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
