Question:
If I had a retirement annuity which is now worth R145000 in total and I had left South Africa 12 years ago (Not officially emigrating ) but am now I am an American Citizen and I want to withdraw the retirement annuity (I have been told that I can get the full amount as a lump Sum) would I be penalized by SARS for not submitting a Tax return in South Africa for the last 12/13 years? I still have a South African Banking Account.
Answer:
Mr(s) Elliott, If you want to cash in your retirement annuity, you will have to go through the formal financial emigration process with SARS, which would effectively tie up any outstanding tax issues. You will be liable for capital gains tax on all your South African assets (excl. any property) you may still have here. If you still owe income tax from 12 years ago, you would have to pay that, but as a non-resident, you will not be penalized for not submitting a tax return. Your retirement annuity lump sum will be taxed. Only the first R25 000 is tax free, the balance will be taxed at 18%.
