three years.

 

As it currently stands, the respective definitions of the above funds in section 1 of the Income Tax Act 58 of 1962 provide that taxpayers may withdraw their retirement funds prior to their retirement date, upon financial emigration for exchange control purposes, as recognised by the SARB. These amendments introducing the three year test are aimed to come into force on 1 March 2021, and are currently open for public comment.

We urge our clients who are planning to emigrate to make contact with their advisers.

The TLAB can be accessed here  https://www.sars.gov.za/AllDocs/LegalDoclib/Drafts/LPrep-Draft-2020-43%20-%202020%20Draft%20Taxation%20Laws%20Amendment%20Bill%20-%2031%20July%202020.pdf

Comments may be submitted per email to ​the National Treasury’s tax policy depository at 2020AnnexCProp@treasury.gov.za  and to  SARS at acollins@sars.gov.za