Retirement Annuities can now be cashed up and transferred
South African Immigrates are now permitted to cash up and transfer their Paid Up retirement annuity policies to their adopted country.
This will allow many immigrates improved liquidity, the chance to reduce their debt positions such as mortgages, less headaches about the direction their left behind funds may be disappearing to in a Rand based economy. For more information refer to the Retirement Annuity services.
In order to cash in retirement annuity (RA) funds due to emigration, the member of the RA fund needs to prove that they received formal emigration approval from the SARB (South African Reserve Bank).
Relevant extract from the definition of retirement annuity in the Income Tax Act:
- That a member who discontinues his or her contributions prior to his or her retirement date shall be entitled to the payment of a lump sum benefit contemplated in paragraph 2(b)(ii) of the Second Schedule where that member emigrated from the Republic and that emigration is recognised by the South African Reserve Bank for purposes of exchange control...”
This means that the client must have formally emigrated in order to access their funds. (This does not apply to emigrations to any of the Common Monetary Area countries - Lesotho, Namibia. SA & Swaziland, as this emigration provision does not apply in these instances).
In order to obtain formal emigration approval, the member must emigrate through an Authorised Dealer in Foreign Exchange (i.e. a bank). This bank would receive notification that SARB approved the formal emigration and the bank would open a blocked account to transfer the remaining assets from South Africa.
So in order to prove formal emigration, we require a letter from the bank that the member used to process their emigration, stating that they have received formal emigration approval from the SARB with details of the blocked account they have opened in the client's name.
Requirements to withdraw funds:
South African Revenue Services (SARS)
On top of all this, prior to issuing a tax directive for emigration withdrawals on RAs, SARS requires the following to prove formal emigration:
- A copy of the IB-IT21 (a) (application for a tax clearance certificate) together with the MP336 submitted at the SARS branch office should accompany the Form C application form. The IB-IT 21 (a) should bear the date stamp of the SARS Office where your submitted the tax clearance application.
- A letter from the authorised dealer confirming the emigration and the Form C.
- If the member has already emigrated, the above as well as a copy of his certificate of residency should accompany the Form C application form.
Where to send the documents
Once you have the documents ready, please contact Liberty Life. Our service level agreement is 30 days to process.
Currently, SARS is processing manual directives from their Head Office only, so we need to fax a Form C with their above requirements to them. Regarding subsequent payment to client's who emigrated formally a number of years ago, the blocked account will need to be reopened or the bank through whom the emigration was done must advise how payment should be made.
Many individuals who have merely gone overseas without undergoing the formal emigration process described above, have not formally emigrated through the SARB for exchange control purposes and will need to do so before they may access their RA funds.
Contact Liberty Life for more information
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