HAS THE TIME COME TO AVOID PURCHASING A HOLIDAY HOME IN SOUTH AFRICA?

The South African Revenue Service (SARS) recently released a set of rules for transferring monies out of South Africa.  Currently South Africans who want to transfer funds abroad of more than their R1m annual allowance are required to have a “Tax Clearance Pin”.

For “non-residents” however, they will be required to gain clearance in order for the first Rand to be transferred.

In order to obtain the clearance, a virtual “lifestyle” audit has to be undergone which includes the following:

  • Proof of worldwide assets including historic cost even though in theory these would have nothing to do with South Africa;
  • Details of any interests in foreign trusts;
  • Any loans made to foreign trusts;
  • All foreign shareholding details including showing historic costs and estimated current value, and the source of any funding to acquire this;
  • Any inheritances received;
  • All other international investments including property, crypto, ETF’s, listed and unlisted stock etc;
  • Cash, livestock, jewellery, art etc;
  • Motor vehicles, the list goes on and on.

The new rules would seem to imply that if a non-resident had purchased a lovely holiday home in the Cape and now sells up, they will have to undergo this invasive enquiry which does not seem to have anything to do with SARS.

One may wonder if an investment of this kind into South Africa from abroad is worth the effort if it is going to take this level of effort to extract any Rand earnings that you may have achieved.