Question posted in the General Law category relating to Western Cape
Hi, I am a permanent resident( not a South African citizen) living partly in Ireland and South Africa. I am currently working for two companies one in South Africa and one in Ireland. Due to my job, I would say that i spend approximatly 300 days of the year in Ireland/ overseas and the remainder in South Africa. My South Africa income, goes to my South African bank account and tax is automatically paid by my employer. My Irish income, goes to my Irish bank account and tax is also paid by my employer. I am considering moving back permantly to South Africa in a years time and my question is, how is the best way to get my irish funds to my South African bank account. My concern is, that SARS might consider this as income and i have to pay double tax on it. I am also concenered( as it is a higher amount), that the money might be blocked due to money laundering. What is the best way to go about it?
In addition, once i moved to South Africa, i will keep part of my money in my Irish account as i currently have an Irish investment plan which will end in like 5 years. How can i make sure, that this money can be moved to my south African account once term has expired? I would be looking at around 12 000 EUR which would be around R 200 000.
Message from the Attorney
Hi there and thank you for your question,
I am a practicing attorney based in South Africa and I will assist you with your question. Please feel free to ask as many follow up questions in order to clarify your question. If you have a new question, you must please open a new thread.
You should have absolutely no issues in doing what you want to do. We have foreign clients who are resident here, and some not resident here, who are often bringing in money for some business venture and then take the money out a year or so later.
The trick is that when your bank wires the money in, your receiving bank must report record the incoming money as foreign proceeds brought in for investment purposes, or something like that. Then, when you want to take the money out in a few years, you will need to KEEP the paperwork and reference number and copy of your bank statement showing the incoming funds, and you'll make an application to take the money out, and that will be that.
SARS will only tax you on the money if you declare it to SARS as income. Otherwise SARS will only find out about the money if they audit you, or if the incoming agent bank records the incoming funds as "income" instead of "capital for investment purposes".
In reality, R200k is not enough to get SARS worked up about anything. Some of our clients bring in tens of millions, and then take it out later.
I really don't think that you need to be worried about it.
Furthermore, how can SARS think that you are laundering the money? Did you take it out, then bring it back, then take it out about, and now you're bringing it back? No, you're just bringing money in. Don't worry about money laundering.
Even if SARS considers that they should be entitled to tax you on that money, there are double taxation agreements between SA and Ireland which means that SARS will give you a tax credit here in respect of any tax that you paid on the money in Ireland. So if you've already paid your tax on it, SARS won't actually gain anything from trying to tax it again.
I also don't understand why you're worried about bringing money in again in 5 years time. Again, a small amount. You would simply declare that it is capital money that you've got in Ireland, and that you want to invest it here in SA. Then you can take it out sometime in the future.
If there is a part of the answer which you need more advice on, or clarity please continue in this same thread instead of opening a new question.
Att. Patrick
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Message from the Customer
1. For the receiving back to process it as investment purpose, do i need to give them special instruction?
2. What do you mean with application to take the money out?
Message from the Attorney
The incoming bank will be your local South African bank. i.e. Standard Bank, ABSA, FNB, Nedbank, whatever. When the money is wired in to SA using the SWIFT international money transfer system, the incoming bank will need to record where the money is coming from, where the money is going to, and the reason why the money is coming into SA. They will therefore call you, or email you, to find out. That is when you need to tell them that you are bringing the money into SA for investment purposes. They will report this information to the Reserver Bank, SARS, and keep a copy.
When you want to wire money out of South Africa, your local bank will need to complete a Reserve Bank approval form. On that form they will need to say WHY you want to take the money out. The Reserve Bank will assess the application and approve it, or decline the application. If, on the application, there is proof that you previously brought the money in from Ireland, then the Reserve Bank will simply approve your application. Otherwise, you will be limited to the annual limit which you can take out of the country for whatever reason.