YOUR MONEY: Tax and emigration — what should you expect to pay?
Your personal assets and liabilities will determine this, but the amount is usually not high
23 March 2023 - 05:00
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If I emigrate, what tax do I have to pay, and how do I minimise my tax bill?
— Name withheld
Answer:
The tax on emigration is completely dependent on your personal assets and liabilities, excluding immovable property, personal-use assets, cash, insurances and retirement funds (your pension or provident fund, or retirement annuity). Exclusions are basically anything that do not carry a tax. So, if immovable property is an exclusion from exit tax, it means that you don’t have to pay capital gains tax on your South African property when you emigrate.
The exit tax is a deemed sale of all your assets the day before you emigrate (at market value). This means the only realistic way to reduce the exit tax is to emigrate during a downturn.
The good news is that due to all the exclusions that are allowed, the tax on emigration is not very common, as most people have only a few assets in their name.
— André Bothma, taxmaverick.co.za
Next week’s question:
The bond on my house has increased by R10,000 a month over the past year, making it unsustainable for me on my current income. I’m also paying off an apartment, which I let, but I have to pay levies and rates on it. Should I sell the flat to help cover my home loan? Or how should I pay my monthly house bond?
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
READER QUESTION OF THE WEEK
YOUR MONEY: Tax and emigration — what should you expect to pay?
Your personal assets and liabilities will determine this, but the amount is usually not high
Question:
If I emigrate, what tax do I have to pay, and how do I minimise my tax bill?
— Name withheld
Answer:
The tax on emigration is completely dependent on your personal assets and liabilities, excluding immovable property, personal-use assets, cash, insurances and retirement funds (your pension or provident fund, or retirement annuity). Exclusions are basically anything that do not carry a tax. So, if immovable property is an exclusion from exit tax, it means that you don’t have to pay capital gains tax on your South African property when you emigrate.
The exit tax is a deemed sale of all your assets the day before you emigrate (at market value). This means the only realistic way to reduce the exit tax is to emigrate during a downturn.
The good news is that due to all the exclusions that are allowed, the tax on emigration is not very common, as most people have only a few assets in their name.
— André Bothma, taxmaverick.co.za
Next week’s question:
The bond on my house has increased by R10,000 a month over the past year, making it unsustainable for me on my current income. I’m also paying off an apartment, which I let, but I have to pay levies and rates on it. Should I sell the flat to help cover my home loan? Or how should I pay my monthly house bond?
— Solange
We want to hear from you! Send questions to yourmoney@fm.co.za
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