SARS’ Requirements Of Pre-Retirement Withdrawals Upon Emigration
SARS has revised the criteria that non-resident retirement fund members need to meet in order to access their retirement benefits prior to retirement.
Previously, members of retirement annuity and preservation funds could access their full retirement benefit before retirement once they had formally emigrated, however, as of 01 March 2021 SARS introduced new requirements:
- Only retirement fund members who have been non-residents for South African tax purposes for an uninterrupted period of 3 years or longer may withdraw their full retirement benefit. This includes:
- Preservation fund members who have already made use of their once-off withdrawal prior to retirement
- Retirement annuity fund members who have since stopped contributing to their retirement annuity since emigrating.
The reason for the uninterrupted period of 3 years is to deter those members leaving South Africa for a short amount of time from withdrawing their retirement savings.
- Retirement fund members must inform SARS as soon as they cease to be South African residents. If members do not inform SARS their tax directive will be rejected and the withdrawal process will be suspended until the client provides evidence confirming that they have informed SARS.
Members will cease to be a South African tax resident when they are no longer ordinarily resident in South Africa and are not considered a resident based on SARS physical presence test. It is advised that members consult a registered tax practitioner in this regard.
Non-resident members who meet this requirement must complete the “Withdrawal due to Cessation of SA Residency Form” in order to take their pre-retirement lump sum withdrawal.
ARE THERE ANY EXCEPTIONS?
There is one exception to these requirements and that is where a member has applied for emigration with the South African Reserve Bank (“SARB”) or an authorised foreign exchange dealer on or before 28 February 2021 and that application approved by the SARB on or before 28 February 2022. This means that in this instance, members can withdraw their full retirement benefit regardless of the duration of their non-resident status once their application has been approved. Members who meet this requirement must use the “Disinvestment due to Emigration Form”
- Certificate of residence not older than 6 months issued by the Tax Authority of the country of residence.
- Documentation confirming cessation of residence:
- Copies of passport(s) indicating entry into and out of South Africa
- Copies of income tax assessments issued by the tax authority of the client’s country of residence for the last 3 years
- Proof of residence for at least the last 3 years
- Proof of active bank account for at least 3 years
- The member must inform SARS as soon as they cease to be a South African resident. The process to inform SARS and required documentation can be found here: https://www.sars.gov.za/individuals/cease-to-be-a-resident/
SARS are ultimately responsible for approving or declining the Cessation of SA Residency withdrawal request based on the information provided to the administrator. The member must inform SARS as soon as they cease to be a South African resident.
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