the parting shot
22 August 2008

Record numbers of South Africans are believed to be considering emigration, but tax advisers say few consider the financial implications of moving to a new jurisdiction.  "Offshore structures set up to be tax-efficient from an SA point of view can be extremely onerous once a person becomes a tax resident elsewhere," says Doelie Lessing, tax partner at Maitland.

Generally, SA citizens cease to be local tax residents when they leave SA with a view to settling permanently overseas, even if they still hold SA passports. Once a person leaves, the SA Revenue Service (Sars) deems all assets to have been disposed of. This triggers an additional 10% capital gains tax (CGT) exit charge on all assets other than those remaining in the SA tax net, such as fixed property and certain types of share schemes. "Sars likes to get a last bite of the cherry before you go," says Lessing.

Head of tax at Deneys Reitz, Ernie Lai King, says the deemed disposals can affect everything from personal gold coin collections to share portfolios. "And because the sale need not actually be realised, it means you may be in a cash-poor situation - something you need to take account of when managing your cash flows," he says.
 
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Jacqui Pile, www.financialmail.co.za