August 30, 2023
A guide to Inheritances for South African beneficiaries living overseas
Introduction
Understanding the ins and outs of inheritances for South African beneficiaries residing abroad can be a challenging endeavour, given the numerous regulations and procedures involved. To provide clarity on this matter, we have compiled a comprehensive overview to help you determine your beneficiary residency status for tax purposes, explore different scenarios, and offer guidance on the appropriate procedures to follow.
Determining beneficiary residency status with the Reserve Bank
The first step in dealing with inheritances is for the estate’s Executor to establish the beneficiary’s residency status. This involves answering crucial questions, such as:
- Does the beneficiary have a passport?
The place of birth shown on the passport helps determine important factors, including whether the beneficiary possesses an RSA Green Bar-Coded ID book. - Has the beneficiary completed formal emigration?
This refers to processes like Tax Emigration or Financial Emigration. - Is the beneficiary a bona-fide non-resident with no ties to South Africa?
Once these questions are answered, the Executor can determine the appropriate process for remitting the inheritance abroad.
Here are various scenarios and how Currency Partners can assist in each case:
Scenario 1: Inheritance of a South African asset by a bona-fide non-resident.
Currency Partners can help open a non-resident account and facilitate the offshore transfer. No restrictions on the amount apply, as annual allowances do not affect non-residents.
Scenario 2: Inheritance of a South African asset by a resident temporarily abroad. (This person does not have a South African ID book, has not completed formal Tax Emigration, and has an active income tax number).
Currency Partners can assist with the Tax Emigration process.
Scenario 3: Inheritance of a South African asset by a resident permanently abroad. (This person does not have a South African ID book and no active South African tax number).
The recipient should not be registered on the SARS database for tax purposes. The inheritance should be the sole asset, and Currency Partners can assist by submitting a declaration and supporting documents to the bank for approval to remit funds as a non-resident.
Scenario 4: Inheritance of a South African asset by a resident temporarily abroad. (This person has a South African ID Book and has not completed formal Tax Emigration).
The first R1,000,000 may be transferred using the single discretionary allowance. For amounts between R1 and R10 million, Currency Partners can assist with tax clearances. Additionally, we can help clients reapply for a tax number if needed.
Scenario 5: Inheritance of an offshore asset from a resident to a resident who wants to retain it offshore.
Effective from February 23, 2022, residents may retain foreign assets inherited from South African estates without declaring to an Authorised Dealer. Currency Partners can assist with SARB approval if the Liquidation and Distribution Account was finalised before this date.
Scenario 6: Inheritance of a South African asset by a resident permanently abroad who has concluded Tax Emigration (after March 1, 2021) or Financial Emigration (before March 1, 2021).
Currency Partners will advise on the specific requirements and assist with the transfer. Proof of Tax Emigration or Financial Emigration, as well as the necessary approval and documentation, will be essential.
Scenario 7: Inheritance of an offshore asset from a non-resident to a resident who wants to retain it offshore.
South African residents who inherited foreign assets from a non-resident after 17 March 1998 may retain the foreign asset without declaring it to the SARB.
Documentary evidence
It’s important to note that the bank may request documentary evidence of the inheritance’s source of funds. This may include a copy of the passport, death certificate, last will and testament, letter of Executorship, final distribution and liquidation account, and proof of emigration.
Whether you are a bona-fide non-resident, a resident temporarily abroad, or a resident permanently abroad who has concluded Tax Emigration or Financial Emigration, Currency Partners is here to help simplify the complexities and ensure a seamless transfer of assets.
To speak to an expert in our specialist team, register here or email enquiries@currencypartners.co.za or call us on +27 21 203 0081.
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