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A Fin24 user is applying for permanent residence in South Africa and wants to know how much tax he will have to pay on his savings. He writes:
We are applying for permanent residence here. Currently I am exempt from capital gains taxes in Zimbabwe on all of my foreign money-sourced investments.
If I import my UK savings to Zimbabwe I am tax free on any capital gains and I am free to repatriate the money.
Will this change if I move to South Africa as far as money brought into South Africa is concerned?
I already own a house here. Would that be affected? I may invest in shares here. What about that?
Will I pay income tax on the dividends here or in the UK?
I don't know how much you know about the terms and conditions for applying for immigration, but I saw something that seems to be asking for a cash payment with the application amounting to R75 000. Is that likely?
Marc Sevitz of TaxTim responds:
When you move to South Africa your assets brought with you are not taxed on coming into South Africa.
Any future income earned from investing those assets or any capital gains made from those assets will be subject to tax in South Africa only if they are from a South African source.
An example would be if you invest cash in a local bank or in local shares and earn interest or dividends.
Until you become a tax resident of South Africa then any income earned from outside South Africa will not be taxed in South Africa. See more here.
If you own a property in South Africa, there are no tax consequences unless you sell. In that case you will be subject to capital gains tax, similar to shares, which you will only be taxed on the dividends or if you sell the shares.
Regardless of how the money was brought into the country, any immovable property in South Africa such as a house, is subject to capital gains tax (CGT) if sold.
The base cost of the property will, generally speaking, be the purchase price and any growth on this property to the date of sale will attract CGT.
Therefore, CGT will only be paid on the difference between the purchase price and the selling price.
In effect the growth, as it took place in South Africa, is subject to tax.
You will be able to keep your money offshore or bring it into South Africa if you wish.
Regarding payment for becoming a permanent resident, this would be for an immigration lawyer to determine as there is no set payment.
There may be certain criteria for you to meet, which the lawyer will be able to assist with.
You must seek the correct legal advice when applying for permanent residence.
Zahida Ebrahim, head of the immigration unit at ENS responds:
There is a category of permanent residence one can apply for if you can prove a net worth of assets in excess of R7.5 m, upon payment of a fee of R75 000 to the department of home affairs.
There are numerous categories of permanent residence. The appropriate category will be determined by the applicants particular circumstances.
As mentioned, the R75 000 option is but one of the retired persons' permit options. For example, an applicant can also prove a net worth of assets yielding guaranteed income of at least R20 000 per month, in which case they need not pay the R75 000 fee.
A proper consultation is required to determine the appropriate category of application based on the applicants circumstances.
- Fin24
Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.
Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers.
Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.
We are applying for permanent residence here. Currently I am exempt from capital gains taxes in Zimbabwe on all of my foreign money-sourced investments.
If I import my UK savings to Zimbabwe I am tax free on any capital gains and I am free to repatriate the money.
Will this change if I move to South Africa as far as money brought into South Africa is concerned?
I already own a house here. Would that be affected? I may invest in shares here. What about that?
Will I pay income tax on the dividends here or in the UK?
I don't know how much you know about the terms and conditions for applying for immigration, but I saw something that seems to be asking for a cash payment with the application amounting to R75 000. Is that likely?
Marc Sevitz of TaxTim responds:
When you move to South Africa your assets brought with you are not taxed on coming into South Africa.
Any future income earned from investing those assets or any capital gains made from those assets will be subject to tax in South Africa only if they are from a South African source.
An example would be if you invest cash in a local bank or in local shares and earn interest or dividends.
Until you become a tax resident of South Africa then any income earned from outside South Africa will not be taxed in South Africa. See more here.
If you own a property in South Africa, there are no tax consequences unless you sell. In that case you will be subject to capital gains tax, similar to shares, which you will only be taxed on the dividends or if you sell the shares.
Regardless of how the money was brought into the country, any immovable property in South Africa such as a house, is subject to capital gains tax (CGT) if sold.
The base cost of the property will, generally speaking, be the purchase price and any growth on this property to the date of sale will attract CGT.
Therefore, CGT will only be paid on the difference between the purchase price and the selling price.
In effect the growth, as it took place in South Africa, is subject to tax.
You will be able to keep your money offshore or bring it into South Africa if you wish.
Regarding payment for becoming a permanent resident, this would be for an immigration lawyer to determine as there is no set payment.
There may be certain criteria for you to meet, which the lawyer will be able to assist with.
You must seek the correct legal advice when applying for permanent residence.
Zahida Ebrahim, head of the immigration unit at ENS responds:
There is a category of permanent residence one can apply for if you can prove a net worth of assets in excess of R7.5 m, upon payment of a fee of R75 000 to the department of home affairs.
There are numerous categories of permanent residence. The appropriate category will be determined by the applicants particular circumstances.
As mentioned, the R75 000 option is but one of the retired persons' permit options. For example, an applicant can also prove a net worth of assets yielding guaranteed income of at least R20 000 per month, in which case they need not pay the R75 000 fee.
A proper consultation is required to determine the appropriate category of application based on the applicants circumstances.
- Fin24
Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.
Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers.
Under the ECT Act and to the fullest extent possible under the applicable law, Fin24 disclaims all responsibility or liability for any damages whatsoever resulting from the use of this site in any manner.
