Currently South African expats receive a tax exemption on their foreign income if they are outside the country for more than 183 days in total and for a continuous period of 60 days within a consecutive 12-month period. Once the new law comes into effect on 1 March 2020, this exemption will be removed. This means that South African tax residents abroad will be required to pay tax on up to 45% of their foreign income where it exceeds the R1 million threshold.
According to Renier Hugo, Certified Financial Planner at Alexander Forbes, South African tax residents living and working abroad will be required to consider whether they should emigrate from South Africa in order to avoid having to potentially account for tax in two countries. In light of this and several other questions about emigrating and financial emigration, he investigates the issue of what to do with life savings, retirement, and insurance policies when emigrating. “One needs to understand the consequences of emigrating to another country on one’s financial products, such as long-term insurance policies, investments and pre-retirement money,” Hugo advises.
Click here to read more about what Hugo views as the impact on various insurance products.